Exhibit VII
[Form of Security Agreement]
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of [ ], 1996 between Advanced
Radio Telecom Corp., a corporation duly organized and validly existing under the
laws of the State of [ ] (the "COMPANY"); EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE A HERETO (the "GUARANTORS"); and [NAME], as collateral
agent for the lenders or other financial institutions or entities party, as
lenders, to the Credit Agreement referred to below (in such capacity, together
with its successors in such capacity, the "AGENT").
The Company, the Guarantors, certain lenders and the Agent are
parties to a Credit Agreement dated as of [ ], 1996 (as modified and
supplemented and in effect from time to time, the "CREDIT AGREEMENT"),
providing, subject to the terms and conditions thereof, for extensions of credit
to be made by said lenders to the Company.
To induce said lenders to enter into the Credit Agreement and to
extend credit thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each Debtor (as
hereinafter defined) has agreed to pledge, mortgage and grant a security
interest in the Pledged Collateral (as hereinafter defined) as security for the
Secured Obligations (as so defined). Accordingly, the parties hereto agree as
follows:
Section 1. DEFINITIONS. Terms defined in the Credit Agreement
are used herein as defined therein. In addition, as used herein:
"ACCOUNTS" shall have the meaning ascribed thereto in Section 3(e)
hereof.
"ART 38 GHZ AUTHORIZATIONS" refers to all 38 GHz Authorizations of
any Debtor, including a list containing latitude and longitude of the
rectangular service area, date granted and channels authorized.
"ART PENDING APPLICATIONS" refers to the Pending Applications of
any Debtor, including latitude and longitude of the requested rectangular
service area, channels requested, date filed, public notice dates and
amendments.
"COLLATERAL ACCOUNT" shall have the meaning ascribed thereto in
Section 4.01(a) hereof.
"CONTRACTS" shall mean all contracts, undertakings, or other
agreements, as the same may be amended from time to time, and (a) all rights of
any Debtor to receive moneys due and to become due thereunder or in connection
therewith, (b) all rights of any Debtor to damages arising out of or for breach
or default in respect thereof and (c) all rights of any Debtor to exercise
remedies thereunder.
"COPYRIGHT COLLATERAL" shall mean all Copyrights, whether now
owned or hereafter acquired by any Debtor, including each Copyright identified
in ANNEX 2 hereto.
"COPYRIGHTS" shall mean all copyrights, copyright registrations
and applications for copyright registrations, including, without limitation, all
renewals and extensions thereof, the right to recover for all past, present and
future infringements thereof, and all other rights of any kind whatsoever
accruing thereunder or pertaining thereto.
"DEBTOR" shall mean each of the Company and the Guarantors.
"DOCUMENTS" shall have the meaning ascribed thereto in Section
3(k) hereof.
"EQUIPMENT" shall have the meaning ascribed thereto in Section
3(i) hereof.
"FCC" means the Federal Communications Commission.
"INSTRUMENTS" shall have the meaning ascribed thereto in Section
3(f) hereof.
"INTELLECTUAL PROPERTY" shall mean, collectively, all Copyright
Collateral, all Patent Collateral and all Trademark Collateral, together with
(a) all inventions, processes, production methods, proprietary information,
know-how and trade secrets; (b) all licenses or user or other agreements granted
to any Debtor with respect to any of the foregoing, in each case whether now or
hereafter owned or used including, without limitation, the licenses or other
agreements with respect to the Copyright Collateral, the Patent Collateral or
the Trademark Collateral, listed in ANNEX 5 hereto; (c) all information,
customer lists, identification of suppliers, data, plans, blueprints,
specifications, designs, drawings, recorded knowledge, surveys, engineering
reports, test reports, manuals, materials standards, processing standards,
performance standards, catalogs, computer and automatic machinery software and
programs; (d) all field repair data, sales data and other information relating
to sales or service of products now or hereafter manufactured; (e) all
accounting information and all
media in which or on which any information or knowledge or data or records may
be recorded or stored and all computer programs used for the compilation or
printout of such information, knowledge, records or data; and (f) all licenses,
consents, permits, variances, certifications and approvals of governmental
agencies now or hereafter held by any Debtor (other than 38 GHz Authorizations
and Pending Applications); and (g) all causes of action, claims and warranties
now or hereafter owned or acquired by the Debtors in respect of any of the items
listed above.
"INVENTORY" shall have the meaning ascribed thereto in Section
3(g) hereof.
"ISSUERS" shall mean, collectively, the respective corporations
identified beneath the names of the Debtors on ANNEX 1A hereto under the
caption "ISSUER," together with any corporation created or acquired after the
date hereof, the capital stock of which is required to be pledged hereunder
pursuant to the Credit Agreement.
"MOTOR VEHICLES" shall mean motor vehicles, tractors, trailers and
other like property, whether or not the title thereto is governed by a
certificate of title or ownership.
"PATENT COLLATERAL" shall mean all Patents, whether now owned or
hereafter acquired by any Debtor, including each Patent identified in ANNEX 3
hereto, excluding, however, the Patents identified as "Excluded Patents" on said
ANNEX 3.
"PATENTS" shall mean all patents and patent applications,
including, without limitation, the inventions and improvements described and
claimed therein together with the reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, all income, royalties, damages and
payments now or hereafter due and/or payable under and with respect thereto,
including, without limitation, damages and payments for past or future
infringements thereof, the right to xxx for past, present and future
infringements thereof, and all rights corresponding thereto throughout the
world.
"PENDING APPLICATION" means an application that was filed with the
FCC prior to November 13, 1995, to obtain a 38 GHz Authorization, which as of
the date hereof has not been granted or dismissed by the FCC, and which was
placed on public notice by the FCC and held in abeyance pursuant to the notice
of proposed rulemaking issued by the FCC on December 15, 1995 pursuant to which
it proposed to amend its current rules to provide for, among other things, (i)
the adoption of an auction procedure for the issuance of licenses in the 38 GHz
band, including a possible auction of the lower 16 channels in the 38 GHz band
that have not been previously
available for commercial use, (ii) the continuation of the 100 MHZ-based
channeling plan and licensing rules for point-to-point microwave operations in
the lower 16 channels, (iii) licensing frequencies using predefined geographic
service areas, (iv) the imposition of minimum construction requirements for new
authorizations and existing 38 GHz licenses as a condition to the retention of
existing authorizations and (v) the implementation of certain technical rules
designed to avoid radio frequency interference among licensees.
"PLEDGED COLLATERAL" shall have the meaning ascribed thereto in
Section 3 hereof.
"PLEDGED STOCK" shall have the meaning ascribed thereto in Section
3(a) hereof.
"SECURED OBLIGATIONS" shall mean, collectively, (a) the principal
of and interest on the Loans made by the Lenders to, and the Notes held by each
Lender of, the Company and all other amounts from time to time owing to the
Creditors by the Company under the Senior Loan Documents, (b) all obligations of
the Company arising under any Interest Rate Agreement between the Company and
any Lender, (c) all obligations of the Guarantors under the Credit Agreement and
the other Senior Loan Documents (including, without limitation, in respect of
their Guarantees under Section 9 of the Credit Agreement) and (d) all
obligations of the Debtors to the Creditors hereunder.
"SPECIAL EVENT OF DEFAULT" shall mean any Event of Default that
arises pursuant to Section 7.1, 7.3, 7.6 or 7.7 of the Credit Agreement.
"STOCK COLLATERAL" shall mean, collectively, the Pledged
Collateral described in clauses (a) through (c) of Section 3 hereof and the
proceeds of and to any such property and, to the extent related to any such
property or such proceeds, all books, correspondence, credit files, records,
invoices and other papers.
"38 GHZ AUTHORIZATIONS" means construction permits granted by the
FCC for the construction and operation of millimetric microwave
telecommunications systems on specific 100 MHZ channels between 37.0 GHz and
40.0 GHz on the radio frequency spectrum each within a specific geographic
footprint with up to a 50-mile radius.
"TRADEMARK COLLATERAL" shall mean all Trademarks, whether now
owned or hereafter acquired by any Debtor, including each Trademark identified
in ANNEX 4 hereto. Notwithstanding the foregoing, the Trademark Collateral
does not and shall not include any Trademark that would be rendered invalid,
abandoned, void or
unenforceable by reason of its being included as part of the Trademark
Collateral.
"TRADEMARKS" shall mean all trade names, trademarks and service
marks, logos, trademark and service xxxx registrations, and applications for
trademark and service xxxx registrations, including, without limitation, all
renewals of trademark and service xxxx registrations, all rights corresponding
thereto throughout the world, the right to recover for all past, present and
future infringements thereof, all other rights of any kind whatsoever accruing
thereunder or pertaining thereto, together, in each case, with the product lines
and goodwill of the business connected with the use of, and symbolized by, each
such trade name, trademark and service xxxx.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code
as in effect from time to time in the State of New York.
Section 2. REPRESENTATIONS AND WARRANTIES. Each Debtor
represents and warrants to the Creditors that:
(a) Such Debtor is the sole beneficial owner of the Pledged
Collateral in which it purports to grant a security interest pursuant to
Section 3 hereof and no Lien exists or will exist upon such Pledged
Collateral at any time (and no right or option to acquire the same exists
in favor of any other Person) except for Liens permitted under Section 6.2
of the Credit Agreement and except for the pledge and security interest in
favor of the Agent for the benefit of the Lenders created or provided for
herein, which pledge and security interest shall (upon the filing of the
financing statements delivered by the Company pursuant to the Credit
Agreement in locations specified by the Obligors to the Agent or
possession of Collateral which is required for perfection) constitute a
first priority perfected pledge and security interest in and to all of
such Pledged Collateral (other than Pledged Collateral subject to Liens
permitted under Section 6.2 of the Credit Agreement and other than the ART
38 GHz Authorization and the ART Pending Applications) in which a Security
Interest may be perfected by filing financing statements or possession
(other than Intellectual Property registered or otherwise located outside
of the United States of America).
(b) The Pledged Stock represented by the certificates identified
under the name of such Debtor in ANNEX 1A hereto is, and all other
Pledged Stock in which such Debtor shall hereafter grant a security
interest pursuant to Section 3 hereof will be, duly authorized, validly
existing, fully paid and non-assessable and none of such Pledged Stock is
or will
be subject to any contractual restriction, or any restriction under the
charter or by-laws of the respective Issuer of such Pledged Stock, upon
the transfer of such Pledged Stock (except for any such restriction
contained herein or in the Credit Agreement or as permitted by the Credit
Agreement).
(c) The Pledged Stock represented by the certificates identified
under the name of such Debtor in ANNEX 1A hereto constitutes all of the
issued and outstanding shares of capital stock of any class of the Issuers
beneficially owned by such Debtor on the date hereof or such percentage of
the capital stock of any Issuer created or acquired after the date hereof
that is required to be pledged hereunder pursuant to the Credit Agreement
(whether or not registered in the name of such Debtor) and said ANNEX 1A
correctly identifies, as at the date hereof, or, with respect to any
Issuer created or acquired after the date hereof, as of the date of pledge
hereunder, the respective Issuers of such Pledged Stock, the respective
class and par value of the shares comprising such Pledged Stock and the
respective number of shares (and registered owners thereof) represented by
each such certificate.
(d) As of the date hereof, (x) the Intercompany Notes identified
on ANNEX 1B hereto constitute all of the Intercompany Notes of such
corporations as identified on ANNEX 1B, and (y) other than the
Intercompany Notes, no Debtor owns, directly or indirectly, any other
Intercompany Notes of any Debtor.
(e) ANNEXES 2, 3 AND 4 hereto, respectively, set forth under the
name of such Debtor a complete and correct list of all Copyrights, Patents
and Trademarks owned by such Debtor on the date hereof which have been
registered or for which an application for registration has been made;
except pursuant to licenses and other user agreements entered into by such
Debtor in the ordinary course of business, that are listed in ANNEX 5
hereto, on and as of the date hereof (i) such Debtor owns and possesses
the right to use, and has done nothing to authorize or enable any other
Person to use, any Copyright, Patent or Trademark listed in said ANNEXES
2, 3 and 4, and (ii) all registrations listed in said ANNEXES 2, 3 AND 4
are valid and in full force and effect; and except as may be set forth in
said ANNEX 5, such Debtor owns and possesses the right to use all
Copyrights, Patents end Trademarks on and as of the date hereof.
(f) ANNEX 5 hereto sets forth a complete and correct list of all
material licenses and other user agreements included in the Intellectual
Property on the date hereof.
(g) To such Debtor's knowledge, on and as of the date hereof: (i)
except as set forth in ANNEX 5 hereto, there is no violation by others
of any right of such Debtor with respect to any Copyright, Patent or
Trademark listed in ANNEXES 2, 3 AND 4 hereto, respectively, under the
name of such Debtor and (ii) such Debtor is not infringing in any respect
upon any Copyright, Patent or Trademark of any other Person; and no
proceedings have been instituted or are pending against such Debtor or, to
such Debtor's knowledge, threatened, and no claim against such Debtor has
been received by such Debtor, alleging any such violation, except as may
be set forth in said ANNEX 5, except with respect to clauses (i) and
(ii) where any of the foregoing could not reasonably be expected to have a
Material Adverse Effect.
(h) Any goods now or hereafter produced by such Debtor or any of
its Subsidiaries included in the Pledged Collateral have been and will be
produced in compliance with the requirements of the Fair Labor Standards
Act of 1938, as amended, except where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
Section 3. COLLATERAL. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations owing by such Debtor, each Debtor hereby
pledges and mortgages to the Agent, for the benefit of the Creditors as
hereinafter provided, and grants to the Agent, for the benefit of the Creditors
as hereinafter provided, a security interest in, all of such Debtor's right,
title and interest in the following property, whether now owned by such Debtor
or hereafter acquired and whether now existing or hereafter coming into
existence (all being collectively referred to herein as "PLEDGED COLLATERAL"):
(a) the shares of common and/or preferred stock of the Issuers
represented by the certificates identified in ANNEX 1A hereto under the
name of such Debtor and all other shares of capital stock of whatever
class of the Issuers, now or hereafter owned by such Debtor, in each case
together with the certificates evidencing the same (collectively, the
"PLEDGED STOCK");
(b) all shares, securities, moneys or property representing a
dividend on any of the Pledged Stock, or representing a distribution or
return of capital upon or in respect of the Pledged Stock, or resulting
from a split-up, revision, reclassification or other like change of the
Pledged Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or
otherwise in respect of, the Pledged Stock;
(c) all Intercompany Notes;
(d) without affecting the obligations of such Debtor under any
provision prohibiting such action hereunder or under the Credit Agreement,
in the event of any consolidation or merger in which an Issuer is not the
surviving corporation, all shares of each class of the capital stock of
the successor corporation owned by the Debtors (unless such successor
corporation is such Debtor itself) formed by or resulting from such
consolidation or merger;
(e) all accounts and general intangibles (each as defined in the
Uniform Commercial Code) of such Debtor constituting any right to the
payment of money, including (but not limited to) all moneys due and to
become due to such Debtor in respect of any loans or advances or for
Inventory or Equipment or other goods sold or leased or for services
rendered, all moneys due and to become due to such Debtor under any
guarantee (including a letter of credit) of the purchase price of
Inventory or Equipment sold by such Debtor and all tax refunds (such
accounts, general intangibles and moneys due and to become due being
herein called collectively "ACCOUNTS");
(f) all instruments, chattel paper or letters of credit (each as
defined in the Uniform Commercial Code) of such Debtor evidencing,
representing, arising from or existing in respect of, relating to, or
securing or otherwise supporting the payment of, any of the Accounts,
including (but not limited to) promissory notes, drafts, bills of exchange
and trade acceptances (herein collectively called "INSTRUMENTS");
(g) all inventory (as defined in the Uniform Commercial Code) of
such Debtor, all goods obtained by such Debtor in exchange for such
inventory, any products made or processed from such inventory including
all substances, if any, commingled therewith or added thereto, and any
such inventory as is temporarily out of such Debtor's custody or
possession, including inventory held by others on consignment, inventory
on the premises of others and items in transit (herein collectively called
"INVENTORY");
(h) all Intellectual Property and all other accounts or general
intangibles (each as defined in the Uniform Commercial Code) not
constituting Intellectual Property or Accounts;
(i) all equipment (as defined in the Uniform Commercial Code) of
such Debtor, including all Motor Vehicles (herein collectively called
"EQUIPMENT");
(j) all Contracts;
(k) all documents of title (as defined in the Uniform Commercial
Code) or other receipts of such Debtor covering, evidencing or
representing Inventory or Equipment (herein collectively called
"DOCUMENTS");
(l) all rights, claims and benefits of such Debtor against any
Person arising out of, relating to or in connection with Inventory or
Equipment purchased by such Debtor, including, without limitation, any
such rights, claims or benefits against any Person storing or transporting
such Inventory or Equipment;
(m) the balance from time to time in the Collateral Account;
(n) the ART 38 GHz Authorizations and the ART Pending
Applications; and
(o) all other tangible and intangible personal property and
fixtures of such Debtor, including, without limitation, all proceeds,
products, offspring, accessions, rents, profits, income, benefits,
substitutions and replacements of and to any of the property of such
Debtor described in the preceding clauses of this Section 3 (including,
without limitation, any proceeds of insurance thereon and all causes of
action, claims and warranties now or hereafter held by any Debtor in
respect of any of the items listed above) and, to the extent related to
any property described in said clauses or such proceeds, products and
accessions, all books, correspondence, credit files, records, invoices and
other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of
such Debtor or any computer bureau or service company from time to time
acting for such Debtor.
Notwithstanding the foregoing, the Pledged Collateral does not and shall not
include any contract to which any Debtor is a party which would be rendered void
or unenforceable by reason of its being included as part of the Pledged
Collateral or which is not assignable by its terms, unless a consent to the
assignment has been received by such Debtor and/or the Agent.
Section 4. CASH PROCEEDS OF COLLATERAL.
4.01. COLLATERAL ACCOUNT.
(a) There is hereby established with the Agent a cash collateral
account (the "COLLATERAL ACCOUNT") in the name and under
the control of the Agent into which there shall be deposited from time to time
certain cash proceeds of any of the Pledged Collateral as provided in Section
4.02 below (including proceeds of insurance covering the Pledged Collateral) and
into which the Debtors may from time to time deposit any additional amounts that
any of them wishes to pledge to the Agent for the benefit of the Lenders as
additional collateral security hereunder.
(b) The balance from time to time in the Collateral Account shall
constitute part of the Pledged Collateral hereunder and shall not constitute
payment of the Secured Obligations until applied as hereinafter provided. So
long as no Special Event of Default has occurred and is continuing, the Agent
shall remit the collected balance outstanding to the credit of the Collateral
Account to or upon the order of the respective Debtor as such Debtor shall from
time to time instruct; PROVIDED, HOWEVER, that any amounts deposited in the
Collateral Account in respect of Casualty Events, Disposition Events, takings,
destructions or loss of title with respect to Mortgaged Real Property shall be
disbursed to the relevant Debtor in periodic installments consistent with the
provisions of Section 2.4A(iii) of the Credit Agreement. However, at any time
following the occurrence and during the continuance of a Special Event of
Default, the Agent may (and, if instructed by the Required Lenders, shall) in
its (or their) discretion apply or cause to be applied (subject to collection)
the balance from time to time outstanding to the credit of the Collateral
Account to the payment of the Secured Obligations in the manner specified in
Section 5.09 hereof. The balance from time to time in the Collateral Account
shall be subject to withdrawal only as provided herein.
(c) If requested by the Company and agreed to by any Lender that
is an Original Lender, and subject to documentation reasonably satisfactory to
the Agent and such Lender, the Agent shall designate such Lender as a collateral
sub-agent for the Agent in respect of all or any portion of the Collateral
Account and provide written notice to the Company of such designation.
4.02. PROCEEDS OF ACCOUNTS. At any time after the occurrence and
during the continuance of an Event of Default, each Debtor shall, upon the
request of the Agent, instruct all account debtors and other Persons obligated
in respect of all Accounts to make all payments in respect of the Accounts
either (a) directly to the Agent (by instructing that such payments be remitted
to a post office box which shall be in the name and under the control of the
Agent) or (b) to one or more other banks in the United States of America (by
instructing that such payments be remitted to a post office box which shall be
in the name and under the control of the Agent) under arrangements, in form and
substance satisfactory to the Agent, pursuant to which such Debtor shall have
irrevocably
instructed such other bank (and such other bank shall have agreed) to remit all
proceeds of such payments directly to the Agent for deposit into the Collateral
Account. All payments made to the Agent, as provided in the preceding sentence,
shall be immediately deposited in the Collateral Account. In addition to the
foregoing, each Debtor agrees that, if the proceeds of any Pledged Collateral
hereunder (including the payments made in respect of Accounts) shall be received
by it, such Debtor shall as promptly as possible deposit such proceeds into the
Collateral Account. Until so deposited, all such proceeds shall be held in
trust by such Debtor for and as the property of the Agent and the Lenders and
shall not be commingled with any other funds or property of such Debtor.
4.03. INVESTMENT OF BALANCE IN COLLATERAL ACCOUNT. Amounts on
deposit in the Collateral Account shall be invested from time to time in such
Permitted Investments as the respective Debtor (or, after the occurrence and
during the continuance of an Event of Default, the Agent) shall determine, which
Permitted Investments shall be held in the name and be under the control of the
Agent; PROVIDED, HOWEVER, that at any time after the occurrence and during
the continuance of an Event of Default, the Agent may (and, if instructed by the
Required Lenders, shall) in its (or their) discretion at any time and from time
to time elect to liquidate any such Permitted Investments and to apply or cause
to be applied the proceeds thereof to the payment of the Secured Obligations in
the manner specified in Section 5.09 hereof.
Section 5. FURTHER ASSURANCES; REMEDIES. In furtherance of the
grant of the pledge and security interest pursuant to Section 3 hereof, the
Debtors hereby jointly and severally agree with each Lender and the Agent as
follows:
5.01. DELIVERY AND OTHER PERFECTION. Each Debtor shall:
(a) if any of the above-described shares or securities (or only if
an Event of Default has occurred and is continuing) moneys or property)
required to be pledged by such Debtor under clauses (a), (b), (c) and (d)
of Section 3 hereof are received by such Debtor, forthwith either (x)
transfer and deliver to the Agent such shares or securities so received by
such Debtor (together with the certificates for any such shares and
securities duly endorsed in blank or accompanied by undated stock powers
duly executed in blank), all of which thereafter shall be held by the
Agent, pursuant to the terms of this Agreement, as part of the Pledged
Collateral or (y) take such other action as the Agent shall deem necessary
or appropriate to duly record the Lien created hereunder in such shares,
securities, moneys or property in said clauses (a), (b), (c) and (d);
(b) deliver and pledge to the Agent any and all Instruments,
endorsed and/or accompanied by such instruments of assignment and transfer
in such form and substance as the Agent may request; PROVIDED,
HOWEVER, that so long as no Event of Default shall have occurred and be
continuing, such Debtor may retain for collection in the ordinary course
any Instruments received by such Debtor in the ordinary course of business
and the Agent shall, promptly upon request of such Debtor, make
appropriate arrangements for making any other Instrument pledged by such
Debtor available to such Debtor for purposes of presentation, collection
or renewal (any such arrangement to be effected, to the extent deemed
appropriate by the Agent, against trust receipt or like document);
(c) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that
may be necessary or desirable (in the reasonable judgment of the Agent) to
create, preserve, perfect or validate the security interest granted
pursuant hereto or to enable the Agent to exercise and enforce its rights
hereunder with respect to such pledge and security interest, including,
without limitation, after the occurrence and during the continuance of an
Event of Default, causing any or all of the Stock Collateral to be
transferred of record into the name of the Agent or its nominee (and the
Agent agrees that if any Stock Collateral is transferred into its name or
the name of its nominee, the Agent will thereafter promptly give to the
respective Debtor copies of any notices and communications received by it
with respect to the Stock Collateral); PROVIDED, HOWEVER, that notices
to account debtors in respect of any Accounts or Instruments shall be
subject to the provisions of clause (i) below;
(d) keep full and accurate books and records relating to the
Pledged Collateral, and stamp or otherwise xxxx all such material books
and records in such manner as the Agent may reasonably require in order to
reflect the security interests granted by this Agreement;
(e) furnish to the Agent upon its reasonable request statements
and schedules further identifying and describing the Copyright Collateral,
the Patent Collateral and the Trademark Collateral, respectively, and such
other reports in connection with the Copyright Collateral, the Patent
Collateral and the Trademark Collateral, as the Agent may reasonably
request, all in reasonable detail;
(f) promptly upon request of the Agent, following receipt by the
Agent of any statements, schedules or reports pursuant to clause (e)
above, modify this Agreement by
amending ANNEXES 2, 3 AND/OR 4 hereto, as the case may be, to include
any Copyright, Patent or Trademark that becomes part of the Pledged
Collateral under this Agreement;
(g) permit representatives of the Agent, upon reasonable notice,
at any time during normal business hours to inspect and make abstracts
from its books and records pertaining to the Pledged Collateral;
(h) upon the occurrence and during the continuance of any Event of
Default, permit representatives of the Agent to be present at such
Debtor's place of business to receive copies of all communications and
remittances relating to the Pledged Collateral, and forward copies of any
notices or communications received by such Debtor with respect to the
Pledged Collateral, all in such manner as the Agent may require; and
(i) upon the occurrence and during the continuance of any Event of
Default, upon request of the Agent, except as otherwise expressly provided
herein, promptly notify (and such Debtor hereby authorizes the Agent so to
notify) each account debtor in respect of any Accounts or Instruments that
such Pledged Collateral has been assigned to the Agent for the benefit of
the Lenders hereunder, and that any payments due or to become due in
respect of such Pledged Collateral are to be made directly to the Agent.
5.02. OTHER FINANCING STATEMENTS AND LIENS. Except as otherwise
permitted under Section 6.2 of the Credit Agreement, without the prior written
consent of the Agent (granted with the authorization of the Required Lenders),
no Debtor shall file or suffer to be on file, or authorize or permit to be
filed or to be on file, in any jurisdiction, any financing statement or like
instrument with respect to the Pledged Collateral in which the Agent is not
named as the sole secured party for the benefit of the Lenders.
5.03. PRESERVATION OF RIGHTS. The Agent shall not be required to
take steps necessary to preserve any rights against prior parties to any of the
Pledged Collateral.
5.04. SPECIAL PROVISIONS RELATING TO CERTAIN COLLATERAL.
(a) STOCK COLLATERAL.
(1) The Debtors will cause the Pledged Stock to constitute at all
times, with respect to any Issuer existing on the date hereof, 100% or, with
respect to any Issuer created or acquired after the date hereof, the percentage
required by the
Credit Agreement to be pledged hereunder, of the total number of shares of each
class of capital stock of each Issuer then outstanding.
(2) So long as no Event of Default shall have occurred and be
continuing, the Debtors shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the Stock Collateral for all
purposes not inconsistent with the terms of this Agreement, the Credit
Agreement, the Notes or any other instrument or agreement referred to herein or
therein; PROVIDED, HOWEVER, that the Debtors jointly and severally agree
that they will not vote the Stock Collateral in any manner that is inconsistent
with the terms of this Agreement, the Credit Agreement, the Notes or any such
other instrument or agreement; and the Agent shall execute and deliver to the
Debtors or cause to be executed and delivered to the Debtors all such proxies,
powers of attorney, dividend and other orders, and all such instruments, without
recourse, as the Debtors may reasonably request for the purpose of enabling the
Debtors to exercise the rights and powers that they are entitled to exercise
pursuant to this Section 5.04(a).
(3) The Debtors shall be entitled to receive and retain any
dividends on the Stock Collateral to the extent that the payment of such
dividends is permitted by the Credit Agreement.
(4) If any Event of Default shall have occurred, then so long as
such Event of Default shall continue, and whether or not the Agent or any Lender
exercises any available right to declare any Secured Obligation due and payable
or seeks or pursues any other relief or remedy available to it under applicable
law or under this Agreement, the Credit Agreement, the Notes or any other
agreement relating to such Secured Obligation, all dividends and other
distributions on the Stock Collateral shall be paid directly to the Agent and
retained by it as part of the Pledged Collateral, subject to the terms of this
Agreement, and, if the Agent shall so request in writing, the Debtors jointly
and severally agree to execute and deliver to the Agent appropriate additional
dividend, distribution and other orders and documents to that end; PROVIDED,
HOWEVER, that (a) if such Event of Default is cured, any such dividend or
distribution theretofore paid to the Agent shall, upon request of the Debtors
(except to the extent theretofore applied to the Secured Obligations), be
returned by the Agent to the Debtors and (b) nothing contained in this paragraph
(4) shall prohibit any Dividend Payment permitted by Section 6.3 of the Credit
Agreement.
(b) INTELLECTUAL PROPERTY.
(1) For the purpose of enabling the Agent, during the continuance
of an Event of Default, to exercise rights and remedies under Section 5.05
hereof at such time as the Agent shall be lawfully entitled to exercise such
rights and remedies, and for no other purpose, each Debtor hereby grants to the
Agent, to the extent assignable, an irrevocable, non-exclusive license
(exercisable without payment of royalty or other compensation to such Debtor) to
use, assign, license or sublicense any of the Intellectual Property now owned or
hereafter acquired by such Debtor, wherever the same may be located, including
in such license reasonable access to all media in which any of the licensed
items may be recorded or stored and to all computer programs used for the
compilation or printout thereof.
(2) Notwithstanding anything contained herein to the contrary, but
subject to the provisions of Section 6.6 of the Credit Agreement that limit the
right of the Debtors to dispose of their respective property, so long as no
Event of Default shall have occurred and be continuing, the Debtors will be
permitted to exploit, use, enjoy, protect, license, sublicense, assign, sell,
dispose of or take other actions with respect to the Intellectual Property in
the ordinary course of the business of the Debtors. In furtherance of the
foregoing, unless an Event of Default shall have occurred and be continuing the
Agent shall from time to time, upon the request of the respective Debtor,
execute and deliver any instruments, certificates or other documents, in the
form so requested, that such Debtor shall have certified are appropriate (in its
judgment) to allow it to take any action permitted above (including
relinquishment of the license provided pursuant to clause (1) immediately above
as to any specific Intellectual Property). Further, upon the payment in full of
all of the Secured Obligations and cancellation or termination of the
Commitments and Letter of Credit Liabilities or earlier expiration of this
Agreement or release of the Pledged Collateral, the Agent shall grant back to
the Debtors the license granted pursuant to clause (1) immediately above. The
exercise of rights and remedies under Section 5.05 hereof by the Agent shall not
terminate the rights of the holders of any licenses or sublicenses theretofore
granted by the Debtors in accordance with the first sentence of this clause (2).
(3) The Agent agrees that it will not exercise any of its rights
and remedies pursuant to Section 5.05 hereof prior to having received the
required consents, if any, under any licensing agreements to which any Debtor is
a party to the exercise of such rights and remedies.
(c) MOTOR VEHICLES. At any time after the occurrence and during
the continuance of an Event of Default, each Debtor shall, upon the request of
the Agent, deliver to the Agent originals of the certificates of title or
ownership for the Motor Vehicles, and any other Equipment covered by
certificates of title or ownership, owned by it with the Agent listed as
lienholder.
5.05. EVENTS OF DEFAULT, ETC. During the period during which an
Event of Default shall have occurred and be continuing:
(a) each Debtor shall, at the request of the Agent, assemble the
Pledged Collateral owned by it at such place or places, reasonably
convenient to both the Agent and such Debtor, designated in its request;
(b) the Agent may make any reasonable compromise or settlement
deemed desirable with respect to any of the Pledged Collateral and may
extend the time of payment, arrange for payment in installments, or
otherwise modify the terms, of any of the Pledged Collateral;
(c) the Agent shall have all of the rights and remedies with
respect to the Pledged Collateral of a secured party under the Uniform
Commercial Code (whether or not the Uniform Commercial Code is in effect
in the jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled under
the laws in effect in any jurisdiction where any rights and remedies
hereunder may be asserted, including, without limitation, the right, to
the maximum extent permitted by law, to exercise all voting, consensual
and other powers of ownership pertaining to the Pledged Collateral as if
the Agent were the sole and absolute owner thereof (and each Debtor
agrees to take all such action as may be appropriate to give effect to
such right);
(d) the Agent in its discretion may, in its name or in the name of
the Debtors or otherwise, demand, xxx for, collect or receive any money or
property at any time payable or receivable on account of or in exchange
for any of the Pledged Collateral, but shall be under no obligation to do
so; and
(e) the Agent may, upon ten business days' prior written notice to
the Debtors of the time and place, with respect to the Pledged Collateral
or any part thereof that shall then be or shall thereafter come into the
possession, custody or control of the Agent, the Lenders or any of their
respective agents, sell, lease, assign or otherwise dispose of all or any
part of such Pledged Collateral, at such place or places as the Agent
deems best, and for cash or for credit or for future
delivery (without thereby assuming any credit risk), at public or private
sale, without demand of performance or notice of intention to effect any
such disposition or of the time or place thereof (except such notice as is
required above or by applicable statute and cannot be waived), and the
Agent or any Lender or anyone else may be the purchaser, lessee, assignee
or recipient of any or all of the Pledged Collateral so disposed of at any
public sale (or, to the extent permitted by law, at any private sale) and
thereafter hold the same absolutely, free from any claim or right of
whatsoever kind, including any right or equity of redemption (statutory or
otherwise), of the Debtors, any such demand, notice and right or equity
being hereby expressly waived and released. In the event of any sale,
assignment, or other disposition of any of the Trademark Collateral, the
goodwill connected with and symbolized by the Trademark Collateral subject
to such disposition shall be included, and the Debtors shall supply to the
Agent or its designee, for inclusion in such sale, assignment or other
disposition, all Intellectual Property relating to such Trademark
Collateral. The Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the sale may be so adjourned.
The proceeds of each collection, sale or other disposition under this Section
5.05, including by virtue of the exercise of the license granted to the Agent in
Section 5.04(b) hereof, shall be applied in accordance with Section 5.09 hereof.
The Debtors recognize that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Agent may be compelled, with respect to any sale of all or
any part of the Pledged Collateral, to limit purchasers to those who will agree,
among other things, to acquire the Pledged Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The
Debtors acknowledge that any such private sales may be at prices and on terms
less favorable to the Agent than those obtainable through a public sale without
such restrictions, and, notwithstanding such circumstances, agree that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that the Agent shall have no obligation to engage in public sales and
no obligation to delay the sale of any Pledged Collateral for the period of time
necessary to permit the respective Issuer or issuer thereof to register it for
public sale.
The Agent agrees that any public or private sale of the Pledged
Collateral will be held in a commercially reasonable manner.
5.06. DEFICIENCY. If the proceeds of sale, collection or other
realization of or upon the Pledged Collateral pursuant to Section 5.05 hereof
are insufficient to cover the costs and expenses of such realization and the
payment in full of the Secured Obligations, the Debtors shall remain liable for
any deficiency.
5.07. REMOVALS, NAME CHANGE, ETC. Without at least 30 days'
prior written notice to the Agent, no Debtor shall (i) maintain any of its books
and records with respect to the Pledged Collateral at any office or maintain its
principal place of business at any place, or permit any Inventory or Equipment
to be located anywhere, other than at the address indicated beneath the
signature of the Company to the Credit Agreement or at one of the locations
identified in ANNEX 6 hereto or at the premises of a Person processing or
storing such Inventory or Equipment, if such Person has executed Uniform
Commercial Code Financing Statements naming such Debtor as secured party (which
financing statements are hereby assigned to the Agent) or such Person has
executed a supplier subordination agreement satisfactory to the Required Lenders
in form and substance or in transit from one of such locations to another or
Equipment installed at locations for purposes of conducting the Debtors
business, provided that such Debtor may permit Equipment to be located at such
other premises to the extent permitted as an Investment pursuant to Section
6.4(w) of the Credit Agreement or (ii) change its corporate name, or the name
under which it does business, from the name shown on the signature pages hereto.
5.08. PRIVATE SALE. No Creditors shall incur liability as a
result of the sale of the Pledged Collateral, or any part thereof, at any
private sale pursuant to Section 5.05 hereof conducted in a commercially
reasonable manner. Each Debtor hereby waives any claims against any Creditor
arising by reason of the fact that the price at which the Pledged Collateral may
have been sold at any such private sale held in a commercially reasonable manner
was less than the price that might have been obtained at a public sale or was
less than the aggregate amount of the Secured Obligations, even if the Agent
accepts the first offer received and does not offer the Pledged Collateral to
more than one offeree.
5.09. APPLICATION OF PROCEEDS. Except as otherwise herein
expressly provided and except as provided below in this Section 5.09, the
proceeds of any collection, sale or other realization of all or any part of the
Pledged Collateral pursuant hereto, and any other cash at the time held by the
Agent under
Section 4 hereof or this Section 5, shall be applied by the Agent:
FIRST, to the payment of the reasonable costs and expenses of such
collection, sale or other realization, including reasonable out-of-pocket
costs and expenses of the Agent and the reasonable fees and expenses of
its agents and counsel, and all reasonable expenses incurred and advances
made by the Agent in connection therewith;
NEXT, to the payment in full of the Secured Obligations, in each
case equally and ratably in accordance with the respective amounts thereof
then due and owing or as the Lenders holding the same may otherwise agree;
and
FINALLY, to the payment to the respective Debtor, or its
successors or assigns, or as a court of competent jurisdiction may direct,
of any surplus then remaining.
As used in this Section 5, "PROCEEDS" of Pledged Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Pledged Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Debtors or any issuer of or obligor on
any of the Pledged Collateral. Notwithstanding the foregoing, the proceeds of
any cash or other amounts held in the "Letter of Credit Liabilities Sub-Account"
of the Collateral Account pursuant to Section 4.04 hereof shall be applied
FIRST to the Letter of Credit Liabilities outstanding from time to time and
SECOND to the other Secured Obligations in the manner provided above in this
Section 5.09.
5.10. ATTORNEY-IN-FACT. Without limiting any rights or powers
granted by this Agreement to the Agent while no Event of Default has occurred
and is continuing, upon the occurrence and during the continuance of any Event
of Default the Agent is hereby appointed the attorney-in-fact of each Debtor for
the purpose of carrying out the provisions of this Section 5 and taking any
action and executing any instruments that the Agent may deem reasonably
necessary or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, upon and during the continuance of any Event of
Default, so long as the Agent shall be entitled under this Section 5 to make
collections in respect of the Pledged Collateral, the Agent shall have the right
and power to receive, endorse and collect all checks made payable to the order
of any Debtor representing any dividend, payment or other distribution in
respect of the Pledged Collateral or any part thereof and to give full discharge
for the same.
5.11. PERFECTION. Prior to or concurrently with the execution
and delivery of this Agreement, each Debtor shall (i) file such financing
statements and other documents in such offices as the Agent may reasonably
request to perfect the security interests granted by Section 3 of this
Agreement, (ii) deliver to the Agent all certificates identified in ANNEX 1A
hereto, accompanied by undated stock powers duly executed in blank and (iii)
deliver to the Agent all Intercompany Notes required to be delivered pursuant to
the Credit Agreement.
5.12. TERMINATION. When all Secured Obligations shall have been
paid in full and the Commitments of the Lenders under the Credit Agreement and
all Letter of Credit Liabilities shall have expired or been terminated, this
Agreement shall terminate, and the Agent shall forthwith cause to be assigned,
transferred and delivered, against receipt but without any recourse, warranty or
representation whatsoever, any remaining Pledged Collateral and money received
in respect thereof, to or on the order of the respective Debtor and to be
released and canceled all licenses and rights referred to in Section 5.04(b)
hereof. The Agent shall also execute and deliver to the respective Debtor upon
such termination or upon the sale or other disposition of Property permitted by
Section 6.6 of the Credit Agreement such Uniform Commercial Code termination
statements, certificates for terminating the Liens on the Motor Vehicles and
such other documentation as shall be reasonably requested by the respective
Debtor to effect the termination and release of the Liens on the Pledged
Collateral.
5.13. EXPENSES. The Debtors jointly and severally agree to pay
to the Agent all reasonable out-of-pocket expenses (including reasonable
expenses for legal services of every kind) of, or incident to, the enforcement
of any of the provisions of this Section 5, or performance by the Agent of any
obligations of the Debtors in respect of the Pledged Collateral which the
Debtors have failed or refused to perform, or any actual or attempted sale, or
any exchange, enforcement, collection, compromise or settlement in respect of
any of the Pledged Collateral, and for the care of the Pledged Collateral and
defending or asserting rights and claims of the Agent in respect thereof, by
litigation or otherwise, including expenses of insurance, and all such expenses
shall be Secured Obligations to the Agent secured under Section 3 hereof.
5.14. FURTHER ASSURANCES. Each Debtor agrees that, from time to
time upon the written request of the Agent, such Debtor will execute and deliver
such further documents and do such other acts and things as the Agent may
reasonably request in order fully to effect the purposes of this Agreement.
Section 6. MISCELLANEOUS.
6.01. NO WAIVER. No failure on the part of the Agent or any of
its agents to exercise, and no course of dealing with respect to, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Agent or any of its
agents of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies herein are cumulative and are not exclusive of any remedies provided by
law.
6.02. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
6.03. NOTICES. All notices, requests, consents and demands
hereunder shall be in writing and telecopied or delivered to the intended
recipient at as specified pursuant to the Credit Agreement and shall be deemed
to have been given at the times specified in the Credit Agreement.
6.04. WAIVERS, ETC. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by each Debtor
and the Agent (with the consent of the Required Lenders. Any such amendment or
waiver shall be binding upon each Creditor, each holder of any of the Secured
Obligations and each Debtor.
6.05. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of each
Debtor, the Creditors and each holder of any of the Secured Obligations
(PROVIDED, HOWEVER, that no Debtor shall assign or transfer its rights or
obligations hereunder without the prior written consent of the Creditors).
6.06. CAPTIONS. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
6.07. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
6.08. AGENTS. The Agent may employ agents and attorneys-in-fact
in connection herewith and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
6.09. SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Creditors in order
to carry out the intentions of the parties hereto as nearly as may be possible
and (ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
6.10. FCC NOTIFICATION. In the event that the requirements of 47
C.F.R. Section 22.917, or any successor regulation, are or become applicable to
this Agreement, the Agent agrees, to the extent required to do so, to notify the
Company and the FCC in writing at least ten days prior to repossession, in
accordance with this Agreement, of all or any part of the Pledged Collateral
that is subject to said regulation.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the day and year first above
written.
ADVANCED RADIO TELECOM CORP.
By:
----------------------------------
Name:
Title:
ART LICENSING CORP.
By:
----------------------------------
Name:
Title:
[NAME],
as Agent
By:
----------------------------------
Name:
Title:
ANNEX 1A
PLEDGED STOCK
[See Section 2(b)]
Borrower
--------
Certificate Registered
Issuer No. Owner Number of Shares
------ ----------- ---------- ----------------
GUARANTORS
----------
Certificate Registered
Issuer Nos. Owner Number of Shares
------ ----------- ---------- ----------------
ANNEX 1B
INTERCOMPANY NOTES
Intercompany Notes owned by Borrower:
Original Final
Name of Principal Date of Maturity
Obligor Amount Note Date
------- --------- ------- --------
Intercompany Notes owned by Guarantors:
Original Final
Name of Principal Date of Maturity
Obligor Amount Note Date
------- --------- ------- --------
