Exhibit 10.2
SECURITY AGREEMENT
Dated January 10, 2005
From
The Grantors referred to herein
as Grantors
to
BANK OF AMERICA, N.A.
as Collateral Agent
TABLE OF CONTENTS
SECTION PAGE
Section 1. Grant of Security............................................................................................ 4
Section 2. Security for Obligations..................................................................................... 9
Section 3. Grantors Remain Liable....................................................................................... 9
Section 4. Delivery and Control of Security Collateral.................................................................. 10
Section 5. Maintaining the Account Collateral........................................................................... 11
Section 6. Investing of Amounts in the Collateral Account and the L/C Collateral Account................................ 13
Section 7. Release of Amounts........................................................................................... 13
Section 8. Maintaining Electronic Chattel Paper, Transferable Records and Letter-of-Credit
Rights and Giving Notice of Commercial Tort Claims........................................................... 13
Section 9. Representations and Warranties............................................................................... 14
Section 10. Further Assurances........................................................................................... 18
Section 11. As to Equipment and Inventory................................................................................ 19
Section 12. Insurance.................................................................................................... 20
Section 13. Post-Closing Changes; Bailees; Collections on Assigned Agreements, Receivables and
Related Contracts............................................................................................ 21
Section 14. As to Intellectual Property Collateral....................................................................... 22
Section 15. Voting Rights; Dividends; Etc. .............................................................................. 24
Section 16. As to Letter-of-Credit Rights................................................................................ 25
Section 17. Transfers and Other Liens; Additional Shares................................................................. 25
Section 18. Collateral Agent Appointed Attorney-in-Fact.................................................................. 26
Section 19. Collateral Agent May Perform................................................................................. 26
Section 20. The Collateral Agent's Duties................................................................................ 26
Section 21. Remedies..................................................................................................... 27
Section 22. Amendments; Waivers; Additional Grantors; Etc. .............................................................. 29
Section 23. Notices, Etc. ............................................................................................... 30
Section 24. Continuing Security Interest; Assignments under the Credit Agreement......................................... 30
Section 25. Release; Termination......................................................................................... 31
Section 26. Execution in Counterparts.................................................................................... 32
Section 27. Governing Law................................................................................................ 33
Schedules I - Name, Location, Chief Executive Office, Type Of Organization, Jurisdiction Of Organization And
Organizational Identification Number
Schedule II - Pledged Equity and Pledged Debt
Schedule III - Assigned Agreements
Schedule IV - Changes in Name, Location, Etc.
Schedule V - Patents, Trademarks and Trade Names and Copyrights
Schedule VI - IP Agreements
Schedule VII - Account Collateral
Schedule VIII - Account Collateral not Subject to Account Control Agreement
Schedule IX - Commercial Tort Claims
Schedule X - Letters of Credit
Exhibits
Exhibit A - Form of Security Agreement Supplement
Exhibit B - Form of Consent and Agreement
Exhibit C - Form of Intellectual Property Security Agreement
Exhibit D - Form of Intellectual Property Security Agreement Supplement
Exhibit E - Form of Consent to Assignment of Letter of Credit Rights
2
SECURITY AGREEMENT
SECURITY AGREEMENT dated January 10, 2005 made by CRICKET
COMMUNICATIONS, INC., a Delaware corporation (the "BORROWER"), LEAP WIRELESS
INTERNATIONAL, INC., a Delaware corporation (Holdings), the other Persons listed
on the signature pages hereof and the Additional Grantors (as defined in Section
22) (the Borrower, Holdings, the Persons so listed and the Additional Grantors
being, collectively, the "GRANTORS"), to BANK OF AMERICA, N.A. ("BANK OF
AMERICA"), as collateral agent (in such capacity, together with any successor
collateral agent appointed pursuant to Article IX of the Credit Agreement (as
hereinafter defined), the "COLLATERAL AGENT") for the Secured Parties (as
defined in the Credit Agreement).
PRELIMINARY STATEMENTS.
(1) The Borrower and Holdings have entered into a Credit Agreement
dated as of the date hereof (said Agreement, as it may hereafter be amended,
amended and restated, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT") with the Lenders and the Agents (each as defined
therein).
(2) Pursuant to the Credit Agreement, the Grantors are entering
into this Agreement in order to grant to the Collateral Agent for the ratable
benefit of the Secured Parties a security interest in the Collateral (as
hereinafter defined).
(3) Each Grantor is the owner of the shares of stock or other
Equity Interests set forth opposite such Grantor's name on and as otherwise
described in Part I of Schedule II hereto (the "INITIAL PLEDGED EQUITY") and in
Part III of Schedule II hereto and issued by the Persons named therein and of
the indebtedness set forth opposite such Grantor's name on and as otherwise
described in Part II of Schedule II hereto (the "INITIAL PLEDGED DEBT") and in
Part IV of Schedule II hereto and issued by the obligors named therein.
(4) The Borrower and Holdings have security entitlements (the
"PLEDGED SECURITY ENTITLEMENTS") with respect to all the financial assets (the
"PLEDGED FINANCIAL ASSETS") credited from time to time to the Borrower's and
Holdings' accounts, respectively, as described in Schedule VII hereto (the
"SECURITIES ACCOUNTS").
(5) The Borrower has opened a l/c collateral deposit account,
Account No. 1233304415 (the "L/C COLLATERAL ACCOUNT"), with Bank of America at
its office at 1850 Gateway Blvd, 3rd Floor, Concord, California 94520, in the
name of the Collateral Agent and under the sole control and dominion of the
Collateral Agent and subject to the terms of this Agreement.
(6) The Borrower has opened a collateral deposit account, Account
No. 1233304434 (the "COLLATERAL ACCOUNT"), with Bank of America at its office at
1850 Gateway Blvd, 3rd Floor, Concord, California 94520, in the name of the
Borrower but under the sole dominion and control of the Collateral Agent and
subject to the terms of this Agreement.
3
(7) Certain of the Grantors have opened other deposit accounts
(the "OTHER DEPOSIT ACCOUNTS") with banks, in the name of such Grantors and
subject to the terms of this Agreement, as described in Schedule VII hereto.
(8) The Borrower is the beneficiary under certain letters of
credit as described in Schedule X.
(9) It is a condition precedent to the making of Loans and the
issuance of Letters of Credit by the Lenders under the Credit Agreement and the
entry into Secured Hedge Agreements by the Hedge Banks from time to time that
the Grantors shall have granted the assignment and security interest and made
the pledge and assignment contemplated by this Agreement.
(10) Each Grantor will derive substantial direct and indirect
benefit from the transactions contemplated by the Loan Documents.
(11) Terms defined in the Credit Agreement and not otherwise
defined in this Agreement are used in this Agreement as defined in the Credit
Agreement. Further, unless otherwise defined in this Agreement or in the Credit
Agreement, terms defined in Article 8 or 9 of the UCC (as defined below) and/or
in the Federal Book Entry Regulations (as defined below) are used in this
Agreement as such terms are defined in such Article 8 or 9 and/or the Federal
Book Entry Regulations. "UCC" means the Uniform Commercial Code as in effect,
from time to time, in the State of New York; provided that, if perfection or the
effect of perfection or non-perfection or the priority of any security interest
in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, "UCC" means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of
perfection or non-perfection or priority. The term "FEDERAL BOOK ENTRY
REGULATIONS" means (a) the federal regulations contained in Subpart B
("Treasury/Reserve Automated Debt Entry System (TRADES)") governing book-entry
securities consisting of U.S. Treasury bills, notes and bonds and Subpart D
("Additional Provisions") of 31 C.F.R. Part 357, 31 C.F.R. Section 357.2,
Section 357.10 through Section 357.15 and Section 357.40 through Section 357.45
and (b) to the extent substantially identical to the federal regulations
referred to in clause (a) above (as in effect from time to time), the federal
regulations governing other book-entry securities.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Loans and issue Letters of Credit under the Credit
Agreement and to induce the Hedge Banks to enter into Secured Hedge Agreements
from time to time, each Grantor hereby agrees with the Collateral Agent for the
ratable benefit of the Secured Parties as follows:
Section 1. Grant of Security. Each Grantor hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in, such Grantor's right, title and interest in and to the following,
in each case, as to each type of property described below, whether now owned or
hereafter acquired by such Grantor, wherever located, and whether now or
hereafter existing or arising (collectively, the "COLLATERAL"), but excluding
licenses, permits or authorizations issued by the Federal Communications
Commission (the "FCC") ("WIRELESS LICENSES") to the extent that the grant of a
security interest in such Wireless
4
Licenses is prohibited under applicable Federal Law, provided that the
Collateral shall include (x) the right to receive all proceeds derived from the
sale, assignment, transfer or transfer of control of Wireless Licenses, (y)
proceeds of Wireless Licenses and (z) any Wireless Licenses as to which the FCC
has consented to the grant of a security interest under this Agreement:
(a) all equipment in all of its forms, including, without
limitation, all machinery, tools, motor vehicles, vessels, aircraft,
furniture and fixtures, and all parts thereof and all accessions thereto
and all software related thereto, including, without limitation, software
that is embedded in and is part of the equipment (any and all such
property being the "EQUIPMENT");
(b) all inventory in all of its forms, including, without
limitation, (i) all raw materials, work in process, finished goods and
materials used or consumed in the manufacture, production, preparation or
shipping thereof, (ii) goods in which such Grantor has an interest in mass
or a joint or other interest or right of any kind (including, without
limitation, goods in which such Grantor has an interest or right as
consignee) and (iii) goods that are returned to or repossessed or stopped
in transit by such Grantor, and all accessions thereto and products
thereof and documents therefor, and all software related thereto,
including, without limitation, software that is embedded in and is part of
the inventory (any and all such property being the "INVENTORY");
(c) all accounts (including, without limitation,
health-care-insurance receivables), chattel paper (including, without
limitation, tangible chattel paper and electronic chattel paper),
instruments (including, without limitation, promissory notes), deposit
accounts, letter-of-credit rights, general intangibles (including, without
limitation, payment intangibles) and other obligations of any kind,
whether or not arising out of or in connection with the sale or lease of
goods or the rendering of services and whether or not earned by
performance, and all rights now or hereafter existing in and to all
supporting obligations and in and to all security agreements, mortgages,
Liens, leases, letters of credit and other contracts securing or otherwise
relating to the foregoing property (any and all of such accounts, chattel
paper, instruments, deposit accounts, letter-of-credit rights, general
intangibles and other obligations, to the extent not referred to in clause
(d), (e) or (f) below, being the "RECEIVABLES", and any and all such
supporting obligations, security agreements, mortgages, Liens, leases,
letters of credit and other contracts being the "RELATED CONTRACTS");
(d) the following (the "SECURITY COLLATERAL"):
(i) the Initial Pledged Equity and the certificates, if any,
representing the Initial Pledged Equity, and all dividends,
distributions, return of capital, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
Initial Pledged Equity and all subscription warrants, rights or
options issued thereon or with respect thereto;
(ii) the Initial Pledged Debt and the instruments, if any,
evidencing the Initial Pledged Debt, and all interest, cash,
instruments and other property from
5
time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Initial Pledged
Debt;
(iii) all additional shares of stock and other Equity
Interests from time to time acquired by such Grantor in any manner,
(A) other than Equity Interests in the Excluded Subsidiaries and (B)
limited, in the case of Equity Interests in any entity (other than
the Excluded Subsidiaries) that is a "controlled foreign
corporation" under Section 957 of the Internal Revenue Code, to 66%
of the capital stock of each such entity to the extent that any
material adverse tax consequences to the applicable Grantor would
otherwise result, (such shares and other Equity Interests, together
with the Initial Pledged Equity, being the "PLEDGED EQUITY"), and
the certificates, if any, representing such additional shares or
other Equity Interests, and all dividends, distributions, return of
capital, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares or other Equity Interests and
all subscription warrants, rights or options issued thereon or with
respect thereto;
(iv) all additional indebtedness from time to time owed to
such Grantor (such indebtedness, together with the Initial Pledged
Debt, being the "PLEDGED DEBT") and the instruments, if any,
evidencing such indebtedness, and all interest, cash, instruments
and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
such indebtedness;
(v) the Securities Account, all Pledged Security
Entitlements with respect to all Pledged Financial Assets from time
to time credited to the Securities Account, and all Pledged
Financial Assets, and all dividends, distributions, return of
capital, interest, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such Pledged Security Entitlements or
such Pledged Financial Assets and all subscription warrants, rights
or options issued thereon or with respect thereto;
(vi) except for property excluded in clause (iii)(A) or
(iii)(B) above, all other investment property (including, without
limitation, all (A) securities, whether certificated or
uncertificated, (B) security entitlements, (C) securities accounts,
(D) commodity contracts and (E) commodity accounts) in which such
Grantor has now, or acquires from time to time hereafter, any right,
title or interest in any manner, and the certificates or
instruments, if any, representing or evidencing such investment
property, and all dividends, distributions, return of capital,
interest, distributions, value, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such investment property
and all subscription warrants, rights or options issued thereon or
with respect thereto;
(e) each of the agreements listed on Schedule III hereto, the IP
Agreements (as hereinafter defined), and each Hedge Agreement to which
such Grantor is now or
6
may hereafter become a party, in each case as such agreements may be
amended, amended and restated, supplemented or otherwise modified from
time to time (collectively, the "ASSIGNED AGREEMENTS"), including, without
limitation, (i) all rights of such Grantor to receive moneys due and to
become due under or pursuant to the Assigned Agreements, (ii) all rights
of such Grantor to receive proceeds of any insurance, indemnity, warranty
or guaranty with respect to the Assigned Agreements, (iii) claims of such
Grantor for damages arising out of or for breach of or default under the
Assigned Agreements and (iv) the right of such Grantor to terminate the
Assigned Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder (all such Collateral being the
"AGREEMENT COLLATERAL");
(f) the following (collectively, the "ACCOUNT COLLATERAL"):
(i) the Collateral Account, the L/C Collateral Account and
the Other Deposit Accounts and all funds and financial assets from
time to time credited thereto (including, without limitation, all
Cash Equivalents), all interest, dividends, distributions, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such funds and financial assets, and all certificates
and instruments, if any, from time to time representing or
evidencing the Collateral Account, the L/C Collateral Account and
the Other Deposit Accounts;
(ii) all promissory notes, certificates of deposit, deposit
accounts, checks and other instruments from time to time delivered
to or otherwise possessed by the Collateral Agent for or on behalf
of such Grantor, including, without limitation, those delivered or
possessed in substitution for or in addition to any or all of the
then existing Account Collateral; and
(iii) all interest, dividends, distributions, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of the then existing Account Collateral; and
(g) the following (collectively, the "INTELLECTUAL PROPERTY
COLLATERAL"):
(i) all patents, patent applications, utility models and
statutory invention registrations, all inventions claimed or
disclosed therein and all improvements thereto ("PATENTS");
(ii) all trademarks, service marks, domain names, trade
dress, logos, designs, slogans, trade names, business names,
corporate names and other source identifiers, whether registered or
unregistered (provided that no security interest shall be granted in
United States intent-to-use trademark applications to the extent
that, and solely during the period in which, the grant of a security
interest therein would impair the validity or enforceability of such
intent-to-use trademark applications under applicable federal law),
together, in each case, with the goodwill symbolized thereby
("TRADEMARKS");
7
(iii) all copyrights, including, without limitation,
copyrights in Computer Software (as hereinafter defined), internet
web sites and the content thereof, whether registered or
unregistered ("COPYRIGHTS");
(iv) all computer software, programs and databases
(including, without limitation, source code, object code and all
related applications and data files), firmware and documentation and
materials relating thereto, together with any and all maintenance
rights, service rights, programming rights, hosting rights, test
rights, improvement rights, renewal rights and indemnification
rights and any substitutions, replacements, improvements, error
corrections, updates and new versions of any of the foregoing
("COMPUTER SOFTWARE");
(v) all confidential and proprietary information, including,
without limitation, know-how, trade secrets, manufacturing and
production processes and techniques, inventions, research and
development information, databases and data, including, without
limitation, technical data, financial, marketing and business data,
pricing and cost information, business and marketing plans and
customer and supplier lists and information (collectively, "TRADE
SECRETS"), and all other intellectual, industrial and intangible
property of any type, including, without limitation, industrial
designs and mask works;
(vi) all registrations and applications for registration for
any of the foregoing, including, without limitation, those
registrations and applications for registration set forth in
Schedule V hereto (as such Schedule V may be supplemented from time
to time by supplements to this Agreement, each such supplement being
substantially in the form of Exhibit D hereto (an "IP SECURITY
AGREEMENT SUPPLEMENT") executed by such Grantor to the Collateral
Agent from time to time), together with all reissues, divisions,
continuations, continuations-in-part, extensions, renewals and
reexaminations thereof;
(vii) all tangible embodiments of the foregoing, all rights in
the foregoing provided by international treaties or conventions, all
rights corresponding thereto throughout the world and all other
rights of any kind whatsoever of such Grantor accruing thereunder or
pertaining thereto;
(viii) all agreements, permits, consents, orders and
franchises relating to the license, development, use or disclosure
of any of the foregoing to which such Grantor, now or hereafter, is
a party or a beneficiary ("IP AGREEMENTS"), including, without
limitation, the agreements set forth in Schedule VI hereto; and
(ix) any and all claims for damages and injunctive relief for
past, present and future infringement, dilution, misappropriation,
violation, misuse or breach with respect to any of the foregoing,
with the right, but not the obligation, to sue for and collect, or
otherwise recover, such damages;
(h) all commercial tort claims described in Schedule IX hereto
(collectively the "COMMERCIAL TORT CLAIMS COLLATERAL");
8
(i) all books and records (including, without limitation, customer
lists, credit files, printouts and other computer output materials and
records) of such Grantor pertaining to any of the Collateral; and
(j) all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the Collateral (including, without
limitation, proceeds, collateral and supporting obligations that
constitute property of the types described in clauses (a) through (i) of
this Section 1 and this clause (j)) and, to the extent not otherwise
included, all (A) payments under insurance (whether or not the Collateral
Agent is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of
the foregoing Collateral, (B) tort claims, including, without limitation,
all commercial tort claims and (C) cash;
provided, however, that notwithstanding anything to the contrary set forth
above, in no event shall the security interest granted under this Agreement
attach to (x) any license, contract, property right or agreement (including any
collateral directly associated with any of the foregoing the grant of a Lien on
which is permitted under Section 7.01 of the Credit Agreement) to which any
Grantor is a party or any of such Grantor's rights or interests thereunder if
and for so long as (but only for so long as) the grant of such security interest
(I) gives any other party to such license, contract, property right or agreement
the right to terminate its obligations thereunder, (II) constitutes or results
in the abandonment, invalidation or unenforceability of any right, title or
interest of any Grantor therein or (III) constitutes or results in a breach or
termination pursuant to the terms of, or a default under, such license,
contract, property right or agreement (other than to the extent that any such
terms referred to in any of clauses (I), (II) and (III) are rendered ineffective
by the terms of any of Sections 9-406, 9-407, 9-408 or 9-409 of the UCC or any
similar statute or successor provision or provisions) or (y) any leasehold
interest in real property.
Section 2. Security for Obligations. This Agreement secures, in the
case of each Grantor, the payment of all Obligations of such Grantor now or
hereafter existing under the Loan Documents, whether direct or indirect,
absolute or contingent, and whether for principal, reimbursement obligations,
interest, fees, premiums, penalties, indemnifications, contract causes of
action, costs, expenses or otherwise (all such Obligations being the "SECURED
OBLIGATIONS").
Section 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor's Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Agent
of any of the rights hereunder shall not release any Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) no Secured Party shall have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement or any other Loan Document, nor shall any Secured Party be obligated
to perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
9
Section 4. Delivery and Control of Security Collateral. (a) All
certificates or instruments representing or evidencing Security Collateral shall
be delivered to and held by or on behalf of the Collateral Agent pursuant hereto
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. Upon the occurrence and during
the continuance of an Event of Default, the Collateral Agent shall have the
right, at any time in its discretion and without notice to any Grantor, to
transfer to or to register in the name of the Collateral Agent or any of its
nominees any or all of the Security Collateral, subject only to the revocable
rights specified in Section 15(a). In addition, upon the occurrence and during
the continuance of an Event of Default, the Collateral Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing Security Collateral for certificates or instruments of smaller or
larger denominations. Upon the occurrence and during the continuance of an Event
of Default, the Collateral Agent shall also have the right at any time to
convert Security Collateral consisting of financial assets credited to the
Securities Account to Security Collateral consisting of financial assets held
directly by the Collateral Agent, and to convert Security Collateral consisting
of financial assets held directly by the Collateral Agent to Security Collateral
consisting of financial assets credited to the Securities Account.
(b) With respect to any Security Collateral in which any Grantor
has any right, title or interest and that constitutes an uncertificated
security, such Grantor will cause the issuer thereof (or, if the issuer thereof
is not a Subsidiary of such Grantor, use commercially reasonable efforts to
cause the issuer thereof) either (i) to register the Collateral Agent as the
registered owner of such security or (ii) to agree in an authenticated record
with such Grantor and the Collateral Agent that such issuer will comply with
instructions with respect to such security originated by the Collateral Agent
without further consent of such Grantor, such authenticated record to be in form
and substance satisfactory to the Collateral Agent. With respect to any Security
Collateral in which any Grantor has any right, title or interest and that is not
an uncertificated security, upon the request of the Collateral Agent upon the
occurrence and during the continuance of an Event of Default, such Grantor will
notify each such issuer of Pledged Equity that such Pledged Equity is subject to
the security interest granted hereunder.
(c) With respect to any Security Collateral in which any Grantor
has any right, title or interest and that constitutes a security entitlement in
which the Collateral Agent is not the entitlement holder, except for any such
Security Collateral to which a Lien permitted under any of clauses (b), (e),
(f), (h), (n) or (p) of Section 7.01 of the Credit Agreement has attached, such
Grantor will cause the securities intermediary with respect to such security
entitlement either (i) to identify in its records the Collateral Agent as the
entitlement holder of such security entitlement against such securities
intermediary or (ii) to agree in an authenticated record with such Grantor and
the Collateral Agent that such securities intermediary will comply with
entitlement orders (that is, notifications communicated to such securities
intermediary directing transfer or redemption of the financial asset to which
such Grantor has a security entitlement) originated by the Collateral Agent
without further consent of such Grantor, such authenticated record to be in form
and substance satisfactory to the Collateral Agent (such agreement being a
"SECURITIES ACCOUNT CONTROL AGREEMENT").
(d) No Grantor will change or add any securities intermediary or
commodity intermediary that maintains any securities account or commodity
account in which any of the
10
Collateral is credited or carried, or change or add any such securities account
or commodity account, in each case without first complying with the above
provisions of this Section 4 in order to perfect the security interest granted
hereunder in such Collateral.
(f) Upon the request of the Collateral Agent upon the occurrence
and during the continuance of an Event of Default, such Grantor will notify each
such issuer of Pledged Debt that such Pledged Debt is subject to the security
interest granted hereunder.
Section 5. Maintaining the Account Collateral. So long as any Loan
or any other Obligation of any Loan Party under any Loan Document shall remain
unpaid, any Letter of Credit shall be outstanding, any Secured Hedge Agreement
shall be in effect or any Lender shall have any Commitment:
(a) Except in the case of Account Collateral with Wells Fargo
Bank, N.A. and Pershing LLC, which shall be maintained in accordance with
this paragraph from and after the date hereof, from and after the date
which is 60 days after the date hereof (as such date may be extended on
the terms permitted by the Credit Agreement and provided that if such
Grantor has used commercially reasonable efforts to obtain the Account
Control Agreement described below, such Grantor shall have an additional
30 days to either (A) obtain such Account Control Agreement or (B) move
the applicable Account Collateral to a Pledge Account Bank that is party
to an Account Control Agreement), each Grantor will maintain all Account
Collateral only with the Collateral Agent or with banks (the "PLEDGED
ACCOUNT BANKS") that have agreed, in a record authenticated by the
Grantor, the Collateral Agent and the Pledged Account Banks, to (i) comply
with instructions originated by the Collateral Agent directing the
disposition of funds in the Account Collateral without the further consent
of the Grantor and (ii) waive or subordinate in favor of the Collateral
Agent all claims of the Pledged Account Banks (including, without
limitation, claims by way of a security interest, lien or right of setoff
or right of recoupment, except for debits by the Pledged Account Banks for
fees, charges or returned item amounts) to the Account Collateral, which
authenticated record shall be in form and substance satisfactory to the
Collateral Agent (the "ACCOUNT CONTROL AGREEMENT"); provided, however,
this Section 5(a) shall not apply to Other Deposit Accounts listed in
Schedule VIII hereto so long as the individual balance of any such Other
Deposit Account does not exceed $100,000 and the aggregate of the balances
in all such Other Deposit Accounts (together with any other deposit
accounts of all Grantors not then subject to Account Control Agreements)
does not exceed $500,000, in each case at any time.
(b) Each Grantor will deposit in an Other Deposit Account or the
Collateral Account or pay to the Collateral Agent for deposit in the
Collateral Account, at the end of each Business Day, all proceeds of
Collateral and all other cash of such Grantor, other than (i) petty cash
that in the ordinary course of business is kept at such Grantor's offices
and (ii) checks received at such Grantor's offices that in the ordinary
course of business are not deposited into a deposit account on a daily
basis but which are deposited at least once per week.
11
(c) Each Grantor agrees that it will not add any bank that
maintains a deposit account for such Grantor or open any new deposit
account with any then existing Pledged Account Bank unless (except with
respect to any new deposit account the individual balance of which does
not exceed $100,000 and does not exceed when aggregated with all other
Other Deposit Accounts not then subject to Account Control Agreements,
including those referred to in the proviso to clause (a) above, $500,000)
(i) the Collateral Agent shall have received at least three Business Days'
prior written notice of such additional bank or such new deposit account
and (ii) the Collateral Agent shall have received, in the case of a bank
or Pledged Account Bank that is not the Collateral Agent, an Account
Control Agreement authenticated by such new bank and such Grantor, or a
supplement to an existing Account Control Agreement with such then
existing Pledged Account Bank, covering such new deposit account (and,
upon the receipt by the Collateral Agent of such Account Control Agreement
or supplement, Schedule VII hereto shall be automatically amended to
include such Other Deposit Account). Each Grantor agrees that it will not
terminate any bank as a Pledged Account Bank or terminate any Account
Collateral, except that the Grantor may terminate an Other Deposit
Account, and terminate a bank as a Pledged Account Bank with respect to
such Other Deposit Account, if it gives the Collateral Agent at least
three Business Days' prior written notice of such termination (and, upon
such termination, Schedule VII hereto shall be automatically amended to
delete such Pledged Account Bank and Other Deposit Account).
(d) Upon any termination by a Grantor of any Other Deposit Account
by such Grantor, or any Pledged Account Bank with respect thereto, such
Grantor will immediately transfer all funds and property held in such
terminated Other Deposit Account to another Other Deposit Account listed
in Schedule VII or to the Collateral Account so that the Collateral Agent
shall have a continuously perfected security interest in such Account
Collateral, funds and property. Each Grantor agrees to terminate any or
all Account Collateral and Account Control Agreements upon request by the
Collateral Agent.
(e) The Collateral Agent shall have sole right in accordance with
the Credit Agreement to direct the disposition of funds with respect to
the Collateral Account, the L/C Collateral Account and, after the
occurrence and during the continuance of an Event of Default and the
exercise by the Collateral Agent of its right to exclusive control over
the Other Deposit Accounts, the Other Deposit Accounts; and it shall be a
term and condition of each of the Collateral Account and the L/C
Collateral Account, notwithstanding any term or condition to the contrary
in any other agreement relating to the Collateral Account or the L/C
Collateral Account, as the case may be, that no amount (including, without
limitation, interest on Cash Equivalents credited thereto) will be paid or
released to or for the account of, or withdrawn by or for the account of,
the Borrower or any other Person from the Collateral Account or the L/C
Collateral Account; and it shall be a term and condition of the Other
Deposit Accounts that after the exercise by the Collateral Agent of its
right to exclusive control over the Other Deposit Accounts,
notwithstanding any term or condition to the contrary in any other
agreement relating to the Other Deposit Accounts, no amount (including,
without limitation, interest on Cash Equivalents credited thereto) will be
paid or released to or for the account of, or
12
withdrawn by or for the account of, the Borrower or any other Person from
the Other Deposit Accounts.
(f) The Collateral Agent may, at any time, after the occurrence
and during the continuance of an Event of Default, and without notice to,
or consent from, the Grantor, (i) transfer, or direct the transfer of,
funds from the Account Collateral to satisfy the Grantor's obligations
under the Loan Documents (to the extent such obligations are due and
payable) if an Event of Default shall have occurred and be continuing and
(ii) transfer, or direct the transfer of, funds from the Other Deposit
Accounts to the Collateral Account, in each case, as permitted under the
Credit Agreement.
Section 6. Investing of Amounts in the Collateral Account and the
L/C Collateral Account. The Collateral Agent will, subject to the provisions of
Sections 5, 7 and 21, from time to time (a) invest, or direct the applicable
Pledged Account Bank to invest, amounts received with respect to the Collateral
Account and the L/C Collateral Account in such Cash Equivalents credited to (A)
the Collateral Account and the L/C Collateral Account, respectively, as the
Collateral Agent may select or (B) in the case of Cash Equivalents consisting of
Securities Collateral, a securities account in which the Collateral Agent is the
securities intermediary or a securities account subject to a Securities Account
Control Agreement, and (b) invest interest paid on the Cash Equivalents referred
to in clause (a) above, and reinvest other proceeds of any such Cash Equivalents
that may mature or be sold, in each case in such Cash Equivalents credited in
the same manner. Interest and proceeds that are not invested or reinvested in
Cash Equivalents as provided above shall be deposited and held in the relevant
Collateral Account or L/C Collateral Account. In addition, the Collateral Agent
shall have the right at any time to exchange, or direct the applicable Pledged
Account Bank at which the Collateral Account or the L/C Collateral Account is
held to exchange, such Cash Equivalents for similar Cash Equivalents of smaller
or larger determinations, or for other Cash Equivalents, credited to the
Collateral Account or the L/C Collateral Account, as the case may be.
Section 7. Release of Amounts. So long as no Default shall have
occurred and be continuing, the Collateral Agent will pay and release, or direct
the applicable Pledged Account Bank to pay and release, to the Borrower or at
its order or, at the request of the Borrower, to the Administrative Agent to be
applied to the Obligations of the Borrower under the Loan Documents, such
amount, if any, as is then on deposit in the Collateral Account or the L/C
Collateral Account, as the case may be, in each case to the extent permitted to
be released under the terms of the Credit Agreement.
Section 8. Maintaining Electronic Chattel Paper, Transferable
Records and Letter-of-Credit Rights and Giving Notice of Commercial Tort Claims.
So long as any Loan or any other Obligation of any Loan Party under any Loan
Document shall remain unpaid, any Letter of Credit shall be outstanding, any
Secured Hedge Agreement shall be in effect or any Lender shall have any
Commitment:
(a) Each Grantor will maintain all (i) electronic chattel paper so
that the Collateral Agent has control of the electronic chattel paper in
the manner specified in Section 9-105 of the UCC and (ii) all transferable
records so that the Collateral Agent has control of the transferable
records in the manner specified in Section 16 of the Uniform
13
Electronic Transactions Act, as in effect in the jurisdiction governing
such transferable record ("UETA" );
(b) Each Grantor will use commercially reasonable efforts to
maintain all letter-of-credit rights associated with the letters of credit
described in Schedule X, so that the Collateral Agent has control of such
letter-of-credit rights in the manner specified in Section 9-107 of the
UCC; and
(c) Each Grantor will promptly give notice to the Collateral Agent
of any material commercial tort claim that such Grantor has from time to
time and will promptly execute or otherwise authenticate a supplement to
this Agreement, and otherwise take all necessary action, to subject such
commercial tort claim to the first priority security interest created
under this Agreement, subject to Liens permitted under the Credit
Agreement.
Section 9. Representations and Warranties. Each Grantor represents
and warrants as follows:
(a) Such Grantor's exact legal name, as defined in Section
9-503(a) of the UCC, is correctly set forth in Schedule I hereto. Such
Grantor has only the trade names and registered trademarks listed on
Schedule V hereto. Such Grantor is located (within the meaning of Section
9-307 of the UCC) and has its chief executive office in the state or
jurisdiction set forth in Schedule I hereto. The information set forth in
Schedule I hereto with respect to such Grantor is true and accurate in all
respects. Such Grantor has not previously changed its name, location,
chief executive office, type of organization, jurisdiction of organization
or organizational identification number from those set forth in Schedule I
hereto except as disclosed in Schedule IV hereto.
(b) All of the Equipment and Inventory of such Grantor are located
at locations for which financing statements in proper form for filing have
been delivered to the Administrative Agent pursuant to Section
4.01(a)(iii)(B) of the Credit Agreement. All Security Collateral
consisting of certificated securities and instruments have been delivered
to the Collateral Agent. None of the Receivables or Agreement Collateral
is evidenced by a promissory note or other instrument with a face amount
in excess of $50,000 that has not been delivered to the Collateral Agent.
(c) Such Grantor is the legal and beneficial owner of the
Collateral of such Grantor free and clear of any Lien, claim, option or
right of others, except for the Lien created under this Agreement or any
Lien permitted under the Credit Agreement. To such Grantor's knowledge, no
effective financing statement or other instrument similar in effect
covering all or any part of such Collateral or listing such Grantor or any
trade name of such Grantor as debtor is on file in any recording office,
except such as may have been filed in favor of the Collateral Agent
relating to the Loan Documents or as otherwise permitted under the Credit
Agreement.
(d) Such Grantor, either individually or together with one or more
other Grantors, has exclusive possession and control of its Equipment and
Inventory other than
14
Inventory stored at any leased premises or warehouse and except as a third
party may have possession or control of Equipment or Inventory in the
ordinary course of such Grantor's business. In the case of Equipment and
Inventory located on leased premises or in warehouses, no lessor or
warehouseman of any premises or warehouse upon or in which such Equipment
or Inventory is located has any Lien, claim or charge (based on contract,
statute or otherwise) on such Equipment and Inventory, other than any Lien
permitted under the Credit Agreement.
(e) The Initial Pledged Equity pledged by such Grantor hereunder
has been duly authorized and validly issued and is fully paid and
non-assessable. With respect to the Pledged Equity that is an
uncertificated security, such Grantor has caused (or, in the case of any
issuer that is not a Subsidiary of such Grantor, has used commercially
reasonable efforts to cause) the issuer thereof either (i) to register the
Collateral Agent as the registered owner of such security or (ii) to agree
in an authenticated record with such Grantor and the Collateral Agent that
such issuer will comply with instructions with respect to such security
originated by the Collateral Agent without further consent of such
Grantor. If such Grantor is an issuer of Pledged Equity, such Grantor
confirms that it has received notice of such security interest. The
Initial Pledged Debt pledged by such Grantor hereunder has been duly
authorized, authenticated or issued and delivered, is the legal, valid and
binding obligation of the issuers thereof, is evidenced by one or more
promissory notes (which notes have been delivered to the Collateral Agent)
and is not in default.
(f) As of November 30, 2004, the Initial Pledged Equity pledged by
such Grantor constitutes the percentage of the issued and outstanding
Equity Interests of the issuers thereof indicated on Schedule II hereto.
As of November 30, 2004, the Initial Pledged Debt constitutes all of the
outstanding indebtedness owed to such Grantor by the issuers thereof and
is outstanding in the principal amount indicated on Schedule II hereto.
(g) All of the investment property owned by such Grantor as of
November 30, 2004 is listed on Schedule II hereto.
(h) Such Grantor has no deposit accounts, other than the Account
Collateral listed on Schedule VII hereto, as such Schedule VII may be
amended from time to time pursuant to Section 5(d), and legal, binding and
enforceable (subject to the effects of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether
considered in a proceeding in equity or at law)) Account Control
Agreements are in effect for each deposit account that constitutes Account
Collateral (other than Account Collateral consisting of deposit accounts
maintained with the Collateral Agent), except to the extent such Account
Control Agreements are not required pursuant to the terms of Section 5(a).
(i) Such Grantor is not a beneficiary or assignee under any letter
of credit, other than (i) letters of credit with a face amount of less
than $100,000 and (ii) the letters of credit described in Schedule X
hereto, as such Schedule X may be amended from time to time.
15
(j) (i) Except to the extent not required by the terms of the Loan
Documents, all actions necessary to obtain control of Collateral as
provided in Sections 9-104, 9-105, 9-106 and 9-107 of the UCC and Section
16 of UETA and actions necessary to perfect the Collateral Agent's
security interest with respect to Collateral evidenced by a certificate of
ownership have been duly taken, (ii) all UCC financing statements and
United States Patent and Trademark Office and United States Copyright
Office filings required to be filed in order to perfect the Collateral
Agent's security interest in the Collateral of such Grantor have been
delivered to the Administrative Agent in proper form for filing, and (iii)
this Agreement creates in favor of the Collateral Agent for the benefit of
the Secured Parties a valid and, together with such filings described in
clause (ii) to the extent made and such actions described in clause (i) to
the extent taken, perfected first priority (except to the extent of any
Lien permitted under Section 7.01 of the Credit Agreement that is prior to
the Lien created under this Agreement) security interest in the Collateral
of such Grantor, securing the payment of the Secured Obligations.
(k) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required for (i) the grant by such Grantor of the security interest
granted hereunder or for the execution, delivery or performance of this
Agreement by such Grantor, (ii) the perfection or maintenance of the
security interest created hereunder (including the first priority nature
of such security interest), except for the filing of financing statements
referred to above and all required continuation statements, the
recordation of the grant of security in the Intellectual Property
Collateral that is the subject of United States federal registrations or
applications with the U.S. Patent and Trademark Office and the U.S.
Copyright Office, as applicable, and the actions described in Section 4
with respect to Security Collateral, or (iii) the exercise by the
Collateral Agent of its voting rights provided for in this Agreement,
except as may be required (x) in connection with the disposition of any
portion of the Security Collateral by laws affecting the offering and sale
of securities generally, (y) by FCC rules and regulations in the case of
any disposition of Equity Interests in a Subsidiary that holds FCC
Licenses and (z) in connection with any exercise of voting rights with
respect to Equity Interests of entities that are not Subsidiaries.
(l) As to itself and its Intellectual Property Collateral:
(i) The operation of such Grantor's business as currently
conducted or as contemplated to be conducted and the use of the
Intellectual Property Collateral in connection therewith do not
conflict with, infringe, misappropriate, dilute, misuse or otherwise
violate the intellectual property rights of any third party, except
as could not reasonably be expected to have a Material Adverse
Effect.
(ii) Such Grantor is the owner of all right, title and
interest in and to the Intellectual Property Collateral set forth on
Schedule V. Such Grantor is entitled to use all Intellectual
Property Collateral as such Intellectual Property Collateral is in
use as of the date of this Agreement, except as could not reasonably
be expected to have a Material Adverse Effect.
16
(iii) The Intellectual Property Collateral set forth on
Schedule V hereto includes all of the patents, patent applications,
trademark registrations and applications and copyright registrations
and applications owned by such Grantor.
(iv) All registrations for the Intellectual Property
Collateral set forth on Schedule V are subsisting and have not been
adjudged invalid or unenforceable in whole or any material part, and
to such Grantor's knowledge, are valid and enforceable, except as
could not reasonably be expected to have a Material Adverse Effect.
Such Grantor does not have knowledge of any uses by such Grantor of
any item of Intellectual Property Collateral that could be expected
to lead to such item becoming invalid or unenforceable, except as
could not reasonably be expected to have a Material Adverse Effect.
(v) Except as could not reasonably be expected to have a
Material Adverse Effect, such Grantor has made or performed all
filings, recordings and other acts and has paid all required fees
and taxes to maintain and protect its interest in the Intellectual
Property Collateral set forth on Schedule VI in full force and
effect throughout the United States and to protect and maintain its
interest therein including, without limitation, recordations of any
of its interests in the Patents and Trademarks with the U.S. Patent
and Trademark Office, and recordation of any of its interests in the
Copyrights with the U.S. Copyright Office and in corresponding
national and international copyright offices. Such Grantor has used
proper statutory notice in connection with its use of each material
patent, trademark and copyright in the Intellectual Property
Collateral, except as could not reasonably be expected to have a
Material Adverse Effect.
(vi) As of the date hereof and except as could not reasonably
be expected to have a Material Adverse Effect, no claim, action,
suit, investigation, litigation or proceeding has been asserted or
is pending or to such Grantor's knowledge, threatened against such
Grantor (i) based upon or challenging or seeking to deny or restrict
the Grantor's rights in or use of any of the Intellectual Property
Collateral, (ii) alleging that the Grantor's rights in or use of the
Intellectual Property Collateral or that any services provided by,
processes used by, or products manufactured or sold by, such Grantor
infringe, misappropriate, dilute, misuse or otherwise violate any
patent, trademark, copyright or any other proprietary right of any
third party, or (iii) alleging that the Intellectual Property
Collateral is being licensed or sublicensed in violation or
contravention of the terms of any license or other agreement. To
such Grantor's knowledge, no Person is engaging in any activity that
infringes, misappropriates, dilutes, misuses or otherwise violates
in any material respect the Intellectual Property Collateral or the
Grantor's rights in or use thereof, except as could not reasonably
be expected to have a Material Adverse Effect. Such Grantor has not
granted any license, release, covenant not to sue, non-assertion
assurance, or other right to any Person with respect to any part of
the Intellectual Property Collateral, except as could not reasonably
be expected to have a Material Adverse Effect. The consummation of
the transactions contemplated by the Transaction Documents will not
result in the
17
termination or impairment of any of the Intellectual Property
Collateral in any material respect.
(vii) With respect to each IP Agreement and in each case,
except as could not reasonably be expected to have a Material
Adverse Effect: (A) such IP Agreement is, to such Grantor's
knowledge, valid and binding and in full force and effect; (B) such
IP Agreement will not cease to be valid and binding and in full
force and effect on terms identical to those currently in effect as
a result of the rights and interest granted herein, nor will the
grant of such rights and interest constitute a breach or default
under such IP Agreement or otherwise give any party thereto a right
to terminate such IP Agreement; (C) such Grantor has not received
any written notice of termination or cancellation under such IP
Agreement; (D) such Grantor has not received any written notice of a
breach or default under such IP Agreement, which breach or default
has not been cured; (E) such Grantor has not granted to any other
third party any rights, adverse or otherwise, under such IP
Agreement; and (F) neither such Grantor nor any other party to such
IP Agreement is in breach or default thereof in any material
respect, and no event has occurred that, with notice or lapse of
time or both, would constitute such a breach or default or permit
termination, modification or acceleration under such IP Agreement.
(viii) To such Grantor's knowledge, (A) none of the Trade
Secrets of such Grantor has been used, divulged, disclosed or
appropriated to the detriment of such Grantor for the benefit of any
other Person other than such Grantor; (B) no employee, independent
contractor or agent of such Grantor has misappropriated any trade
secrets of any other Person in the course of the performance of his
or her duties as an employee, independent contractor or agent of
such Grantor; and (C) no employee, independent contractor or agent
of such Grantor is in default or breach of any material term of any
employment agreement, non-disclosure agreement, assignment of
inventions agreement or similar agreement or contract relating in
any way to the protection, ownership, development, use or transfer
of such Grantor's Intellectual Property Collateral, except, in each
case, as could not reasonably be expected to have a Material Adverse
Effect.
(ix) No Grantor or Intellectual Property Collateral is
subject to any outstanding consent, settlement, decree, order,
injunction, judgment or ruling restricting the use of any
Intellectual Property Collateral or that would impair the validity
or enforceability of such Intellectual Property Collateral except as
could not reasonably be expected to have a Material Adverse Effect.
(m) The Grantor has no material commercial tort claims (as defined
in Section 9-102(13) of the UCC) other than those listed in Schedule IX
hereto (as amended from time to time.
Section 10. Further Assurances. (a) Each Grantor agrees that from
time to time, at the expense of such Grantor, such Grantor will promptly execute
and deliver, or
18
otherwise authenticate, all further instruments and documents, and take all
further action that may be necessary or desirable, or that the Collateral Agent
may request, in order to perfect and protect any pledge or security interest
granted or purported to be granted by such Grantor hereunder or to enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral of such Grantor. Without limiting the generality of
the foregoing, each Grantor will promptly with respect to Collateral of such
Grantor: (i) if any such Collateral shall be evidenced by a promissory note or
other instrument or chattel paper, deliver and pledge to the Collateral Agent
hereunder such note or instrument or chattel paper with a face amount exceeding
$50,000 duly indorsed and accompanied by duly executed instruments of transfer
or assignment, all in form and substance satisfactory to the Collateral Agent;
(ii) execute or authenticate and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Collateral Agent may request, in order to
perfect and preserve the security interest granted or purported to be granted by
such Grantor hereunder; (iii) deliver and pledge to the Collateral Agent for
benefit of the Secured Parties certificates representing Security Collateral
that constitutes certificated securities, accompanied by undated stock or bond
powers executed in blank; (iv) take all action necessary to ensure that the
Collateral Agent has control of Collateral consisting of deposit accounts,
electronic chattel paper, investment property, letter-of-credit rights and
transferable records as provided in Sections 9-104, 9-105, 9-106 and 9-107 of
the UCC and in Section 16 of UETA, except as not required by the terms of the
Loan Documents; (v) take all action to ensure that the Collateral Agent's
security interest is noted on any certificate of ownership related to any
Collateral with a value in excess of $100,000 that is evidenced by a certificate
of ownership; (vi) use commercially reasonable efforts to cause the Collateral
Agent to be the beneficiary under all letters of credit set forth on Schedule X,
with the right to make all draws under such letters of credit, and with all
rights of a transferee under Section 5-114(e) of the UCC; and (vii) deliver to
the Collateral Agent evidence that all other action that the Collateral Agent
may deem reasonably necessary or desirable in order to perfect and protect the
security interest created by such Grantor under this Agreement has been taken.
(b) Each Grantor hereby authorizes the Collateral Agent to file one
or more financing or continuation statements, and amendments thereto, including,
without limitation, one or more financing statements indicating that such
financing statements cover all assets or all personal property (or words of
similar effect) of such Grantor, in each case without the signature of such
Grantor, and regardless of whether any particular asset described in such
financing statements falls within the scope of the UCC or the granting clause of
this Agreement. A photocopy or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law. Each Grantor
ratifies its authorization for the Collateral Agent to have filed such financing
statements, continuation statements or amendments filed prior to the date
hereof.
(c) Each Grantor will furnish to the Collateral Agent from time to
time statements and schedules further identifying and describing the Collateral
of such Grantor and such other reports in connection with such Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.
Section 11. As to Equipment and Inventory. Each Grantor will keep
the Equipment and Inventory of such Grantor (other than Inventory sold in the
ordinary course of
19
business) at the places therefor specified in Section 9(b) or, upon 30 days'
prior written notice to the Collateral Agent, at such other places designated by
the Grantor in such notice.
Section 12. Insurance. (a) Each insurance policy required to be
maintained in accordance with Section 6.07 of the Credit Agreement shall (i)
name such Grantor and the Collateral Agent as insured parties thereunder
(without any representation or warranty by or obligation upon the Collateral
Agent) as their interests may appear, (ii) contain the agreement by the insurer
that any loss thereunder shall be payable to the Collateral Agent (jointly with
such Grantor) notwithstanding any action, inaction or breach of representation
or warranty by such Grantor, (iii) provide that there shall be no recourse
against the Collateral Agent for payment of premiums or other amounts with
respect thereto and (iv) provide that at least 10 days' prior written notice of
cancellation or of lapse shall be given to the Collateral Agent by the insurer.
Each Grantor will, if so requested by the Collateral Agent, deliver to the
Collateral Agent original or duplicate policies of such insurance and, as often
as the Collateral Agent may reasonably request, a report of a reputable
insurance broker with respect to such insurance. Further, each Grantor will, at
the request of the Collateral Agent, duly execute and deliver instruments of
assignment of such insurance policies to comply with the requirements of this
Section 12 and use commercially reasonable efforts to cause the insurers to
acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 12 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory, the applicable Grantor will make or cause to
be made the necessary repairs to or replacements of such Equipment or Inventory,
and any proceeds of insurance properly received by or released to such Grantor
shall be used by such Grantor, except as otherwise required hereunder or by the
Credit Agreement, to pay or as reimbursement for the costs of such repairs or
replacements, except in each case where the failure to do so could not
reasonably be expected to have a Material Adverse Effect and provided that
nothing in this Section shall require the making of any repair or replacement of
any Equipment or Inventory where such repair or replacement would not be
commercially reasonable.
(c) So long as no Default under Section 8.01(a) or (f) of the
Credit Agreement or Event of Default shall have occurred and be continuing, all
insurance payments received by the Collateral Agent in connection with any loss,
damage or destruction of any Inventory or Equipment will be released by the
Collateral Agent to the applicable Grantor for application in accordance with
Section 12(b). To the extent that (i) the amount of any such insurance payments
exceeds the cost of any such repair, replacement or restoration, or (ii) such
insurance payments are not otherwise required by the applicable Grantor to
complete any such repair, replacement or restoration required hereunder, the
amount of such excess shall be applied in the manner set forth in the Credit
Agreement. Upon the occurrence and during the continuance of any Event of
Default, all insurance payments in respect of such Equipment or Inventory shall
be paid to the Collateral Agent and shall, in the Collateral Agent's sole
discretion, (i) be released to the applicable Grantor to be applied as set forth
in the first sentence of this subsection (c) or (ii) be held as additional
Collateral hereunder or applied as specified in Section 21(b).
20
Section 13. Post-Closing Changes; Bailees; Collections on Assigned
Agreements, Receivables and Related Contracts. (a) No Grantor will change its
name, type of organization, jurisdiction of organization, organizational
identification number or location from those set forth in Section 9(a) of this
Agreement without first giving at least 30 days' prior written notice to the
Collateral Agent and taking all action reasonably required by the Collateral
Agent for the purpose of perfecting or protecting the security interest granted
by this Agreement. No Grantor will change the location of the Equipment and
Inventory from the locations therefor specified in Section 9(b) without first
giving the Collateral Agent 30 days' prior written notice of such change. No
Grantor will become bound by a security agreement authenticated by another
Person (determined as provided in Section 9-203(d) of the UCC) without giving
the Collateral Agent 30 days' prior written notice thereof and taking all action
required by the Collateral Agent to ensure that the perfection and first
priority nature of the Collateral Agent's security interest in the Collateral
will be maintained, except as permitted by the terms of the Loan Documents and
subject to Liens permitted under the Credit Agreement. Each Grantor will hold
and preserve its records relating to the Collateral, including, without
limitation, the Assigned Agreements and Related Contracts, and will permit
representatives of the Collateral Agent at any time during normal business hours
to inspect and make abstracts from such records and other documents. If the
Grantor does not have an organizational identification number and later obtains
one, it will forthwith notify the Collateral Agent of such organizational
identification number.
(b) If any Collateral of any Grantor is at any time in the
possession or control of a warehouseman, bailee or agent, and if the Collateral
Agent so requests such Grantor will (i) notify such warehouseman, bailee or
agent of the security interest created hereunder, (ii) instruct such
warehouseman, bailee or agent to hold all such Collateral solely for the
Collateral Agent's account subject only to the Collateral Agent's instructions
(which shall permit such Collateral to be removed by such Grantor in the
ordinary course of business until the Collateral Agent notifies such
warehouseman, bailee or agent that an Event of Default has occurred and is
continuing), (iii) use commercially reasonable efforts, to cause such
warehouseman, bailee or agent to authenticate a record acknowledging that it
holds possession of such Collateral for the Collateral Agent's benefit and shall
act solely on the instructions of the Collateral Agent as specified in clause
(ii) above without the further consent of the Grantor or any other Person, and
(iv) if so obtained, make such authenticated record available to the Collateral
Agent.
(c) Except as otherwise provided in this subsection (c), each
Grantor will continue to collect, in the ordinary course of business and at its
own expense, amounts due or to become due such Grantor under the Assigned
Agreements, Receivables and Related Contracts. In connection with such
collections, such Grantor may take (and, at the Collateral Agent's direction,
will take) such action as such Grantor or the Collateral Agent may reasonably
deem necessary or advisable to enforce collection of the Assigned Agreements,
Receivables and Related Contracts; provided, however, that the Collateral Agent
shall have the right at any time, upon the occurrence and during the continuance
of an Event of Default and upon written notice to such Grantor of its intention
to do so, to notify the obligors (other than customers of any Grantor) under any
Assigned Agreements, Receivables and Related Contracts of the assignment of such
Assigned Agreements, Receivables and Related Contracts to the Collateral Agent
and to direct such obligors (other than customers of any Grantor) to make
payment of all amounts due or to become due to such Grantor thereunder directly
to the Collateral Agent and, upon such notification and at the expense of such
Grantor, to enforce collection of any such Assigned
21
Agreements, Receivables and Related Contracts, to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done, and to otherwise exercise all rights with respect to
such Assigned Agreements, Receivables and Related Contracts, including, without
limitation, those set forth set forth in Section 9-607 of the UCC. After receipt
by any Grantor of the notice from the Collateral Agent referred to in the
proviso to the preceding sentence, (i) all amounts and proceeds (including,
without limitation, instruments) received by such Grantor in respect of the
Assigned Agreements, Receivables and Related Contracts of such Grantor shall be
received in trust for the benefit of the Collateral Agent hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over to
the Collateral Agent in the same form as so received (with any necessary
indorsement) to be deposited in the Collateral Account and either (A) released
to such Grantor on the terms set forth in Section 7 so long as no Event of
Default shall have occurred and be continuing or (B) if any Event of Default
shall have occurred and be continuing and the Collateral Agent so elects as
provided in Section 21(b), applied as provided in Section 21(b) and (ii) such
Grantor will not adjust, settle or compromise the amount or payment of any
Receivable or amount due on any Assigned Agreement or Related Contract, release
wholly or partly any obligor thereof, or allow any credit or discount thereon,
except in the ordinary course of business or in connection with any settlement
with the obligor thereof. No Grantor will consent to the subordination of its
right to payment under any of the Assigned Agreements, Receivables and Related
Contracts to any other indebtedness or obligations of the obligor thereof.
Section 14. As to Intellectual Property Collateral. (a) With respect
to each item of its Intellectual Property Collateral, each Grantor agrees to
take, at its expense, all necessary steps, including, without limitation, in the
U.S. Patent and Trademark Office, the U.S. Copyright Office and any other
governmental authority, to (i) maintain the validity and enforceability of all
material Intellectual Property Collateral and maintain such Intellectual
Property Collateral in full force and effect, and (ii) to the extent
commercially reasonable, pursue the registration and maintenance of each
material patent, trademark, or copyright registration or application, now or
hereafter included in the Intellectual Property Collateral of such Grantor,
including, without limitation, the payment of required fees and taxes, the
filing of responses to office actions issued by the U.S. Patent and Trademark
Office, the U.S. Copyright Office or other governmental authorities, the filing
of applications for renewal or extension, the filing of affidavits under
Sections 8 and 15 of the U.S. Trademark Act, the filing of divisional,
continuation, continuation-in-part, reissue and renewal applications or
extensions, the payment of maintenance fees and the participation in
interference, reexamination, opposition, cancellation, infringement and
misappropriation proceedings. No Grantor shall, without the written consent of
the Collateral Agent, discontinue use of or otherwise abandon any Intellectual
Property Collateral, or abandon any right to file an application for patent,
trademark, or copyright, unless such Grantor shall have previously determined
that such use or the pursuit or maintenance of such Intellectual Property
Collateral is no longer desirable in the conduct of such Grantor's business and
that the loss thereof would not be reasonably likely to have a Material Adverse
Effect.
(b) Each Grantor agrees promptly to notify the Collateral Agent if
such Grantor has knowledge (i) that any material item of the Intellectual
Property Collateral may have become abandoned, placed in the public domain,
invalid or unenforceable, or of any adverse determination or development
regarding such Grantor's ownership of any of the Intellectual
22
Property Collateral or its right to register the same or to keep and maintain
and enforce the same, or (ii) of any adverse determination or the institution of
any proceeding (including, without limitation, the institution of any proceeding
in the U.S. Patent and Trademark Office or any court) regarding any item of the
Intellectual Property Collateral.
(c) In the event that any Grantor has knowledge that any item of
the Intellectual Property Collateral is being infringed or misappropriated by a
third party, such Grantor shall (i) take such actions, at its expense, as such
Grantor deems reasonable and appropriate under the circumstances to protect or
enforce such Intellectual Property Collateral and (ii) if such Intellectual
Property Collateral is of material economic value and such infringement or
misappropriation could reasonably be expected to have a Material Adverse Effect,
promptly notify the Collateral Agent after such Grantor learns thereof and take
such actions, at its expense, as such Grantor deems reasonable and appropriate
under the circumstances, which may include, without limitation, suing for
infringement or misappropriation and for an injunction against such infringement
or misappropriation.
(d) Except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, (i) each Grantor shall
use proper statutory notice in connection with its use of each material item of
its Intellectual Property Collateral and (ii) no Grantor shall do or permit any
act or knowingly omit to do any act whereby any of its material Intellectual
Property Collateral may lapse or become invalid or unenforceable or placed in
the public domain.
(e) Each Grantor shall take all steps which it reasonably deems
appropriate under the circumstances to preserve and protect each item of its
Intellectual Property Collateral.
(f) With respect to its Intellectual Property Collateral, each
Grantor agrees to execute or otherwise authenticate an agreement, in
substantially the form set forth in Exhibit C hereto or otherwise in form and
substance satisfactory to the Collateral Agent (an "INTELLECTUAL PROPERTY
SECURITY AGREEMENT"), for recording the security interest granted hereunder to
the Collateral Agent in such Intellectual Property Collateral with the U.S.
Patent and Trademark Office, the U.S. Copyright Office and any other
governmental authorities necessary to perfect the security interest hereunder in
such Intellectual Property Collateral.
(g) Each Grantor agrees that should it obtain an ownership
interest in any material property of the type set forth in Section 1(g) that is
not on the date hereof a part of the Intellectual Property Collateral
("AFTER-ACQUIRED INTELLECTUAL PROPERTY") (i) the provisions of this Agreement
shall automatically apply thereto, and (ii) any such After-Acquired Intellectual
Property and, in the case of trademarks, the goodwill symbolized thereby, shall
automatically become part of the Intellectual Property Collateral subject to the
terms and conditions of this Agreement with respect thereto. Within 30 days
after the end of each fiscal year of Holdings, each Grantor shall give written
notice to the Collateral Agent identifying the After-Acquired Intellectual
Property acquired during such fiscal year (other than After-Acquired
Intellectual Property acquired from third parties in the ordinary course of
business that is not material to the business of the Loan Parties), and such
Grantor shall execute and deliver to the Collateral Agent with such written
notice, or otherwise authenticate, an agreement substantially in the form of
Exhibit D hereto or otherwise in form and substance satisfactory to the
Collateral Agent (an "IP
23
SECURITY AGREEMENT SUPPLEMENT") covering such After-Acquired Intellectual
Property which IP Security Agreement Supplement shall be recorded, if reasonably
deemed necessary by the Collateral Agent, with the U.S. Patent and Trademark
Office, the U.S. Copyright Office and any other governmental authorities
necessary to perfect the security interest hereunder in such After-Acquired
Intellectual Property.
Section 15. Voting Rights; Dividends; Etc. (a) So long as no Event
of Default shall have occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Security Collateral of such
Grantor or any part thereof for any purpose; provided however, that such
Grantor will not exercise or refrain from exercising any such right if
such action would have a material adverse effect on the value of the
Security Collateral or any material part thereof.
(ii) Each Grantor shall be entitled to receive and retain any and
all dividends, interest and other distributions paid in respect of the
Security Collateral of such Grantor if and to the extent that the payment
thereof is not otherwise prohibited by the terms of the Loan Documents;
provided, however, that, except with respect to transactions between and
among Loan Parties but subject to the requirements of the Loan Documents
with respect to proceeds of Dispositions, any and all
(A) dividends, interest and other distributions paid or
payable other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in respect
of, or in exchange for, any Security Collateral,
(B) dividends and other distributions paid or payable in
cash in respect of any Security Collateral in connection with a
partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in-surplus and
(C) cash paid, payable or otherwise distributed in respect
of principal of, or in redemption of, or in exchange for, any
Security Collateral
shall be, and shall be forthwith delivered to the Collateral Agent to hold
as, Security Collateral and shall, if received by such Grantor, be
received in trust for the benefit of the Collateral Agent, be segregated
from the other property or funds of such Grantor and be forthwith
delivered to the Collateral Agent as Security Collateral in the same form
as so received (with any necessary indorsement).
(iii) The Collateral Agent will execute and deliver (or cause to be
executed and delivered) to each Grantor all such proxies and other
instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default:
24
(i) Except with respect to transactions between and among Loan
Parties that are not by the terms of the Credit Agreement prohibited from
being consummated after the occurrence of an Event of Default, all rights
of each Grantor (x) to exercise or refrain from exercising the voting and
other consensual rights that it would otherwise be entitled to exercise
pursuant to Section 15(a)(i) shall, upon notice to such Grantor by the
Collateral Agent, cease and (y) to receive the dividends, interest and
other distributions that it would otherwise be authorized to receive and
retain pursuant to Section 15(a)(ii) shall automatically cease, and all
such rights shall thereupon become vested in the Collateral Agent, which
shall thereupon have the sole right to exercise or refrain from exercising
such voting and other consensual rights and to receive and hold as
Security Collateral such dividends, interest and other distributions.
(ii) All dividends, interest and other distributions that are
received by any Grantor contrary to the provisions of paragraph (i) of
this Section 15(b) shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of such Grantor and
shall be forthwith paid over to the Collateral Agent as Security
Collateral in the same form as so received (with any necessary
indorsement).
(iii) The Collateral Agent shall be authorized to send to each
Securities Intermediary or Commodity Intermediary as defined in and under
any Security Control Agreement a Notice of Exclusive Control as defined in
and under such Security Control Agreement.
Section 16. As to Letter-of-Credit Rights. Each Grantor, by granting
a security interest in its Receivables consisting of letter-of-credit rights to
the Collateral Agent, intends to (and hereby does) assign to the Collateral
Agent its rights (including its contingent rights) to the proceeds of all
Related Contracts consisting of letters of credit of which it is or hereafter
becomes a beneficiary or assignee. Each Grantor will promptly use its
commercially reasonable efforts to cause the issuer of each letter of credit
with a face amount in excess of $100,000 and each nominated person (if any) with
respect thereto to consent to such assignment of the proceeds thereof in
substantially the form of the Consent to Assignment of Letter of Credit Rights
attached hereto as Exhibit E or otherwise in form and substance satisfactory to
the Collateral Agent and deliver written evidence of such consent to the
Collateral Agent.
Section 17. Transfers and Other Liens; Additional Shares. (a) Each
Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or
grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, permitted under the terms of the Credit Agreement, or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral of such
Grantor except for the pledge, assignment and security interest created under
this Agreement and Liens permitted to attach to such Collateral under Section
7.01 of the Credit Agreement.
(b) Each Grantor agrees that it will (i) cause each Subsidiary
that is an issuer of the Pledged Equity pledged by such Grantor not to issue any
Equity Interests or other securities in addition to or in substitution for the
Pledged Equity issued by such issuer, except to such Grantor, and (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly)
25
thereof, any and all additional Equity Interests or other securities, subject to
the limitation set forth in Section 1(d)(iii).
Section 18. Collateral Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Collateral Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the Collateral
Agent's discretion, upon the occurrence and during the continuance of an Event
of Default, to take any action and to execute any instrument that the Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Collateral Agent,
(b) to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral,
(c) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a) or
(b) above, and
(d) to file any claims or take any action or institute any
proceedings that the Collateral Agent may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce compliance
with the terms and conditions of any Assigned Agreement or the rights of
the Collateral Agent with respect to any of the Collateral.
Section 19. Collateral Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Collateral Agent may, as the
Collateral Agent deems necessary to protect the security interest granted
hereunder in the Collateral or to protect the value thereof, but without any
obligation to do so and without notice, itself perform, or cause performance of,
such agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by such Grantor under the Loan Documents.
Section 20. The Collateral Agent's Duties. (a) The powers conferred
on the Collateral Agent hereunder are solely to protect the Secured Parties'
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Collateral
Agent 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 any Secured Party 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. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property.
(b) Anything contained herein to the contrary notwithstanding, the
Collateral Agent may from time to time, when the Collateral Agent deems it to be
necessary, appoint one or more subagents (each a "SUBAGENT") for the Collateral
Agent hereunder with respect to all or any
26
part of the Collateral (and shall notify the Borrower of such appointment;
provided, that the failure to so notify the Borrower shall not affect the
provisions of this Section 20(b)). In the event that the Collateral Agent so
appoints any Subagent with respect to any Collateral, (i) the assignment and
pledge of such Collateral and the security interest granted in such Collateral
by each Grantor hereunder shall be deemed for purposes of this Security
Agreement to have been made to such Subagent, in addition to the Collateral
Agent, for the ratable benefit of the Secured Parties, as security for the
Secured Obligations of such Grantor, (ii) such Subagent shall automatically be
vested, in addition to the Collateral Agent, with all rights, powers,
privileges, interests, obligations and remedies of the Collateral Agent
hereunder with respect to such Collateral, and (iii) the term "Collateral
Agent," when used herein in relation to any rights, powers, privileges,
interests, obligations and remedies of the Collateral Agent with respect to such
Collateral, shall include such Subagent; provided, however, that no such
Subagent shall be authorized to take any action with respect to any such
Collateral unless and except to the extent expressly authorized in writing by
the Collateral Agent.
Section 21. Remedies. If any Event of Default shall have occurred
and be continuing and the Administrative Agent shall have so instructed the
Collateral Agent:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party upon default under the UCC (whether or not the UCC applies to the
affected Collateral) and also may: (i) require each Grantor to, and each
Grantor hereby agrees that it will at its expense and upon request of the
Collateral Agent forthwith, assemble all or part of the Collateral as
directed by the Collateral Agent and make it available to the Collateral
Agent at a place and time to be designated by the Collateral Agent that is
reasonably convenient to both parties; (ii) 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 Collateral Agent's
offices or elsewhere, for cash, on credit or for future delivery, and upon
such other terms as the Collateral Agent may deem commercially reasonable;
(iii) occupy any premises owned or leased by any of the Grantors where the
Collateral or any part thereof is assembled or located for a reasonable
period in order to effectuate its rights and remedies hereunder or under
law, without obligation to such Grantor in respect of such occupation; and
(iv) exercise any and all rights and remedies of any of the Grantors under
or in connection with the Collateral, or otherwise in respect of the
Collateral, including, without limitation, (A) any and all rights of such
Grantor to demand or otherwise require payment of any amount under, or
performance of any provision of, the Assigned Agreements, the Receivables,
the Related Contracts and the other Collateral, (B) withdraw, or cause or
direct the withdrawal, of all funds with respect to the Account Collateral
and (C) exercise all other rights and remedies with respect to the
Assigned Agreements, the Receivables, the Related Contracts and the other
Collateral, including, without limitation, those set forth in Section
9-607 of the UCC. Each Grantor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to such 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. The Collateral
Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Collateral Agent may adjourn any
public or private sale from time to time by announcement at the time and
place fixed
27
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) Any cash held by or on behalf of the Collateral Agent and all
cash proceeds received by or on behalf of the Collateral Agent in respect
of any sale of, collection from, or other realization upon all or any part
of the Collateral may, in the discretion of the Collateral Agent, be held
by the Collateral Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Collateral
Agent pursuant to the Loan Documents) in whole or in part by the
Collateral Agent for the ratable benefit of the Secured Parties against,
all or any part of the Secured Obligations, in the following manner:
(i) first, paid to the Agents for any amounts then owing to
the Agents pursuant to Section 8.04 of the Credit Agreement or
otherwise under the Loan Documents, ratably in accordance with such
respective amounts then owing to the Agents; and
(ii) second, ratably (A) paid to the Lenders and the Hedge
Banks, respectively, for any amounts then owing to them, in their
capacities as such, under the Loan Documents ratably in accordance
with such respective amounts then owing to such Lenders and the
Hedge Banks, provided that, for purposes of this Section 21, the
amount owing to any such Hedge Bank pursuant to any Secured Hedge
Agreement to which it is a party (other than any amount therefore
accrued and unpaid) shall be deemed to be equal to the Agreement
Value therefor and (B) deposited as Collateral in the L/C Collateral
Account up to an amount equal to 105% of the aggregate Available
Amount of all outstanding Letters of Credit, provided that in the
event that any such Letter of Credit is drawn, the Collateral Agent
shall pay to the Issuing Bank that issued such Letter of Credit the
amount held in the L/C Collateral Account in respect of such Letter
of Credit, provided further that, to the extent that any such Letter
of Credit shall expire or terminate undrawn and as a result thereof
the amount of the Collateral in the L/C Collateral Account shall
exceed 105% of the aggregate Available Amount of all then
outstanding Letters of Credit, such excess amount of such Collateral
shall be applied in accordance with the remaining order of priority
set out in this Section 21(b).
Any surplus of such cash or cash proceeds held by or on the behalf of the
Collateral Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the applicable Grantor or to whomsoever
may be lawfully entitled to receive such surplus.
(c) All payments received by any Grantor under or in connection
with any Assigned Agreement or otherwise in respect of the Collateral
shall be received in trust for the benefit of the Collateral Agent, shall
be segregated from other funds of such Grantor and shall be forthwith paid
over to the Collateral Agent in the same form as so received (with any
necessary indorsement).
28
(d) The Collateral Agent may, without notice to any Grantor except
as required by law and at any time or from time to time, charge, set-off
and otherwise apply all or any part of the Secured Obligations against any
funds held with respect to the Account Collateral or in any other deposit
account.
(e) In the event of any sale or other disposition of any of the
Intellectual Property Collateral of any Grantor, the goodwill symbolized
by any Trademarks subject to such sale or other disposition shall be
included therein, and such Grantor shall supply to the Collateral Agent or
its designee such Grantor's written know-how and written expertise, and
documents relating to any Intellectual Property Collateral subject to such
sale or other disposition, and such Grantor's customer lists and other
records and documents relating to such Intellectual Property Collateral
and to the manufacture, distribution, advertising and sale of products and
services of such Grantor.
(f) After the cure or waiver of all Events of Default theretofore
existing, upon request by the Borrower and at the Borrower's expense, the
Collateral Agent will deliver to the Borrower appropriate evidence of
revocation of any notice previously delivered to a third party relating to
the Collateral Agent's exercise of its rights over the Collateral.
Section 22. Amendments; Waivers; Additional Grantors; Supplements to
Schedules, Etc. (a) No amendment or waiver of any provision of this Agreement,
and no consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Collateral
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part of
any party to this Agreement to exercise, and no delay in exercising any right
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right.
(b) Upon the execution and delivery, or authentication, by any
Person of a security agreement supplement in substantially the form of Exhibit A
hereto (each a "SECURITY AGREEMENT SUPPLEMENT"), (i) such Person shall be
referred to as an "ADDITIONAL GRANTOR" and shall be and become a Grantor
hereunder, and each reference in this Agreement and the other Loan Documents to
"Grantor" shall also mean and be a reference to such Additional Grantor, and
each reference in this Agreement and the other Loan Documents to "Collateral"
shall also mean and be a reference to the Collateral of such Additional Grantor,
and (ii) the supplemental schedules I-X attached to each Security Agreement
Supplement shall be incorporated into and become a part of and supplement
Schedules I-X, respectively, hereto, and the Collateral Agent may attach such
supplemental schedules to such Schedules; and each reference to such Schedules
shall mean and be a reference to such Schedules as supplemented pursuant to each
Security Agreement Supplement.
(c) Upon the execution and delivery by any Grantor of a Security
Agreement Supplement with appropriate modifications to reflect such Grantor's
status as an existing Grantor, any supplemental schedules to such Security
Agreement Supplement shall be incorporated into and become a part of and
supplement the corresponding schedules to this Agreement, and the Collateral
Agent may attach such supplemental schedules to such Schedules; and each
reference to such Schedules shall mean and be a reference to such Schedules as
29
supplemented pursuant to such Security Agreement Supplement; provided that this
clause (c) shall not apply to Schedule IV.
Section 23. Notices, Etc. (a) Except in the case of notices and
other communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopier as
follows, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:
(i) if to the Borrower or the Collateral Agent, to the
address, telecopier number, electronic mail address or telephone
number specified for such Person in the Credit Agreement; and
(ii) if to Holdings or any other Grantor, to the address,
telecopier number, electronic mail address or telephone number
specified as such Grantor's chief executive office on Schedule I
hereto.
Notices sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received;
notices sent by telecopier shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next business day
for the recipient). Notices delivered through electronic communications to the
extent provided in subsection (b) below shall be effective as provided in such
subsection (b).
(b) Electronic Communications. The Collateral Agent or any Grantor
may, in its discretion, agree to accept notices and other communications
to it hereunder by electronic communications pursuant to procedures
approved by it, provided that approval of such procedures may be limited
to particular notices or communications.
Unless the Collateral Agent otherwise prescribes, notices and other
communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient.
Section 24. Continuing Security Interest; Assignments under the
Credit Agreement. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the latest of
(i) the payment in full in cash of the Secured Obligations, (ii) the Maturity
Date and (iii) the termination or expiration of all Letters of Credit and all
Secured Hedge Agreements, (b) be binding upon each Grantor, its successors and
assigns and (c) inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Secured Parties and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Lender may assign or otherwise transfer
30
all or any portion of its rights and obligations under the Credit Agreement
(including, without limitation, all or any portion of its Commitments, the Loans
owing to it and the Note or Notes, if any, held by it) subject to compliance
with Section 10.06 of the Credit Agreement, and such permitted assignee or
transferee shall thereupon become vested with all the benefits in respect
thereof granted to such Lender herein or otherwise, in each case as provided in
Section 10.06 of the Credit Agreement.
Section 25. Release; Termination. (a) Upon any sale, lease, transfer
or other Disposition of any item of Collateral of any Grantor in accordance with
the terms of the Loan Documents (other than sales of Inventory in the ordinary
course of business as to which the assignment and security interest created
hereunder shall be automatically released), (i) (x) if the value of the assets
so disposed of in any single transaction or series of related transactions does
not exceed $10,000,000 or (y) if the value of assets so Disposed of in any
transaction or series of related transactions exceeds $10,000,000 and the
Borrower notifies the Collateral Agent at least five Business Days in advance of
such proposed Disposition, then in each case with respect to clauses (x) and (y)
such item of Collateral shall be automatically released from the assignment and
security interest created under this Agreement upon consummation of such
Disposition and (ii) if the value of assets so Disposed of in any transaction or
series of related transactions exceeds $10,000,000 and the Borrower does not
notify the Collateral Agent at least five Business Days in advance of such
Disposition, then such item shall not be released from the assignment and
security interest created under this Agreement until such time as the Collateral
Agent shall have executed and delivered to such Grantor the release referred to
in the next succeeding sentence. The Collateral Agent agrees to execute and
deliver (at such Grantor's expense) such documents as such Grantor shall
reasonably request to evidence the release of an item of Collateral from the
assignment and security interest granted hereby to the extent that (A) such
Grantor shall have delivered to the Collateral Agent a written request for
release describing the item of Collateral and the terms of the sale, lease,
transfer or other disposition in reasonable detail, including, without
limitation, the price thereof and an estimate of any expenses in connection
therewith, together with a form of release for execution by the Collateral Agent
and a certificate of such Grantor to the effect that the transaction is in
compliance with the Loan Documents and as to such other matters as the
Collateral Agent may request and (B) the proceeds of any such sale, lease,
transfer or other disposition required to be applied, or any payment to be made
in connection therewith, in accordance with Section 2.04 of the Credit Agreement
shall, if and to the extent so required as of the date of such certificate, have
been paid or made to, or in accordance with the instructions of, the Collateral
Agent when and as required under Section 2.04 of the Credit Agreement. Each
Grantor agrees that it will notify the Collateral Agent within two Business Days
after any Disposition by such Grantor of a type referred to in subclause (x) of
clause (i) above involving assets with a fair market value of $1,000,000 or
more.
(b) Upon the latest of (i) the payment in full in cash of the
Secured Obligations, (ii) the Maturity Date and (iii) the termination or
expiration of all Letters of Credit and all Secured Hedge Agreements, the pledge
and security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Grantor. Upon any such termination,
the Collateral Agent will, at the applicable Grantor's expense, execute and
deliver to such Grantor such documents as such Grantor shall reasonably request
to evidence such termination and reversion.
31
Section 26. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of an original
executed counterpart of this Agreement.
32
Section 27. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
CRICKET COMMUNICATIONS, INC.
Address for Notices:
10307 Pacific Center Court By: /s/ S. Douglas Hutcheson
San Diego, CA 92121 Name: S. Douglas Hutcheson
Title: Chief Financial Officer
Address for Notices: LEAP WIRELESS INTERNATIONAL, INC.
TELEPHONE ENTERTAINMENT NETWORK, INC.
10307 Pacific Center Court CHASETEL LICENSEE CORP.
San Diego, CA 92121 CRICKET LICENSEE (ALBANY), INC.
CRICKET LICENSEE (COLUMBUS), INC.
CRICKET LICENSEE (DENVER) INC.
CRICKET LICENSEE (LAKELAND) INC.
CRICKET LICENSEE (MACON), INC.
CRICKET LICENSEE (NORTH CAROLINA) INC.
CRICKET LICENSEE (PITTSBURGH) INC.
CRICKET LICENSEE (REAUCTION), INC.
CRICKET LICENSEE I, INC.
CRICKET LICENSEE II, INC.
CRICKET LICENSEE III, INC.
CRICKET LICENSEE IV, INC.
CRICKET LICENSEE V, INC.
CRICKET LICENSEE VI, INC.
CRICKET LICENSEE VII, INC.
CRICKET LICENSEE VIII, INC.
CRICKET LICENSEE IX, INC.
CRICKET LICENSEE X, INC.
CRICKET LICENSEE XII, INC.
CRICKET LICENSEE XIII, INC.
CRICKET LICENSEE XIV, INC.
CRICKET LICENSEE XV, INC.
CRICKET LICENSEE XVI, INC.
CRICKET LICENSEE XVII, INC.
CRICKET LICENSEE XVIII, INC.
CRICKET LICENSEE XIX, INC.
CRICKET LICENSEE XX, INC.
CRICKET HOLDINGS DAYTON, INC.
MCG PCS LICENSEE CORPORATION, INC.
BACKWIRE.COM, INC.
33
CHASETEL REAL ESTATE HOLDING COMPANY, INC.
CRICKET ALABAMA PROPERTY COMPANY
CRICKET ARIZONA PROPERTY COMPANY
CRICKET ARKANSAS PROPERTY COMPANY
CRICKET CALIFORNIA PROPERTY COMPANY
CRICKET COLORADO PROPERTY COMPANY
CRICKET FLORIDA PROPERTY COMPANY
CRICKET GEORGIA PROPERTY COMPANY, INC.
CRICKET IDAHO PROPERTY COMPANY
CRICKET ILLINOIS PROPERTY COMPANY
CRICKET INDIANA PROPERTY COMPANY
CRICKET KANSAS PROPERTY COMPANY
CRICKET KENTUCKY PROPERTY COMPANY
CRICKET MICHIGAN PROPERTY COMPANY
CRICKET MINNESOTA PROPERTY COMPANY
CRICKET MISSISSIPPI PROPERTY COMPANY
CRICKET NEBRASKA PROPERTY COMPANY
CRICKET NEVADA PROPERTY COMPANY
CRICKET NEW MEXICO PROPERTY COMPANY
CRICKET NEW YORK PROPERTY COMPANY, INC.
CRICKET NORTH CAROLINA PROPERTY COMPANY
CRICKET OHIO PROPERTY COMPANY
CRICKET OKLAHOMA PROPERTY COMPANY
CRICKET OREGON PROPERTY COMPANY
CRICKET PENNSYLVANIA PROPERTY COMPANY
CRICKET TEXAS PROPERTY COMPANY
CRICKET UTAH PROPERTY COMPANY
CRICKET WASHINGTON PROPERTY COMPANY
CRICKET WISCONSIN PROPERTY COMPANY
LEAP PCS MEXICO, INC.
By: /s/ S. Douglas Hutcheson
Name: S. Douglas Hutcheson
Title: Chief Financial Officer
34
EXHIBIT A TO THE
SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
[Date of Security Agreement Supplement]
___________________________________,
as the Collateral Agent for the
Secured Parties referred to in the
Credit Agreement referred to below
___________________________________
___________________________________
Attn: ___________________
[Name of Borrower]
Ladies and Gentlemen:
Reference is made to (i) the Credit Agreement dated as of January
10, 2005 (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT"), among Cricket Communications, Inc.,
a Delaware corporation, as the Borrower, Leap Wireless International Inc., the
Lenders party thereto, Bank of America, N.A., as administrative agent (together
with any successor administrative agent appointed pursuant to Article IX of the
Credit Agreement, the "ADMINISTRATIVE AGENT"), and _______________, as
administrative agent for the Lenders, and (ii) the Security Agreement dated
January 10, 2005 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "SECURITY AGREEMENT") made by the Grantors from
time to time party thereto in favor of the Bank of America, N.A., as collateral
agent (together with any successor collateral agent appointed pursuant to
Article IX of the Credit Agreement, the "COLLATERAL AGENT") for the Secured
Parties. Terms defined in the Credit Agreement or the Security Agreement and not
otherwise defined herein are used herein as defined in the Credit Agreement or
the Security Agreement.
SECTION 1. Grant of Security. The undersigned hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in, all of its right, title and interest in and to all of the
Collateral of the undersigned, whether now owned or hereafter acquired by the
undersigned, wherever located and whether now or hereafter existing or arising,
including, without limitation, the property and assets of the undersigned set
forth on the attached supplemental schedules to the Schedules to the Security
Agreement.
SECTION 2. Security for Obligations. The grant of a security
interest in, the Collateral by the undersigned under this Security Agreement
Supplement and the Security Agreement secures the payment of all Obligations of
the undersigned now or hereafter existing under or in respect of the Loan
Documents, whether direct or indirect, absolute or contingent,
2
and whether for principal, reimbursement obligations, interest, premiums,
penalties, fees, indemnifications, contract causes of action, costs, expenses or
otherwise.
SECTION 3. Supplements to Security Agreement Schedules. The
undersigned has attached hereto supplemental Schedules I through X to Schedules
I through X, respectively, to the Security Agreement, and the undersigned hereby
certifies, as of the date first above written, that such supplemental schedules
have been prepared by the undersigned in substantially the form of the
equivalent Schedules to the Security Agreement and are complete and correct in
all material respects.
SECTION 4. Representations and Warranties. The undersigned hereby
makes each representation and warranty set forth in Section 9 of the Security
Agreement (as supplemented by the attached supplemental schedules) to the same
extent as each other Grantor.
SECTION 5. Obligations Under the Security Agreement. The undersigned
hereby agrees, as of the date first above written, to be bound as a Grantor by
all of the terms and provisions of the Security Agreement to the same extent as
each of the other Grantors. The undersigned further agrees, as of the date first
above written, that each reference in the Security Agreement to an "Additional
Grantor" or a "Grantor" shall also mean and be a reference to the undersigned.
SECTION 6. Governing Law. This Security Agreement Supplement shall
be governed by, and construed in accordance with, the laws of the State of New
York.
Very truly yours,
[NAME OF ADDITIONAL GRANTOR]
By ____________________________________
Title:
Address for notices:
_____________________________
_____________________________
_____________________________
EXHIBIT B TO THE
SECURITY AGREEMENT
FORM OF CONSENT AND AGREEMENT
The undersigned hereby (a) acknowledges notice of, and consents to
the terms and provisions of, the Security Agreement dated January 10, 2005 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "SECURITY AGREEMENT", the terms defined therein being used herein as
therein defined) from ____________________ (the "GRANTOR") and certain other
grantors from time to time party thereto to Bank of America, N.A., as Collateral
Agent (the "COLLATERAL AGENT") for the Secured Parties referred to therein, (b)
consents in all respects to the pledge and assignment to the Collateral Agent of
all of the Grantor's right, title and interest in, to and under the Assigned
Agreement (as defined below) pursuant to the Security Agreement, (c)
acknowledges that the Grantor has provided it with notice of the right of the
Collateral Agent in the exercise of its rights and remedies under the Security
Agreement to make all demands, give all notices, take all actions and exercise
all rights of the Grantor under the Assigned Agreement, and (d) agrees with the
Collateral Agent that:
(1) A true copy of the agreement between the undersigned and the
Grantor dated ____________, ____ (the "ASSIGNED AGREEMENT"), including,
without limitation, all amendments, modifications, restatements and
supplements is attached hereto as Schedule 1. The Assigned Agreement is in
full force and effect, and the undersigned is not aware of any default
under the Assigned Agreement or any event that would give any party the
right to terminate or rescind the Assigned Agreement. No prepayments have
been made of any amounts to become due under the Assigned Agreement.
(2) The undersigned will make all payments to be made by it under
or in connection with the Assigned Agreement directly to an Other Deposit
Account or otherwise in accordance with the instructions of the Collateral
Agent.
(3) All payments referred to in paragraph 2 above shall be made by
the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and the
undersigned will not seek to recover from any Secured Party for any reason
any such payment once made.
(4) The Collateral Agent or its designee shall be entitled to
exercise any and all rights and remedies of the Grantor under the Assigned
Agreement in accordance with the terms of the Security Agreement, and the
undersigned shall comply in all respects with such exercise.
(5) The undersigned will not, without the prior written consent of
the Collateral Agent, (i) cancel or terminate the Assigned Agreement or
consent to or accept any cancellation or termination thereof, or (ii)
amend, amend and restate, supplement or otherwise modify the Assigned
Agreement, except, in each case, to the extent otherwise permitted under
the Credit Agreement referred to in the Security Agreement.
(6) In the event of a default by the Grantor in the performance of
any of its obligations under the Assigned Agreement, or upon the
occurrence or non-occurrence of
2
any event or condition under the Assigned Agreement which would
immediately or with the passage of any applicable grace period or the
giving of notice, or both, enable the undersigned to terminate or suspend
its obligations under the Assigned Agreement, the undersigned shall not
terminate the Assigned Agreement until it first gives the Collateral Agent
written notice of the default and permits the Collateral Agent to cure the
default within a period of [30] [60] days after the later of (i) notice of
default having been given to the Collateral Agent by the undersigned and
(ii) the expiration of the applicable cure period provided in the Assigned
Agreement for the Grantor to cure the default.
(7) The undersigned shall deliver to the Collateral Agent,
concurrently with the delivery thereof to the Grantor, a copy of each
notice, request or demand given by the undersigned pursuant to the
Assigned Agreement.
(8) Except as specifically provided in this Consent and Agreement,
neither the Collateral Agent nor any other Secured Party shall have any
liability or obligation under the Assigned Agreement as a result of this
Consent and Agreement, the Security Agreement or otherwise.
(9) Upon the enforcement of the Security Agreement by the
Collateral Agent and the transfer of the Assigned Agreement to a
transferee, the undersigned will [recognize the transferee] [not
unreasonably withhold its consent to the recognition of the transferee] as
the counterparty to the Assigned Agreement in the place and stead of the
Grantor.
This Consent and Agreement shall be binding upon the undersigned and
its successors and assigns, and shall inure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Secured
Parties and their successors, transferees and assigns. This Consent and
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
IN WITNESS WHEREOF, the undersigned has duly executed this Consent
and Agreement as of the date set opposite its name below.
Dated: _______________, ____ [NAME OF OBLIGOR]
By_________________________
Title:
EXHIBIT C TO THE
SECURITY AGREEMENT
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended, amended
and restated, supplemented or otherwise modified from time to time, the "IP
SECURITY AGREEMENT") dated ________, ____, is made by the Persons listed on the
signature pages hereof (collectively, the "GRANTORS") in favor of
____________________ (" "), as collateral agent (the "COLLATERAL AGENT") for the
Secured Parties (as defined in the Credit Agreement referred to below).
WHEREAS, Cricket Communications, Inc., a Delaware corporation, has
entered into a Credit Agreement dated as of January 10, 2005 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), with Bank of America, N.A. ("BANK OF AMERICA"), as
Administrative Agent, Bank of America, as Collateral Agent, and the Lenders
party thereto. Terms defined in the Credit Agreement and not otherwise defined
herein are used herein as defined in the Credit Agreement.
WHEREAS, as a condition precedent to the making of Loans and the
issuance of Letters of Credit by the Lenders under the Credit Agreement and the
entry into Secured Hedge Agreements by the Hedge Banks from time to time, each
Grantor has executed and delivered that certain Security Agreement dated January
10, 2005 made by the Grantors to the Collateral Agent (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "SECURITY
AGREEMENT").
WHEREAS, under the terms of the Security Agreement, the Grantors
have granted to the Collateral Agent, for the ratable benefit of the Secured
Parties, a security interest in, among other property, certain intellectual
property of the Grantors, and have agreed as a condition thereof to execute this
IP Security Agreement for recording with the U.S. Patent and Trademark Office,
the United States Copyright Office and other governmental authorities.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor agrees as follows:
SECTION 1. Grant of Security. Each Grantor hereby grants to the
Collateral Agent for the ratable benefit of the Secured Parties a security
interest in all of such Grantor's right, title and interest in and to the
following (the "COLLATERAL"):
(i) the patents and patent applications set forth in
Schedule A hereto (the "PATENTS");
(ii) the trademark and service mark registrations and
applications set forth in Schedule B hereto (provided that no
security interest shall be granted in United States intent-to-use
trademark applications to the extent that, and solely during the
period in which, the grant of a security interest therein would
impair the validity or enforceability of such intent-to-use
trademark applications under
2
applicable federal law), together with the goodwill symbolized
thereby (the "TRADEMARKS");
(iii) all copyrights, whether registered or unregistered, now
owned or hereafter acquired by such Grantor, including, without
limitation, the copyright registrations and applications and
exclusive copyright licenses set forth in Schedule C hereto (the
"COPYRIGHTS");
(iv) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of
any of the foregoing, all rights in the foregoing provided by
international treaties or conventions, all rights corresponding
thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining
thereto;
(v) any and all claims for damages and injunctive relief for
past, present and future infringement, dilution, misappropriation,
violation, misuse or breach with respect to any of the foregoing,
with the right, but not the obligation, to sue for and collect, or
otherwise recover, such damages; and
(vi) any and all proceeds of, collateral for, income,
royalties and other payments now or hereafter due and payable with
respect to, and supporting obligations relating to, any and all of
the Collateral of or arising from any of the foregoing.
SECTION 2. Security for Obligations. This IP Security Agreement
secures, in the case of each Grantor, the payment of all Obligations of such
Grantor now or hereafter existing under the Loan Documents, whether direct or
indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, fees, premiums, penalties, indemnifications, contract
causes of action, costs, expenses or otherwise (all such Obligations being the
"SECURED OBLIGATIONS").
SECTION 3. Recordation. Each Grantor authorizes and requests that
the Register of Copyrights, the Commissioner for Patents and the Commissioner
for Trademarks and any other applicable government officer record this IP
Security Agreement.
SECTION 4. Execution in Counterparts. This IP Security Agreement may
be executed in any number of counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same agreement.
SECTION 5. Grants, Rights and Remedies. This IP Security Agreement
has been entered into in conjunction with the provisions of the Security
Agreement. Each Grantor does hereby acknowledge and confirm that the grant of
the security interest hereunder to, and the rights and remedies of, the
Collateral Agent with respect to the Collateral are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated herein by
reference as if fully set forth herein.
SECTION 6. Governing Law. This IP Security Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
3
IN WITNESS WHEREOF, each Grantor has caused this IP Security
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
CRICKET COMMUNICATIONS, INC.
By_______________________________________
Name:
Title:
Address for Notices:
_________________________________________
_________________________________________
_________________________________________
[NAME OF GRANTOR]
By_______________________________________
Name:
Title:
Address for Notices:
_________________________________________
_________________________________________
_________________________________________
[NAME OF GRANTOR]
By_______________________________________
Name:
Title:
Address for Notices:
_________________________________________
_________________________________________
_________________________________________
[ETC.]
EXHIBIT D TO THE
SECURITY AGREEMENt
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT (this "IP
SECURITY AGREEMENT SUPPLEMENT") dated ________, ____, is made by the Person
listed on the signature page hereof (the "GRANTOR") in favor of
__________________ ______________ (" "), as collateral agent (the "COLLATERAL
AGENT") for the Secured Parties (as defined in the Credit Agreement referred to
below).
WHEREAS, Cricket Communications, Inc., a Delaware corporation, has
entered into a Credit Agreement dated as of January 10, 2005 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), with Bank of America, N.A. ("BANK OF AMERICA"), as
Administrative Agent, Bank of America, as Collateral Agent, and the Lenders
party thereto. Terms defined in the Credit Agreement and not otherwise defined
herein are used herein as defined in the Credit Agreement.
WHEREAS, pursuant to the Credit Agreement, the Grantor and certain
other Persons have executed and delivered that certain Security Agreement dated
January 10, 2005 made by the Grantor and such other Persons to the Collateral
Agent (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "SECURITY AGREEMENT") and that certain Intellectual Property
Security Agreement dated January 10, 2005 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "IP SECURITY
AGREEMENT").
WHEREAS, under the terms of the Security Agreement, the Grantor has
granted to the Collateral Agent, for the ratable benefit of the Secured Parties,
a security interest in the Additional Collateral (as defined in Section 1 below)
of the Grantor and has agreed as a condition thereof to execute this IP Security
Agreement Supplement for recording with the U.S. Patent and Trademark Office,
the United States Copyright Office and other governmental authorities.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Grantor agrees as follows:
SECTION 1. Grant of Security. Each Grantor hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in all of such Grantor's right, title and interest in and to the
following (the "COLLATERAL"):
(i) the patents and patent applications set forth in
Schedule A hereto (the "PATENTS");
(ii) the trademark and service mark registrations and
applications set forth in Schedule B hereto (provided that no
security interest shall be granted in United States intent-to-use
trademark applications to the extent that, and solely during the
period in which, the grant of a security interest therein would
impair
2
the validity or enforceability of such intent-to-use trademark
applications under applicable federal law), together with the
goodwill symbolized thereby (the "TRADEMARKS");
(iii) the copyright registrations and applications and
exclusive copyright licenses set forth in Schedule C hereto (the
"COPYRIGHTS");
(iv) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of
any of the foregoing, all rights in the foregoing provided by
international treaties or conventions, all rights corresponding
thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining
thereto;
(v) all any and all claims for damages and injunctive relief
for past, present and future infringement, dilution,
misappropriation, violation, misuse or breach with respect to any of
the foregoing, with the right, but not the obligation, to sue for
and collect, or otherwise recover, such damages; and
(vi) any and all proceeds of, collateral for, income,
royalties and other payments now or hereafter due and payable with
respect to, and supporting obligations relating to, any and all of
the foregoing or arising from any of the foregoing.
SECTION 2. Supplement to Security Agreement. Schedule VI to the
Security Agreement is, effective as of the date hereof, hereby supplemented to
add to such Schedule the Additional Collateral.
SECTION 3. Security for Obligations. This IP Security Agreement
Supplement secures, in the case of each Grantor, the payment of all Obligations
of such Grantor now or hereafter existing under the Loan Documents, whether
direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, fees, premiums, penalties,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations being the "SECURED OBLIGATIONS").
SECTION 4. Recordation. The Grantor authorizes and requests that the
Register of Copyrights, the Commissioner for Patents and the Commissioner for
Trademarks and any other applicable government officer to record this IP
Security Agreement Supplement.
SECTION 5. Grants, Rights and Remedies. This IP Security Agreement
Supplement has been entered into in conjunction with the provisions of the
Security Agreement. The Grantor does hereby acknowledge and confirm that the
grant of the security interest hereunder to, and the rights and remedies of, the
Collateral Agent with respect to the Additional Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated herein by reference as if fully set forth herein.
SECTION 6. Governing Law. This IP Security Agreement Supplement
shall be governed by, and construed in accordance with, the laws of the State of
New York.
3
IN WITNESS WHEREOF, the Grantor has caused this IP Security
Agreement Supplement to be duly executed and delivered by its officer thereunto
duly authorized as of the date first above written.
[NAME OF GRANTOR]
By________________________________
Name:
Title:
Address for Notices:
__________________________________
__________________________________
__________________________________
EXHIBIT E TO THE
SECURITY AGREEMENt
FORM OF CONSENT TO ASSIGNMENT OF LETTER OF CREDIT RIGHTS
To: Bank of America, N.A., as Collateral Agent
[____________________]
[____________________]
[____________________]
[INSERT NAME OF BENEFICIARY], as Beneficiary
[____________________]
[____________________]
[____________________]
We refer to the [INSERT ALL IDENTIFYING INFORMATION WITH RESPECT TO
RELEVANT LETTER OF CREDIT] (as it may be amended, supplemented or otherwise
modified from time to time, the "Letter of Credit")[, a true copy of which is
attached hereto]. The Letter of Credit has been established in favor of [INSERT
NAME OF BENEFICIARY], as beneficiary (the "Beneficiary"), and we are the
[issuing bank (the "Issuing Bank")][nominated person (the "Nominated Person")]
required to give value thereunder pursuant to one [or more] drawing[s] upon the
satisfaction of the conditions stated in the Letter of Credit. The liability of
the [Issuing Bank][Nominated Person] for action or omissions under the Letter of
Credit is governed by the laws of [INSERT RELEVANT JURISDICTION], as chosen by
agreement in the Letter of Credit. [To the knowledge of the undersigned,] the
signatories to this consent letter are the only persons obligated to give value
under the Letter of Credit.
We hereby confirm that there is no term in the Letter of Credit or
other restriction which prohibits, restricts or requires any person's consent to
the Beneficiary's assignment of or creation of a security interest in the rights
to payment or performance under the Letter of Credit. We hereby consent to and
acknowledge the assignment by the Beneficiary of all proceeds of and rights to
payment and performance under the Letter of Credit in favor of Bank of America,
N.A., as collateral agent (the "Collateral Agent") pursuant to the Security
Agreement dated as of January 10, 2005 executed by the Beneficiary and other
parties thereto, as Grantor, in favor of the Collateral Agent, as such agreement
may be amended, amended and restated, supplemented or otherwise modified from
time to time (the "Security Agreement").
2
We hereby agree to pay, irrespective of, and without deduction for,
any counterclaim, defense, recoupment or set-off, all proceeds of the Letter of
Credit that would otherwise be paid to the Beneficiary directly to the
Collateral Agent to the following account:
[____________________]
[____________________]
[____________________]
We hereby confirm and agree that the Letter of Credit is, and shall
continue to be, in full force and effect and is hereby ratified and confirmed in
all respects and that the Collateral Agent shall have no liability or obligation
under or with respect to the Letter of Credit or any document related thereto as
a result of this consent letter, the Security Agreement or otherwise.
This consent letter may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same consent letter. Delivery of an executed
counterpart of a signature page to this consent letter by telecopier shall be
effective as delivery of an original executed counterpart of this consent
letter.
This consent letter shall be governed by, and construed in
accordance with, the laws of the State of New York.
[NAME OF ISSUING BANK]
By: _____________________________
Name:
Title:
[NAME OF NOMINATED PERSON]
By: _____________________________
Name:
Title:
3
The above is acknowledged and agreed to:
[NAME OF GRANTOR/BENEFICIARY]
By_____________________________________
Name:__________________________________
Title:_________________________________
Address for Notices:
_______________________________________
_______________________________________
_______________________________________