EXECUTION COPY
SECURITY AGREEMENT
Dated August 12, 1999
From
THE PERSONS LISTED ON THE SIGNATURE PAGES HEREOF
as Grantors
to
ROYAL BANK OF CANADA
as Collateral Agent
T A B L E O F C O N T E N T S
Section Page
1. Grant of Security..........................................................2
2. Security for Obligations...................................................6
3. Borrower Remains Liable....................................................6
4. Delivery and Control of Security Collateral and Account Collateral.........6
5. Maintaining the Cash Collateral Account and the L/C Cash Collateral
Account....................................................................7
6. Maintaining the Pledged Accounts...........................................8
7. Investing of Amounts in the Cash Collateral Account and the L/C Cash
Collateral Account.........................................................9
8. Release of Amounts.........................................................9
9. Representations and Warranties.............................................9
10. Further Assurances.......................................................11
11. As to Equipment and Inventory............................................12
12. Insurance................................................................13
13. Place of Perfection; Records; Collection of Receivables..................14
14. Voting Rights; Dividends; Etc............................................15
15. As to the Assigned Agreements............................................16
16. Payments Under the Assigned Agreements...................................17
17. Transfers and Other Liens [; Additional Shares]..........................17
18. Collateral Agent Appointed Attorney-in-Fact..............................18
19. Collateral Agent May Perform.............................................18
20. The Collateral Agent's Duties............................................18
21. Remedies.................................................................19
Section Page
22. Registration Rights......................................................20
23. Indemnity and Expenses...................................................21
[Section 24. Security Interest Absolute......................................21
[25]. Amendments; Waivers; Etc...............................................22
[26]. Addresses for Notices..................................................22
[27]. Continuing Security Interest; Assignments under the Credit Agreement...23
[28]. Release and Termination................................................23
[29]. The Mortgages..........................................................24
[30]. Governing Law..........................................................24
Schedule I - Pledged Shares [,] [and] Pledged Debt [, Pledged Security
Entitlements and Pledged Commodity Contracts]
Schedule II - Assigned Agreements
Schedule III - Locations of Equipment and Inventory
Schedule IV - Intellectual Property
Schedule V - Pledged Accounts
Schedule VI - Permitted Unpledged Accounts
Exhibit A - Form of Security Agreement Supplement
Exhibit B - Form of Pledged Account Letter
Exhibit C - Form of Consent and Agreement
Exhibit D - Form of Intellectual Property Security Agreement
Exhibit E - Form of Intellectual Property Security Agreement
Supplement
ii
Execution Copy
SECURITY AGREEMENT
SECURITY AGREEMENT dated August 12, 1999 made by the Persons listed on
the signature pages hereof and the Additional Grantors (as defined in Section
23(c)) (such Persons so listed and the Additional Grantors being, collectively,
the "Grantors"), to Royal Bank of Canada, as administrative agent and collateral
agent (the "Collateral Agent") for the Credit Agreement referred to below
PRELIMINARY STATEMENTS.
(1) ICG Equipment, Inc., a Colorado corporation ("ICG Equipment") and
ICG NetAhead, Inc., a Delaware corporation ("ICG NetAhead" and, together with
ICG Equipment, the "Borrowers") have entered into a Credit Agreement dated as of
August 12, 1999 (said Agreement, as it may be hereafter amended, supplemented or
otherwise modified from time to time, being the Credit Agreement) with certain
Lender Parties thereto, Royal Bank of Canada as Administrative Agent and
Collateral Agent, and Morgan Stanley Senior Funding, Inc., as Sole Book-Runner
and Lead Arranger.
(2) Each Grantor is the owner of the shares (the "Pledged Shares") of
stock set forth opposite such Grantor's name on and as otherwise described in
Part I of Schedule I hereto and issued by the corporations named therein and of
the indebtedness (the "Pledged Debt") described in Part II of said Schedule I
and issued by the obligors named therein.
(3) The Borrowers have opened a non-interest bearing cash collateral
account (the "Cash Collateral Account") with ____________________ at its office
at _______________, New York, New York _____, Account No. 277188-9, in the name
of the Borrowers but under the sole control and dominion of the Collateral Agent
and subject to the terms of this Agreement.
(4) The Borrowers have opened a non-interest bearing cash collateral
account (the "L/C Cash Collateral Account") with ____________________ at its
office at _______________, New York, New York _____, Account No. 277187-1, in
the name of the Borrowers but under the sole control and dominion of the
Collateral Agent and subject to the terms of this Agreement.
(5) It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties 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.
(6) Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Loan Documents.
(7) Terms defined in the Credit Agreement and not otherwise defined in
this Agreement are used in this Agreement as defined in the Credit Agreement.
(8) Unless otherwise defined in this Agreement or in the Credit
Agreement, terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. Uniform Commercial Code") are used in
this Agreement as such terms are defined in such Article 8 or 9.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances 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 its benefit and the ratable benefit of the Secured Parties as follows:
Section 1. Grant of Security. Each Grantor hereby assigns and pledges
to the Collateral Agent for its benefit and the ratable benefit of the Secured
Parties, and hereby grants to the Collateral Agent for its benefit and the
ratable benefit of the Secured Parties a security interest in, the following
(collectively, the "Collateral"):
(a) all of such Grantor's right, title and interest, whether now owned
or hereafter acquired, in and to all equipment in all of its forms,
wherever located, now or hereafter existing, all fixtures and all parts
thereof and all accessions thereto (including, but not limited to,
telecommunications equipment) (any and all such equipment, fixtures, parts
and accessions being the "Equipment");
(b) all of such Grantor's right, title and interest, whether now owned
or hereafter acquired, in and to all inventory (including, but not limited
to, all telecommunications equipment and goods and all ancillary equipment
and goods) in all of its forms, wherever located, now or hereafter existing
(including, but not limited to, (i) all raw materials and work in process
therefor, finished goods thereof 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 (any and all
such inventory, accessions, products and documents being the "Inventory");
(c) all of such Grantor's right, title and interest, whether now owned
or hereafter acquired, in and to all accounts, contract rights, chattel
paper, instruments, deposit accounts, general intangibles and other
obligations of any kind, now or hereafter existing, 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 security agreements, leases and other
contracts, agreements and guarantees securing or otherwise relating to any
such accounts, contract rights, chattel paper, instruments, deposit
accounts, general intangibles or obligations (any and all such accounts,
contract rights, chattel paper, instruments, deposit accounts, general
intangibles and obligations, to the extent not referred to in clause (d),
(e), (f) or (g) below, being the "Receivables", and any and all such
leases, security agreements and other contracts, agreements and guarantees
being the "Related Contracts");
(d) all of the following (the "Security Collateral"):
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(i) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, 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
Pledged Shares;
(ii) the Pledged Debt and the instruments evidencing the
Pledged Debt, 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 the
Pledged Debt;
(iii) all additional shares of stock from time to time
acquired by such Grantor in any manner, and the certificates
representing such additional shares, and all dividends, 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;
(iv) all additional indebtedness from time to time owed to
such Grantor and the instruments 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; and
(v) all other investment property (including, without
limitation, all (A) securities, whether certificated or
uncertificated, (B) security entitlements, as defined in Section
8-102(a)(17) of the N.Y. Uniform Commercial Code or, in the case
of any U.S. Treasury book-entry securities, as defined in 31
C.F.R. Section 357.2, or, in the case of any U.S. federal agency
book-entry securities, as defined in the corresponding U.S.
federal regulations governing such book-entry securities, (C)
securities accounts, (D) commodity contracts and (E) commodity
accounts) in which such Grantor has or acquires from time to time
any right, title or interest in any manner, and the certificates
or instruments, if any, representing or evidencing such
investment property, and all dividends, 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;
(e) all of such Grantor's right, title and interest in and to (i) each
of the agreements listed on Schedule II hereto, (ii) each additional
agreement to lease goods of any type to any Person entered into by such
Grantor as lessor thereunder, (iii) all other contracts, agreements and
guarantees securing or otherwise relating to the agreements described in
clauses (i) and (ii) above and (iv) each Hedge Agreement to which such
Grantor is now or may hereafter become a party, in each case as such
agreements may be amended, supplemented or otherwise modified from time to
time (collectively, the "Assigned Agreements"), including, without
limitation, (A) all rights of such Grantor to receive moneys due and to
become due under or pursuant to the Assigned Agreements, (B) all rights of
such Grantor to receive proceeds of any insurance, indemnity, warranty or
guaranty with respect to the Assigned Agreements, (C) claims of such
Grantor for damages arising out of or for breach of or default under the
Assigned Agreements and (D) 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");
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(f) all of the following (collectively, the "Account Collateral"):
(i) the Cash Collateral Account, all funds held therein and all
certificates and instruments, if any, from time to time representing
or evidencing the Cash Collateral Account;
(ii) the L/C Cash Collateral Account, all funds held therein and
all certificates and instruments, if any, from time to time
representing or evidencing the L/C Cash Collateral Account;
(iii) all Pledged Accounts (as hereinafter defined), all funds
held therein and all certificates and instruments, if any, from time
to time representing or evidencing the Pledged Accounts;
(iv) all other deposit accounts of such Grantor, all funds held
therein and all certificates and instruments, if any, from time to
time representing or evidencing such deposit accounts;
(v) all Collateral Investments (as hereinafter defined) from time
to time and all certificates and instruments, if any, from time to
time representing or evidencing the Collateral Investments;
(vi) all notes, certificates of deposit, deposit accounts, checks
and other instruments from time to time hereafter delivered to or
otherwise possessed by the Collateral Agent for or on behalf of such
Grantor in substitution for or in addition to any or all of the then
existing Account Collateral;
(vii) all interest, dividends, 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;
(g) all of such Grantor's right, title and interest, whether now owned
or hereafter acquired, in and to the following (collectively, the
"Intellectual Property Collateral"):
(i) all United States, international and foreign patents, patent
applications and statutory invention registrations, including, without
limitation, the patents and patent applications set forth in Schedule
IV hereto (as such Schedule IV may be supplemented from time to time
by supplements to this Agreement, each such supplement being in
substantially the form of Exhibit E hereto (an "IP Security Agreement
Supplement"), executed and delivered by such Grantor to the Collateral
Agent from time to time), together with all reissues, divisions,
continuations, continuations-in-part, extensions and reexaminations
thereof, all inventions therein, all rights therein provided by
international treaties or conventions and all improvements thereto,
and all other rights of any kind whatsoever of such Grantor accruing
thereunder or pertaining thereto (the "Patents");
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(ii) all trademarks (including, without limitation, service
marks), certification marks, collective marks, trade dress, logos,
domain names, product configurations, trade names, business names,
corporate names and other source identifiers, whether or not
registered, whether currently in use or not, including, without
limitation, all common law rights and registrations and applications
for registration thereof, including, without limitation, the trademark
registrations and trademark applications set forth in Schedule IV
hereto (as such Schedule IV may be supplemented from time to time by
IP Security Agreement Supplements executed and delivered by such
Grantor to the Collateral Agent from time to time), and all other
marks registered in the U.S. Patent and Trademark Office or in any
office or agency of any State or Territory of the United States or any
foreign country (but excluding any United States intent-to-use
trademark application prior to the filing and acceptance of a
Statement of Use or an Amendment to allege use in connection therewith
to the extent that a valid security interest may not be taken in such
an intent-to-use trademark application under applicable law), and all
rights therein provided by international treaties or conventions, all
reissues, extensions and renewals of any of the foregoing, together in
each case with the goodwill of the business connected therewith and
symbolized thereby, and all rights corresponding thereto throughout
the world and all other rights of any kind whatsoever of such Grantor
accruing thereunder or pertaining thereto (the "Trademarks");
(iii) all copyrights, copyright applications, copyright
registrations and like protections in each work of authorship, whether
statutory or common law, whether published or unpublished, any
renewals or extensions thereof, all copyrights of works based on,
incorporated in, derived from, or relating to works covered by such
copyrights, including, without limitation, the copyright registrations
and copyright applications set forth in Schedule IV hereto including,
without limitation, the trademark registrations and trademark
applications set forth in Schedule IV hereto (as such Schedule IV may
be supplemented from time to time by IP Security Agreement Supplements
executed and delivered by such Grantor to the Collateral Agent from
time to time), together with all rights corresponding thereto
throughout the world and all other rights of any kind whatsoever of
such Grantor accruing thereunder or pertaining thereto (the
"Copyrights");
(iv) all confidential and proprietary information, including,
without limitation, know-how, trade secrets, manufacturing and
production processes and techniques, inventions, research and
development information, technical data, financial, marketing and
business data, pricing and cost information, business and marketing
plans and customer and supplier lists and information (the "Trade
Secrets");
(v) 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, and all rights with respect to the
foregoing, together with any and all options, warranties, service
contracts, program services, test rights, maintenance rights,
improvement rights, renewal rights and indemnifications and any
substitutions, replacements, additions or model conversions of any of
the foregoing (the "Computer Software");
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(vi) all license agreements, permits, authorizations and
franchises, whether with respect to the Patents, Trademarks,
Copyrights, Trade Secrets or Computer Software, or with respect to the
patents, trademarks, copyrights, trade secrets, computer software or
other proprietary right of any other Person, including, without
limitation, the license agreements set forth in Schedule IV hereto (as
such Schedule IV may be supplemented from time to time by IP Security
Agreement Supplements executed and delivered by such Grantor to the
Collateral Agent from time to time), and all income, royalties and
other payments now or hereafter due and/or payable with respect
thereto, subject, in each case, to the terms of such license
agreements, permits, authorizations and franchises, including, without
limitation, terms requiring consent to a grant of a security interest
(the "Licenses"); and
(vii) any and all claims for damages for past, present and future
infringement, misappropriation or breach with respect to the Patents,
Trademarks, Copyrights, Trade Secrets, Computer Software or Licenses,
with the right, but not the obligation, to sue for and collect, or
otherwise recover, such damages; and
(h) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in clauses (a) through (g) of this Section 1 and this
clause (h) and, to the extent not otherwise included, all (i) 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
and (ii) cash.
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 including, without limitation, any extensions,
modifications, substitutions, amendments and renewals thereof, whether for
principal, reimbursement obligations, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations being the "Secured Obligations"). Without limiting the
generality of the foregoing, this Agreement secures the payment of all amounts
that constitute part of the Secured Obligations and would be owed by such
Grantor to any Secured Party under the Loan Documents but for the fact that they
are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Grantor.
Section 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Collateral Agent of any
of the rights hereunder shall not release any of the Grantors from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) neither the Collateral Agent nor any 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 the
Collateral Agent or any Secured Party be obligated to perform any of the
obligations or duties of any of the Grantors thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
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Section 4. Delivery and Control of Security Collateral and Account
Collateral. (a) All certificates or instruments representing or evidencing
Security Collateral or Account 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. The Collateral Agent shall have the right, at any time in
its discretion and without prior notice to the Grantors, 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 and Account Collateral, subject only to the revocable
rights specified in Section 13(a). In addition, the Collateral Agent shall have
the right at any time to exchange certificates or instruments representing or
evidencing Security Collateral or Account Collateral for certificates or
instruments of smaller or larger denominations.
(b) With respect to any Security Collateral that constitutes a
security and is not represented or evidenced by a certificate or an instrument,
the applicable Grantor shall cause the issuer thereof to agree in writing 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 agreement to be in form and
substance satisfactory to the Collateral Agent.
(c) With respect to any Security Collateral that constitutes a
security entitlement, the applicable Grantor shall cause the securities
intermediary with respect to such security entitlement either (i) to identify in
its records the Collateral Agent as having such security entitlement against
such securities intermediary or (ii) to agree in writing 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 agreement to be in form and
substance satisfactory to the Collateral Agent.
(d) With respect to any Security Collateral that constitutes a
commodity contract, the applicable Grantor shall cause the commodity
intermediary with respect to such commodity contract to agree in writing with
such Grantor and the Collateral Agent that such commodity intermediary will
apply any value distributed on account of such commodity contract as directed by
the Collateral Agent without further consent of such Grantor, such agreement to
be in form and substance satisfactory to the Collateral Agent.
(e) With respect to any Security Collateral that constitutes a
securities account or a commodity account, the applicable Grantor will, in the
case of a securities account, comply with subsection (c) of this Section 4 with
respect to all security entitlements carried in such securities account and, in
the case of a commodity account, comply with subsection (d) of this Section 4
with respect to all commodity contracts carried in such commodity account.
Section 5. Maintaining the Cash Collateral Account and the L/C Cash
Collateral Account. So long as any Advance shall remain unpaid, any Letter of
Credit shall be outstanding or any Lender Party shall have any Commitment under
the Credit Agreement:
(a) The Borrowers will maintain the Cash Collateral Account and the
L/C Cash Collateral Account with ____________________.
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(b) It shall be a term and condition of each of the Cash Collateral
Account and the L/C Cash Collateral Account, notwithstanding any term or
condition to the contrary in any other agreement relating to the Cash
Collateral Account or the L/C Cash Collateral Account, as the case may be,
and except as otherwise provided by the provisions of Section 20, that no
amount (including interest on Collateral Investments) shall be paid or
released to or for the account of, or withdrawn by or for the account of,
the Grantors or any other Person from the Cash Collateral Account or the
L/C Cash Collateral Account, as the case may be.
The Cash Collateral Account and the L/C Cash Collateral Account shall be subject
to such applicable laws, and such applicable regulations of the Board of
Governors of the Federal Reserve System and of any other appropriate banking or
governmental authority, as may now or hereafter be in effect.
Section 6. Maintaining the Pledged Accounts. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment under the Credit Agreement:
(a) Each Grantor shall maintain blocked deposit accounts ("Pledged
Accounts") only with banks ("Pledged Account Banks") that have entered into
letter agreements in substantially the form of Exhibit B with such Grantor
and the Collateral Agent ("Pledged Letters").
(b) (i) Upon the written direction of the Collateral Agent, each
Grantor shall immediately instruct each Affiliate of such Grantor obligated
at any time to make any payment to such Grantor for any reason (an
"Obligor") to make such payment to a Pledged Account or to the Cash
Collateral Account and shall pay to the Collateral Agent for deposit in the
Cash Collateral Account, at the end of each Business Day, all proceeds of
Collateral.
(ii) After the occurrence and during the continuance of any
Default and at the written direction of the Collateral Agent, each
Grantor shall immediately instruct each Person who is not an Affiliate
of such Grantor obligated at any time to make any payment to such
Grantor for any reason to make such payment to a Pledged Account or to
the Cash Collateral Account and shall pay to the Collateral Agent for
deposit in the Cash Collateral Account, at the end of each Business
Day, all proceeds of Collateral.
(c) Each Grantor shall instruct each Pledged Account Bank to transfer
to the Cash Collateral Account, at the end of each Business Day after such
written direction, in same day funds, an amount equal to the credit balance
of the Pledged Account in such Pledged Account Bank.
(d) Upon any termination of any Pledged Account Letter or other
agreement with respect to the maintenance of a Pledged Account by any
Grantor or any Pledged Account Bank, the applicable Grantor shall
immediately notify (i) the Collateral Agent, and (ii) all Obligors that
were making payments to such Pledged Account to make all future payments to
another Pledged Account or to the Cash Collateral Account. Each Grantor
agrees to terminate any or all Pledged Accounts and Pledged Letters upon
request by the Collateral Agent.
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Section 7. Representations and Warranties. Each of the Grantors
represents and warrants as follows:
(a) All of the Equipment and Inventory are located at the places
specified in Schedule III hereto, as such Schedule III may be amended from
time to time pursuant to Section 9(a). The chief place of business and
chief executive office of such Grantor and the office where such Grantor
keeps its records concerning the Receivables, and any permitted copies of
each Assigned Agreement and any permitted copies of all chattel paper that
evidence Receivables, are located at the address set forth on the signature
pages hereto beneath such Grantor's name. Only one copy of any item of
chattel paper that evidences Receivables has been originally executed by
the parties thereto and such original executed copy has been delivered to
the Collateral Agent by such Grantor. Any copy of any chattel paper
evidencing Receivables of which the Collateral Agent does not have sole
possession has been conspicuously marked with a legend indicating (i) that
such copy is not the original executed copy, (ii) that the original
executed copy is in the possession of the Collateral Agent, (iii) that such
chattel paper is subject to the security interest granted hereby and, (iv)
such other matters as may be specified in writing from time to time by the
Collateral Agent. None of the Receivables or Agreement Collateral is
evidenced by a promissory note or other instrument.
(b) 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 security interest created by this Agreement and
other Liens permitted by the Credit Agreement. No effective financing
statement or other instrument similar in effect covering all or any part of
the Collateral is on file in any recording office, except such as may have
been filed in favor of the Collateral Agent relating to this Agreement.
Such Grantor has the trade names listed on Schedule IV.
(c) Except for possessory interests of landlord and warehousemen, such
Grantor has exclusive possession and control of the Equipment and Inventory
(other than Inventory the subject of an Assigned Agreement).
(d) The Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable. The Pledged Debt has been duly
authorized, authenticated or issued and delivered, is the legal, valid and
binding obligation of the issuers thereof and is not in default.
(e) As of the date hereof, the Pledged Shares constitute the
percentage of the issued and outstanding shares of stock of the issuers
thereof indicated on Schedule I. As of the date hereof, the Pledged Debt is
outstanding in the principal amount indicated on Schedule I.
(f) All of the investment property owned by such Grantor on the date
hereof is listed on Schedule I hereto. The jurisdiction (for purposes of
Section 8-110(e) of the N.Y. Uniform Commercial Code) of the securities
intermediary that maintains the securities account carrying the Pledged
Security Entitlement is ___________.
(g) The Assigned Agreements have been duly authorized, executed and
delivered by all parties thereto, have not been amended or otherwise
9
modified, are in full force and effect and are binding upon and enforceable
against all parties thereto in accordance with their terms. There exists no
default under any Assigned Agreement by any party thereto. Each party to
the Assigned Agreements (other than the applicable Grantor) and each
guarantor of any such party has executed and delivered to such Grantor a
consent, in substantially the form of Exhibit C, to the assignment of the
Agreement Collateral to the Collateral Agent pursuant to this Agreement.
Only one copy of each Assigned Agreement (other than Hedge Agreements) has
been originally executed by the parties thereto and such original executed
copy has been delivered to the Collateral Agent by such Grantor. Each copy
of each Assigned Agreement of which the Collateral Agent does not have sole
possession has been conspicuously marked with a legend indicating (i) that
such copy is not the original executed copy, (ii) that the original
executed copy is in the possession of the Collateral Agent, (iii) that such
Assigned Agreement is subject to the security interest granted hereby, and
(iv) such other matters as may be specified in writing from time to time by
the Collateral Agent.
(h) Such Grantor has no deposit accounts other than the Pledged
Accounts listed on Schedule V and the permitted accounts listed on Schedule
VI.
(i) This Agreement, the pledge of the Security Collateral pursuant
hereto and the pledge and assignment of the Account Collateral pursuant
hereto create a valid and perfected first priority security interest in the
Collateral, securing the payment of the Secured Obligations, and all
filings and other actions necessary or desirable to perfect and protect
such security interest have been duly taken.
(j) No consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required either (i)
for the grant by such Grantor of the assignment and security interest
granted by it hereby, for the pledge by such Grantor of the Security
Collateral pursuant hereto or for the execution, delivery or performance of
this Agreement by such Grantor, (ii) for the perfection or maintenance of
the pledge, assignment and security interest created hereby (including the
first priority nature of such pledge, assignment or security interest),
except for the filing of financing and continuation statements under the
Uniform Commercial Code, which financing statements have been duly filed
and are in full force and effect, the recordation of the Intellectual
Property Security Agreements referred to in Section 12(f) with the U.S.
Patent and Trademark Office and the U.S. Copyright Office, which Agreements
have been duly recorded and are in full force and effect and the actions
described in Section 4 with respect to Security Collateral, which actions
have been taken and are in full force and effect, or (iii) for the exercise
by the Collateral Agent of its voting or other rights provided for in this
Agreement or the remedies in respect of the Collateral pursuant to this
Agreement, except as may be required in connection with the disposition of
any portion of the Security Collateral by laws affecting the offering and
sale of securities generally.
(k) The Inventory has been produced by such Grantor in compliance with
all requirements of the Fair Labor Standards Act.
(l) As to itself and its Intellectual Property Collateral:
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(i) The rights of such Grantor in or to the Intellectual Property
Collateral do not conflict with, misappropriate or infringe upon the
intellectual property rights of any third party, and no claim has been
asserted that the use of such Intellectual Property Collateral does or
may infringe upon the intellectual property rights of any third party.
(ii) Such Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to the Intellectual
Property Collateral and is entitled to use all such Intellectual
Property Collateral without limitation, subject only to the license
terms of the Licenses.
(iii) The Intellectual Property Collateral set forth on Schedule
IV hereto includes all of the patents, patent applications, trademark
registrations and applications, copyright registrations and
applications and Licenses owned by such Grantor.
(iv) The Intellectual Property Collateral is subsisting and has
not been adjudged invalid or unenforceable in whole or part, and to
the best of such Grantor's knowledge, is valid and enforceable. Such
Grantor is not aware of any uses of any item of Intellectual Property
Collateral that could be expected to lead to such item becoming
invalid or unenforceable.
(v) 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 each and every item of Intellectual
Property Collateral in full force and effect throughout the world, 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 in
corresponding national and international patent offices, 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 patent, trademark and copyright of the
Intellectual Property Collateral.
(vi) No 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 use of any of the Intellectual
Property Collateral, or (ii) alleging that any services provided by,
processes used by, or products manufactured or sold by, such Grantor
infringe upon or misappropriate any patent, trademark, copyright or
any other proprietary right of any third party. To the best of such
Grantor's knowledge, no Person is engaging in any activity that
infringes upon or misappropriates the Intellectual Property Collateral
or upon the rights of such Grantor therein. Except as set forth on
Schedule IV hereto, 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. The consummation of the transactions contemplated by the
Transaction Documents will not result in the termination or impairment
of any of the Intellectual Property Collateral.
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(vii) With respect to each material License: (A) such License is
valid and binding and in full force and effect and represents the
entire agreement between the respective licensor and licensee with
respect to the subject matter of such License; (B) such License 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 License or
otherwise give the licensor or licensee a right to terminate such
License; (C) such Grantor has not received any notice of termination
or cancellation under such License; (D) such Grantor has not received
any notice of a breach or default under such License, 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
License; and (F) neither such Grantor nor any other party to such
License is in breach or default 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 License, except for such
events that could not reasonably be expected to have a Material
Adverse Effect.
(viii) To the best of such Grantor's acknowledge, (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 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 in any material respect.
Section 8. Further Assurances. (a) Each Grantor agrees that from time
to time, at the expense of such Grantor, such Grantor will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable, or that the Collateral Agent may reasonably
request (including, without limitation, procuring third party consents), in
order to perfect and protect any pledge, assignment or security interest granted
or purported to be granted hereby or to enable the Collateral Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, such Grantor will: (i) mark
conspicuously each document included in the Inventory, each chattel paper
included in the Receivables, each Related Contract, each Assigned Agreement and,
at the request of the Collateral Agent, each of its records pertaining to the
Collateral with a legend, in form and substance satisfactory to the Collateral
Agent, indicating that such document, chattel paper, Related Contract, Assigned
Agreement or Collateral is subject to the security interest granted hereby; (ii)
if any 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 duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Collateral Agent; and (iii) execute 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
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perfect and preserve the pledge, assignment and security interest granted or
purported to be granted by such Grantor hereunder; (iv) deliver and pledge to
the Collateral Agent for benefit of the Secured Parties certificates
representing Pledged Shares accompanied by undated stock powers executed in
blank; and (v) 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, relating to
all or any part of the Collateral without the signature of such Grantor where
permitted by law. 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.
(c) Each Grantor will furnish to the Collateral Agent from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Collateral Agent
may reasonably request, all in reasonable detail.
(d) Each Grantor shall execute only one copy of each Assigned
Agreement and of any chattel paper and shall deliver to the Collateral Agent,
forthwith upon execution thereof, such original executed copy, together with all
other documents ancillary thereto or delivered by the relevant parties in
connection therewith. Such Grantor shall mark each copy of any Assigned
Agreement and any chattel paper which is not in the sole possession of the
Collateral Agent with a conspicuous legend indicating (i) that such copy is not
the original executed copy, (ii) that the original executed copy is in the
possession of the Collateral Agent, (iii) that such Assigned Agreement or
chattel paper is subject to the security interest granted hereby, and (iv) such
other matters as may be specified in writing from time to time by the Collateral
Agent.
Section 9. As to Equipment and Inventory. (a) Each Grantor shall keep
its Equipment and Inventory (other than Inventory sold in the ordinary course of
business) at the places therefor specified in Section 7(a) or, upon 30 days'
prior written notice to the Collateral Agent, at such other places in a
jurisdiction where all action required by Section 8 shall have been taken with
respect to the Equipment and Inventory (and, upon the taking of such action in
such jurisdiction, Schedule III hereto shall be automatically amended to include
such other places).
(b) Each Grantor shall cause its Equipment to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with any manufacturer's manual, and
shall forthwith, or in the case of any loss or damage to any of such Equipment
as quickly as practicable after the occurrence thereof, make or cause to be made
all repairs, replacements and other improvements in connection therewith that
are necessary or desirable to such end. Each Grantor shall promptly furnish to
the Collateral Agent a statement respecting any loss or damage to any of the
Equipment or Inventory of such Grantor.
(c) Each Grantor shall pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against, its
Equipment and Inventory. In producing the Inventory, each Grantor shall comply
with all requirements of the Fair Labor Standards Act.
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Section 10. Insurance. (a) Each Grantor shall, at its own expense,
maintain insurance with respect to its Equipment and Inventory in such amounts,
against such risks, in such form and with such insurers, as shall be
satisfactory to the Collateral Agent from time to time. Each policy for property
insurance shall provide for all losses to be paid on behalf of the Collateral
Agent and such Grantor as their interests may appear, and each policy for
property damage insurance shall provide for all losses (except for losses of
less than $5,000,000 per occurrence) to be paid directly to the Collateral
Agent. Each such policy shall in addition (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 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 shall, 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 shall, at the request of the Collateral Agent, duly exercise and deliver
instruments of assignment of such insurance policies to comply with the
requirements of Section 8 and cause the insurers to acknowledge notice of such
assignment.
(b) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 10 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 when subsection (c) of this Section 10 is not
applicable, the applicable Grantor shall make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory as deemed desirable in
the reasonable opinion of the Grantor, and any proceeds of insurance maintained
by such Grantor pursuant to this Section 10 shall be paid to such Grantor as
reimbursement for the costs of such repairs or replacements.
(c) Upon the occurrence and during the continuance of any Default or
the actual or constructive total loss (in excess of $5,000,000 per occurrence)
of any Equipment or Inventory, all insurance payments in respect of such
Equipment or Inventory shall be paid to and applied by the Collateral Agent as
specified in Section 20(b).
Section 11. Place of Perfection; Records; Collection of Receivables.
(a) Each Grantor shall keep its chief place of business and chief executive
office and the office where it keeps its records concerning the Collateral, and
any copies of the Assigned Agreements not required to be delivered to the
Collateral Agent hereunder and any copies of all chattel paper not required to
be delivered to the Collateral Agent hereunder that evidence Receivables, at the
location therefor specified in Section 7(a) or, upon 30 days' prior written
notice to the Collateral Agent, at such other locations in a jurisdiction where
all actions required by Section 8 shall have been taken with respect to the
Collateral of such Grantor. Each Grantor will hold and preserve such records,
Assigned Agreements and chattel paper and will permit representatives of the
Collateral Agent at any time during normal business hours upon reasonable notice
to inspect and make abstracts from such records, Assigned Agreements and chattel
paper. If the jurisdiction of the securities intermediary that maintains the
security account carrying the Pledged Security Entitlements shall change from
that jurisdiction specified in Section 7(f), the applicable Grantor shall
promptly notify the Collateral Agent of such change and of such new
jurisdiction.
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(b) Except as otherwise provided in this subsection (b), each Grantor
shall continue to collect, at its own expense, all amounts due or to become due
such Grantor under the Receivables in the manner such Grantor currently collects
such amounts. In connection with such collections made in respect of Receivables
owing from a Person being an affiliate of such Grantor, such Grantor may take
(and, at the Collateral Agent's direction, shall take) such action as such
Grantor or the Collateral Agent may reasonably deem necessary or advisable to
enforce or expedite collection of the Receivables; provided, however, that the
Collateral Agent shall have the right at any time, upon written notice to such
Grantor of its intention to do so, to notify the Obligors under any Receivables
of the assignment of such Receivables to the Collateral Agent and to direct such
Obligors to make payment of all amounts due or to become due to such Grantor
thereunder directly to the Collateral Agent or its designee and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such Receivables directly against the relevant Obligor, and 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. In connection with such collections made
in respect of Receivables owing from a Person not an affiliate of such Grantor,
such Grantor may take (and, at the Collateral Agent's direction, shall take),
after the occurrence and during the continuance of any Default, such action as
such Grantor or the Collateral Agent may reasonably deem necessary or advisable
to enforce or expedite collection of the Receivables; provided, however, that
the Collateral Agent shall have the right at any time after the occurrence and
during the continuance of any Default, upon written notice to such Grantor of
its intention to do so, to notify the Obligors under any Receivables of the
assignment of such Receivables to the Collateral Agent and to direct such
Obligors to make payment of all amounts due or to become due to such Grantor
thereunder directly to the Collateral Agent or its designee and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such Receivables directly against the relevant Obligor, and 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. After receipt by such Grantor of the
notice from the Collateral Agent referred to in the proviso to the preceding
sentences, (i) all amounts and proceeds (including instruments) received by such
Grantor in respect of the Receivables 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) and (ii) such Grantor shall
not adjust, settle or compromise the amount or payment of any Receivable,
release wholly or partly any Obligor thereof, or allow any credit or discount
thereon.
(c) No Grantor will permit or consent to the subordination of its
right to payment under any of the Receivables or the Related Contracts to any
other indebtedness or obligations of the Obligor thereof.
SECTION 12. 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 each such item of Intellectual Property Collateral and
maintain each such item of Intellectual Property Collateral in full force and
effect, and (ii) pursue the registration and maintenance of each 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.
15
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 letters 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, in which case, such Grantor will give prompt notice of any such
abandonment to the Collateral Agent.
(b) Each Grantor agrees promptly to notify the Collateral Agent if
such Grantor learns (i) that any 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 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 becomes aware that any item of the
Intellectual Property Collateral is being infringed or misappropriated by a
third party, such Grantor shall promptly notify the Collateral Agent and shall
take such actions, at its expense, as such Grantor or the Collateral Agent deems
reasonable and appropriate under the circumstances to protect such Intellectual
Property Collateral, including, without limitation, suing for infringement or
misappropriation and for an injunction against such infringement or
misappropriation.
(d) Each Grantor shall use proper statutory notice in connection with
its use of each item of its Intellectual Property Collateral. No Grantor shall
do or permit any act or knowingly omit to do any act whereby any of its
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 or the Collateral Agent
deems reasonable and appropriate under the circumstances to preserve and protect
each item of its Intellectual Property Collateral, including, without
limitation, maintaining the quality of any and all products or services used or
provided in connection with any of the Trademarks, consistent with the quality
of the products and services as of the date hereof, and taking all steps
necessary to ensure that all licensed users of any of the Trademarks use such
consistent standards of quality.
(f) With respect to its Intellectual Property Collateral, each Grantor
agrees to execute an agreement, in substantially the form set forth in Exhibit D
hereto (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.
16
(g) Each Grantor agrees that, should it obtain an ownership interest
in any item of the type set forth in Section 1(g) which is not on the date
hereof a part of the Intellectual Property Collateral (the "After-Acquired
Intellectual Property"), (i) the provisions of Section 1 shall automatically
apply thereto, (ii) any such After-Acquired Intellectual Property and, in the
case of trademarks, the goodwill of the business connected therewith or
symbolized thereby, shall automatically become part of the Intellectual Property
Collateral subject to the terms and conditions of this Agreement with respect
thereto, (iii) such Grantor shall give prompt written notice thereof to the
Collateral Agent in accordance herewith and (iv) such Grantor shall execute and
deliver to the Collateral Agent an IP Security Agreement Supplement covering
such After-Acquired Intellectual Property as "Additional Collateral" thereunder
and as defined therein, and shall record such IP Security Agreement Supplement
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 13. 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 its Security Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement
or the other Loan Documents; provided, however, that such Grantor shall not
exercise or refrain from exercising any such right if, in the Collateral
Agent's judgment, such action would have a material adverse effect on the
value of the Security Collateral or any part thereof.
(ii) Each Grantor shall be entitled to receive and retain any and all
dividends, interest and other distributions paid in respect of its Security
Collateral; provided, however, that 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, such Security Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of such 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 shall execute and deliver (or cause to be
executed and delivered) to each Grantor all such proxies and other
17
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 a Default
or an Event of Default:
(i) 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 13(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 13(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 each Grantor contrary to the provisions of paragraph (i) of this Section
13(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).
Section 14. As to the Assigned Agreements. (a) Each Grantor shall
at its expense:
(i) perform and observe all the terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned
Agreements in full force and effect, enforce the Assigned Agreements in
accordance with their terms and take all such reasonable action to such end
as may be from time to time requested by the Collateral Agent; and
(ii) furnish to the Collateral Agent promptly upon receipt thereof
copies of all notices, requests and other documents received by such
Grantor under or pursuant to the Assigned Agreements, and from time to time
(A) furnish to the Collateral Agent such information and reports regarding
the Collateral as the Collateral Agent may reasonably request and (B) upon
request of the Collateral Agent make to each other party to any Assigned
Agreement such demands and requests for information and reports or for
action as such Grantor is entitled to make thereunder.
(b) Each Grantor agrees that it shall not:
(i) cancel or terminate any Assigned Agreement or consent to or accept
any cancellation or termination thereof, except in the ordinary course of
business and in a manner that would not reasonably be expected to have a
Material Adverse Effect;
(ii) amend or otherwise modify any Assigned Agreement or give any
consent, waiver or approval thereunder;
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(iii) waive any default under or breach of any Assigned Agreement; or
(iv) take any other action in connection with any Assigned Agreement
that would materially impair the value of the interest or rights of such
Grantor thereunder or that would materially impair the interest or rights
of any Secured Party.
(c) Each Grantor hereby consents on its behalf and on behalf of its
Subsidiaries to the assignment and pledge to the Collateral Agent for benefit of
the Secured Parties of each Assigned Agreement to which it is a party by any
other Grantor hereunder.
Section 15. Payments Under the Assigned Agreements. Each Grantor
agrees, and has effectively so instructed each other party to each Assigned
Agreement, that all payments due or to become due under or in connection with
such Assigned Agreement shall be made in accordance with the terms of the
consents referred to in Section 7(g) above.
Section 16. Transfers and Other Liens; Additional Shares. (a) Each
Grantor agrees that it shall not (i) other than in accordance with the Loan
Documents, sell, assign (by operation of law or otherwise) or otherwise dispose
of, or grant any option with respect to, any of the Collateral, except sales of
Inventory in the ordinary course of business, or (ii) create or suffer to exist
any Lien upon or with respect to any of the Collateral except for the pledge,
assignment and security interest created by this Agreement.
(b) Each Grantor agrees that it shall (i) cause each issuer of the
Pledged Shares not to issue any stock or other securities in addition to or in
substitution for the Pledged Shares issued by such issuer, except to such
Grantor, and (ii) pledge hereunder, immediately upon its acquisition (directly
or indirectly) thereof, any and all additional shares of stock or other
securities of each issuer of the Pledged Shares.
Section 17. 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, 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 pursuant to Section 10,
(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
19
(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 18. Collateral Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Collateral Agent may 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
Section 22(b).
Section 19. The Collateral Agent's Duties. 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 part of the Collateral. 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 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 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 20. Remedies. If any Event of Default shall have occurred
and be continuing:
(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 N.Y. Uniform Commercial Code (whether or not the N.Y.
Uniform Commercial Code applies to the affected Collateral) and also may
(i) require any of the Grantors 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 to be designated
by the Collateral Agent that is reasonably convenient to both parties and
20
(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 are 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 Assigned Agreements, the Receivables and the
Related Contracts or otherwise in respect of the Collateral, including,
without limitation, 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 and the Related
Contracts. 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
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) All cash proceeds received by 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 Section 22) 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 such order as the Collateral Agent shall elect.
Any surplus of such cash or cash proceeds held by 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 each 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).
(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 the Cash
Collateral Account or the L/C Cash Collateral Account or any part thereof.
(e) In the event of any sale or other disposition of any of the
Intellectual Property Collateral of any Grantor, the goodwill of the
business connected with and 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 know-how and
expertise, and documents and things relating to any Intellectual Property
21
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.
Section 21. Registration Rights. With respect to Security Collateral
issued by entities (controlled by a Grantor) where the securities are registered
under Section 12(b) or 12(g) of the Securities Act of 1934, if the Collateral
Agent shall determine to exercise its right to sell all or any of the Security
Collateral pursuant to Section 20, each Grantor agrees that, upon request of the
Collateral Agent, such Grantor will, at its own expense:
(a) execute and deliver, and cause each issuer of the Security
Collateral contemplated to be sold and the directors and officers thereof
to execute and deliver, all such instruments and documents, and do or cause
to be done all such other acts and things, as may be necessary or, in the
opinion of the Collateral Agent, advisable to register such Security
Collateral under the provisions of the Securities Act of 1933, as from time
to time amended (the "Securities Act"), to cause the registration statement
relating thereto to become effective and to remain effective for such
period as prospectuses are required by law to be furnished and to make all
amendments and supplements thereto and to the related prospectus that, in
the opinion of the Collateral Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Security Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Security Collateral, as
requested by the Collateral Agent;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earnings statement that will satisfy the
provisions of Section 11(a) of the Securities Act;
(d) provide the Collateral Agent with such other information and
projections as may be necessary or, in the opinion of the Collateral Agent,
advisable to enable the Collateral Agent to effect the sale of such
Security Collateral; and
(e) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Security Collateral or any part thereof
valid and binding and in compliance with applicable law.
The Collateral Agent is authorized, in connection with any sale of the Security
Collateral pursuant to Section 19, to deliver or otherwise disclose to any
prospective purchaser of the Security Collateral (i) any registration statement
or prospectus, and all supplements and amendments thereto, prepared pursuant to
clause (a) above, (ii) any information and projections provided to it pursuant
to clause (d) above and (iii) any other information in its possession relating
to the Security Collateral.
22
Section 22. Indemnity and Expenses. (a) Each Grantor agrees to
indemnify the Collateral Agent from and against any and all claims, losses and
liabilities growing out of or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except claims, losses or liabilities
resulting from the Collateral Agent's gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction.
(b) Each Grantor will upon demand pay to the Collateral Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Collateral Agent
may incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from or
other realization upon, any of the Collateral, (iii) the exercise or enforcement
of any of the rights of the Collateral Agent or the Secured Parties hereunder or
(iv) the failure by such Grantor to perform or observe any of the provisions
hereof.
Section 23. Amendments; Waivers; 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.
(b) No failure on the part of the Collateral Agent to exercise, and no
delay in exercising any right, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
(c) Upon the execution and delivery 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, and each reference in
this Agreement to "Grantor" shall also mean and be a reference to such
Additional Grantor and (ii) the Schedules attached to each Security Agreement
Supplement shall be incorporated into and become a part of and supplement
Schedules I through VI hereto, and the Collateral Agent may attach such
Schedules as supplements to such Schedules, and each reference to such Schedules
shall mean and be a reference to such Schedules, as supplemented pursuant
hereto.
Section 24. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including telecopy
communication) and, mailed (by certified mail), telecopied, or delivered by hand
to the Borrowers or to the Collateral Agent, as the case may be, in each case
addressed to such Person at its address specified in the Credit Agreement or, as
to any other Grantor at its address set forth below the name of such Grantor on
the signature pages hereto, or to the Security Agreement Supplement to which it
is a party, as the case may be, or as to any party, either party, at such other
address as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. All such notices
and other communications shall, when mailed (by certified mail), telecopied, or
delivered shall be effective when received by the party being notified. Delivery
by telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement, any Security Agreement Supplement hereto, or of any
Schedule hereto to be executed and delivered hereunder shall be effective as
delivery of an original executed counterpart hereto.
23
Section 25. 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 later of (i)
the payment in full in cash of the Secured Obligations and (ii) the later of the
Tranche A Termination Date, the Tranche B Termination Date, and the Working
Capital Termination Date, (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 Collateral Agent, the Secured Parties and
their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), any Lender Party may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of its Commitment,
the Advances owing to it and the Note or Notes held by it to any other Person,
and such other Person 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 9.07 of the Credit Agreement.
Section 26. Release and Termination. (a) Upon any sale, lease,
transfer or other disposition of any item of Collateral in accordance with the
terms of the Loan Documents (other than sales of Inventory in the ordinary
course of business), 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 the release of such item of Collateral from
the assignment and security interest granted hereby; provided, however, that (i)
at the time of such request and such release no Default shall have occurred and
be continuing, (ii) the applicable Grantor shall have delivered to the
Collateral Agent, at least ten Business Days prior to the date of the proposed
release, 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 the price thereof and any expenses in connection therewith, together
with a form of release for execution by the Collateral Agent and a certification
by 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 (iii) the proceeds of any such sale, lease, transfer or other disposition
required to be applied in accordance with Section 2.05 of the Credit Agreement
shall be paid to, or in accordance with the instructions of, the Collateral
Agent at the closing.
(b) Upon the later of (i) the payment in full in cash of the Secured
Obligations, and (ii) the later of the Tranche A Termination Date, the Tranche B
Termination Date, and the Working Capital Termination Date, the pledge,
assignment 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.
Section 27. Investing of Amounts in the Cash Collateral Account and
the L/C Cash Collateral Account. If requested by a Borrower, the Collateral
Agent will, subject to the provisions of Section 20, from time to time (a)
invest amounts on deposit in the Cash Collateral Account and the L/C Cash
Collateral Account in such Cash Equivalents (as to which all action required by
Section 8 shall have been taken) as such Borrower may select and the Collateral
Agent may approve 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 (as to which
all actions required by Section 8 shall have been taken) as such Borrower may
select and the Collateral Agent may approve (the Cash Equivalents referred to in
clauses (a) and (b) above being collectively "Collateral Investments"). Interest
and proceeds that are not invested or reinvested in Collateral Investments as
24
provided above shall be deposited and held in the Cash Collateral Account or the
L/C Cash Collateral Account, as the case may be.
Section 28. 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.
Section 29. The Mortgages. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage and the terms of such Mortgage are inconsistent with the terms of this
Agreement, then with respect to such Collateral, the terms of such Mortgage
shall be controlling in the case of fixtures and leases, letting and licenses
of, and contracts and agreements relating to the lease of real property, and the
terms of this Agreement shall be controlling in the case of all other
Collateral.
Section 30. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, except to the
extent that the validity or perfection of the security interest hereunder, or
remedies hereunder, in respect of any particular Collateral are governed by the
laws of a jurisdiction other than the State of New York.
25
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.
ICG EQUIPMENT, INC.
By /s/ H. Don Teague
---------------------
Title:
Address: 161 Inverness Drive West
Englewood, CO 80112
ICG NETAHEAD, INC.
By /s/ H. Don Teague
---------------------
Title:
Address: 161 Inverness Drive West
Englewood, CO 80112
Schedule I
PLEDGED SHARES AND PLEDGED DEBT
Part I
Percentage of
Stock Certificate Number Outstanding
Stock Issuer Class of Stock Par Value No(s) of Shares Shares
- --------------------------------------------------------------------------------------------------
NIL NIL NIL NIL NIL NIL
Part II
Original
Principal
Debt Issuer Description of Debt Debt Certificate No(s). Final Maturity Amount
- ----------------------------------------------------------------------------------------------
NIL NIL NIL NIL NIL
Schedule II
ASSIGNED AGREEMENTS
Please see attached lists.
Schedule III
LOCATIONS OF EQUIPMENT AND INVENTORY
Locations of Equipment & Inventory: see attached list
Schedule IV to the
Security Agreement
PATENTS, TRADEMARKS AND
TRADE NAMES, COPYRIGHTS AND LICENSES
Grantor Patents Country Patent No. Applic. No. Filing Date Issue Date
- --------------------------------------------------------------------------------
NONE.
Trademarks and Reg. Applic. Filing Issue
Grantor Trade Names Country Mark No. No. Date Date
- --------------------------------------------------------------------------------
NONE.
Filing Issue
Grantor Copyrights Country Title Reg. No. Applic. No. Date Date
- --------------------------------------------------------------------------------
NONE.
Grantor Licenses Title Date Parties
- --------------------------------------------------------------------------------
ORDINARY COURSE OF BUSINESS SOFTWARE AGREEMENTS.
Schedule V
PLEDGED ACCOUNTS
Name and Address of Bank Grantor Account Number
NIL NIL NIL
Schedule VI
PERMITTED UNPLEDGED ACCOUNTS
Name and Address Account
of Bank Number
Please see attached list.
Exhibit A to the
Security Agreement
FORM OF SECURITY AGREEMENT SUPPLEMENT
[Date of Security Agreement Supplement]
Royal Bank of Canada,
as the Collateral Agent for the
Secured Parties referred to in the
Credit Agreement referred to below
1585 Broadway
New York, New York
Attn: ___________________
ICG Equipment, Inc.
ICG NetAhead, Inc.
Ladies and Gentlemen:
Reference is made to (i) the Credit Agreement dated as of August 12, 1999
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among ICG Equipment, Inc., a Colorado
corporation, ICG NetAhead, Inc., a Delaware corporation, the Lender Parties
party thereto, Royal Bank of Canada, as collateral agent (together with any
successor collateral agent appointed pursuant to Article VII of the Credit
Agreement, the "Collateral Agent"), and Royal Bank of Canada, as administrative
agent for the Lender Parties, and (ii) the Security Agreement dated August 12,
1999 (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 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 assigns and
pledges to the Collateral Agent for the ratable benefit of the Secured Parties,
and 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 pledge and assignment of, and
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, and whether for principal, reimbursement obligations, interest,
premiums, penalties, fees, indemnifications, contract causes of action, costs,
expenses or otherwise. Without limiting the generality of the foregoing, this
Security Agreement Supplement and the Security Agreement secures the payment of
all amounts that constitute part of the Secured Obligations and that would be
owed by the undersigned to any Secured Party under the Loan Documents but for
the fact that such Secured Obligations are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
the undersigned or any Grantor.
Section 3. Supplements to Security Agreement Schedules. The
undersigned has attached hereto supplemental Schedules I, II, III, IV, V, VI and
VII to Schedules I, II, III, IV, V, VI and VII, 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 7 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
FORM OF PLEDGED ACCOUNT LETTER
_______________, 19__
[Name and address
of Pledged Account Bank]
ICG Equipment, Inc.
ICG NetAhead, Inc.
Gentlemen/women:
Reference is made to [deposit account no. __________] [the certain
deposit accounts listed on Schedule I hereto] into which certain monies,
instruments and other properties are deposited from time to time and deposit
account no. __________ (collectively, the "Pledged Account") maintained with you
by ____________________ (the "Grantor"). Pursuant to the Security Agreement
dated August 12, 1999 (the "Security Agreement"), the Grantor has granted to
Royal Bank of Canada, as collateral agent (the "Agent") for the Lender Parties
referred to in the Credit Agreement dated as of August 12, 1999 (the "Credit
Agreement") with ICG Equipment, Inc., and ICG NetAhead, Inc., a security
interest in certain property of the Grantor, including, among other things, the
following (the "Account Collateral"): the Pledged Account, all funds held
therein and all certificates and instruments, if any, from time to time
representing or evidencing the Pledged Account, all interest, dividends, 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 all proceeds of any and all of the foregoing
Account Collateral and, to the extent not otherwise included, all (i) 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 Account Collateral and (ii)
cash. It is a condition to the continued maintenance of the Pledged Account with
you that you agree to this letter agreement.
By signing this letter agreement, you acknowledge notice of, and
consent to the terms and provisions of, the Security Agreement and confirm to
the Collateral Agent that the description of the Pledged Account set forth on
Schedule V of the Security Agreement is correct and that you have received no
notice of any other pledge or assignment of the Pledged Account. Further, you
hereby agree with the Collateral Agent that:
(a) Notwithstanding anything to the contrary in any other agreement
relating to the Pledged Account, the Pledged Account is and will be subject
to the terms and conditions of the Security Agreement, will be maintained
solely for the benefit of the Collateral Agent, will be entitled "Royal
Bank of Canada, as Collateral Agent, Re: [name of the Grantor]" and will be
subject to written instructions only from an officer of the Collateral
Agent.
(b) You will collect mail from the Pledged Account on each of your
business days at times that coincide with the delivery of mail thereto.
(c) You will follow your usual operating procedures for the handling
of any remittance received in the Pledged Account that contains restrictive
endorsements, irregularities (such as a variance between the written and
numerical amounts), undated or postdated items, missing signatures,
incorrect payees, etc.
(d) You will endorse and process all eligible checks and other
remittance items not covered by paragraph (c) and deposit such checks and
remittance items in the Pledged Account.
(e) You will maintain a record of all checks and other remittance
items received in the Pledged Account and, in addition to providing the
Grantor with photostats, vouchers, enclosures, etc. of such checks and
remittance items on a daily basis, furnish to the Collateral Agent (i) a
monthly statement of the Pledged Account and (ii) a daily collection and
check float report, to be transmitted electronically to the Collateral
Agent at: 1585 Broadway, New York, New York, Attention: __________.
(f) You will transfer, in same day funds, on each of your business
days, [after you have received written notice from the Collateral Agent
that a Default has occurred under the Credit Agreement] all amounts
collected from the Pledged Account on such day to the following account
(the "Cash Collateral Account"):
ICG Equipment, Inc.
ICG NetAhead, Inc.
Account No. __________
______________________
______________,
New York, New York _____
Attention: ____________________
Each such transfer of funds shall neither comprise only part of a
remittance nor reflect the rounding off of any funds so transferred.
(g) All transfers referred to in paragraph (f) 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 the Collateral Agent for any
reason any such payment once made.
(h) All service charges and fees with respect to the Pledged Account
shall be payable by the Grantor, and deposited checks returned for any
reason shall not be charged to the Pledged Account.
(i) The Collateral Agent shall be entitled to exercise any and all
rights of the Grantor in respect of the Pledged Account in accordance with
the terms of the Security Agreement, and the undersigned shall comply in
all respects with such exercise.
You hereby represent and warrant that the person executing this letter
agreement on your behalf is duly authorized to do so.
No amendment or waiver of any provision of this letter agreement, nor
consent to any departures by you or the Grantor herefrom, shall be effective
unless the same shall be in writing as signed by you, the Grantor and the
Collateral Agent.
2
This letter agreement shall be binding upon you and your successors
and assigns and shall inure to the benefit of the Collateral Agent, the Secured
Parties and their successors, transferees and assigns. You may terminate this
letter agreement only upon thirty days' prior written notice to the Grantor and
the Collateral Agent. Upon such termination you shall close the Pledged Account
and transfer all funds in the Pledged Account to the Cash Collateral Account.
After any such termination, you shall nonetheless remain obligated promptly to
transfer to the Cash Collateral Account all funds and other property received in
respect of the Pledged Account.
This letter agreement 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 when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this letter agreement by telecopier shall be effective as
delivery of an original executed counterpart of this letter agreement.
Please indicate your acknowledgment of and agreement to the provisions
of this letter agreement by signing in the appropriate space provided below and
returning this letter agreement to Royal Bank of Canada, 1585 Broadway, New
York, New York, Telecopier No.: (212) ___-____, Attention: ________________. If
you elect to deliver this letter agreement by telecopier, please arrange for the
executed original to follow by next-day courier.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York.
Very truly yours,
[NAME OF GRANTOR]
By:
Title:
Royal Bank of Canada, as Collateral Agent
By:
Title:
Acknowledged and agreed to as of
the date first above written:
[NAME OF BANK]
By:
Title:
3
Exhibit C to
the Security Agreement
FORM OF CONSENT AND AGREEMENT
The undersigned hereby acknowledges notice of, and consents to the
terms and provisions of, the Security Agreement dated August 12, 1999 (the
"Security Agreement", the terms defined therein being used herein as therein
defined) from ____________________ (the "Grantor") to Royal Bank of Canada as
collateral agent (the "Collateral Agent") for the Lender Parties referred to
therein, and hereby agrees with the Collateral Agent that:
(a) The undersigned will make all payments to be made by it under or
in connection with the __________ Agreement dated _______________, 19__
(the "Assigned Agreement") between the undersigned and the Grantor directly
to the Cash Collateral Account or otherwise in accordance with the
instructions of the Collateral Agent.
(b) All payments referred to in paragraph (a) 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 the Collateral Agent or any
Lender Party for any reason any such payment once made.
(c) The Collateral Agent 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.
(d) The undersigned has not and will not, without the prior written
consent of the Collateral Agent, (i) assign, cancel or terminate the
Assigned Agreement or consent to or accept any assignment, cancellation or
termination thereof, or (ii) amend or otherwise modify the Assigned
Agreement, or (iii) consent to any assignment of the Assigned Agreements to
any Person other than the Collateral Agent for the Secured Parties.
(e) 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 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 written notice
thereof to the Collateral Agent and permits the Grantor and the Collateral
Agent the period of time afforded to the Grantor under the Assigned
Agreement to cure such default.
(f) 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.
(g) 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.
In order to induce the Lender Parties to make Advances and issue
Letters of Credit under the Credit Agreement and the Hedge Banks to enter into
Secured Hedge Agreements from time to time, the undersigned repeats and
reaffirms for the benefit of the Secured Parties the representations and
warranties made by it in the Assigned Agreement.
This letter agreement 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 when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this letter agreement by telecopier shall be effective as
delivery of an original executed counterpart of this letter agreement.
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 Collateral
Agent, the Lender 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: _______________, 19__ [NAME OF OBLIGOR]
By:
Title:
3
Exhibit D 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 August 12, 1999, is made by the Persons listed on the
signature pages hereof (collectively, the "Grantors") in favor of Royal Bank of
Canada, as collateral agent (the "Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
WHEREAS, __________________________, a ________ corporation, has
entered into a Credit Agreement dated as of August 12, 1999 (as amended, amended
and restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), with Royal Bank of Canada, as Administrative Agent, Royal Bank of
Canada, as Collateral Agent, and the Lender Parties 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 Advances and the
issuance of Letters of Credit by the Lender Parties 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
made by the Grantors to the Collateral Agent dated August 12, 1999 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Security Agreement").
WHEREAS, under the terms of the Security Agreement, Grantors have
granted a security interest in, among other property, certain intellectual
property of the Grantors to the Collateral Agent for the ratable benefit of the
Secured Parties, and have agreed as a condition thereof to execute this IP
Security Agreement covering such intellectual property 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 and to all of such Grantor's right, title and interest in and to the
following (the "Collateral"):
(i) The United States, international, and foreign patents, patent
applications and patent licenses set forth in Schedule A hereto (as such
Schedule A may be supplemented from time to time by supplements to the
Security Agreement and this IP Security Agreement, each such supplement
being in substantially the form of Exhibit G to the Security Agreement (an
"IP Security Agreement Supplement"), executed and delivered by such Grantor
to the Collateral Agent from time to time), together with all reissues,
divisions, continuations, continuations-in-part, extensions and
reexaminations thereof, and all rights therein provided by international
treaties or conventions (the "Patents");
(ii) The United States and foreign trademark and service mark
registrations, applications, and licenses set forth in Schedule B hereto
(as such Schedule B may be supplemented from time to time by IP Security
Agreement Supplements executed and delivered by such Grantor to the
Collateral Agent from time to time), (the "Trademarks");
(iii) The copyrights, United States and foreign copyright
registrations and applications and copyright licenses set forth in Schedule
C hereto (as such Schedule C may be supplemented from time to time by IP
Security Agreement Supplements executed and delivered by such Grantor to
the Collateral Agent from time to time) (the "Copyrights");
(iv) any and all claims for damages for past, present and future
infringement, misappropriation or breach with respect to the Patents,
Trademarks and Copyrights, with the right, but not the obligation, to sue
for and collect, or otherwise recover, such damages; and
(v) any and all proceeds of the foregoing.
SECTION 2. Recordation. Each Grantor authorizes and requests that the
Register of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer record this IP Security Agreement.
SECTION 3. 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.
SECTION 4. 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.
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.
[NAME OF BORROWER]
By
Name:
Title:
Address for Notices:
161 Inverness Drive West
Englewood, CO 80112
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[NAME OF GRANTOR]
By
Name:
Title:
Address for Notices:
[NAME OF GRANTOR]
By
Name:
Title:
Address for Notices:
[ETC.]
[IS AN ACKNOWLEDGMENT FORM NECESSARY?]
3
Exhibit E 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 Royal Bank of
Canada, as collateral agent (the "Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
WHEREAS, __________________________, a ________ corporation, has
entered into a Credit Agreement dated as of August 12, 1999 (as amended, amended
and restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), with Royal Bank of Canada, as Administrative Agent, Royal Bank of
Canada, as Collateral Agent, and the Lender Parties 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 made
by the Grantor and such other Persons to the Collateral Agent dated August 12,
1999 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "Security Agreement"). To create a short form version of the
Security Agreement covering certain intellectual property of the Grantor and
such other Persons for recording with the U.S. Patent and Trademark Office, the
United States Copyright Office and other governmental authorities, the Grantor
and such other Persons have executed and delivered that certain Intellectual
Property Security Agreement made by the Grantor and such other Persons to the
Collateral Agent dated ________, ______ (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 and the IP Security
Agreement, the Grantor has granted a security interest in the Additional
Collateral (as defined in Section 1 below) of the Grantor to the Collateral
Agent for the ratable benefit of the Secured Parties 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. Confirmation of Grant of Security. The Grantor hereby
acknowledges and confirms the grant of a security interest to the Collateral
Agent for the ratable benefit of the Secured Parties under the Security
Agreement and the IP Security Agreement in and to all of the Grantor's right,
title and interest in and to the following (the "Additional Collateral"):
(i) The United States, international, and foreign patents, patent
applications, and patent licenses set forth in Schedule A hereto, together
with all reissues, divisions, continuations, continuations-in-part,
extensions and reexaminations thereof, and all rights therein provided by
international treaties or conventions (the "Patents");
(ii) The United States and foreign trademark and service mark
registrations, applications, and licenses set forth in Schedule B hereto
(the "Trademarks");
(iii) The copyrights, associated United States and foreign copyright
registrations and applications and copyright licenses set forth in Schedule
C hereto (the "Copyrights");
(iv) any and all claims for damages for past, present and future
infringement, misappropriation or breach with respect to the Patents,
Trademarks and Copyrights, with the right, but not the obligation, to sue
for and collect, or otherwise recover, such damages; and
(v) any and all proceeds of the foregoing.
SECTION 2. Supplement to Security Agreement and IP Security Agreement.
Schedule V to the Security Agreement and Schedule[s] [A,] [B and] [C] to the IP
Security Agreement are each, effective as of the date hereof, hereby
supplemented to add to such Schedules the Additional Collateral.
SECTION 3. Recordation. The Grantor authorizes and requests that the
Register of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer to record this IP Security Agreement.
IN WITNESS WHEREOF, the Grantor has caused this Agreement 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:
161 Inverness Drive West
Englewood, CO 80112
[IS AN ACKNOWLEDGMENT FORM NECESSARY?]
2