Exhibit 4.7
ESCROW AND SECURITY AGREEMENT
This ESCROW AND SECURITY AGREEMENT (this "Escrow
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Agreement") is made and entered into as of September 24, 1997
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among ICG FUNDING, LLC, a Delaware limited liability company (the
"Issuer"), ICG COMMUNICATIONS, INC. ("ICG"), a Delaware
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corporation, and NORWEST BANK COLORADO, NATIONAL ASSOCIATION, as
escrow agent (the "Escrow Agent") for the holders (the "Holders")
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of the Preferred Securities (as defined herein) issued by the
Issuer under the LLC Agreement referred to below.
W I T N E S S E T H
WHEREAS, pursuant to the Placement Agreement (the
"Placement Agreement") dated September 18, 1997, among the
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Issuer, ICG and Xxxxxx Xxxxxxx & Co. Incorporated and Deutsche
Xxxxxx Xxxxxxxx Inc. (the "Placement Agents"), the Issuer and ICG
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have agreed to sell to the Placement Agents, 2,300,000 of
Issuer's 6 % Exchangeable Limited Liability Company Preferred
Securities, liquidation preference $50 per preferred security
(the "Firm Preferred Securities" and, together with the
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Additional Preferred Securities (as defined herein), the
"Preferred Securities"), which will be mandatorily redeemable on
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November 15, 2009;
WHEREAS, pursuant to the Placement Agreement, the
Issuer and ICG propose to issue and sell to the Placement Agents
not more than an additional 345,000 Preferred Securities (the
"Additional Preferred Securities"), if and to the extent that the
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Placement Agents shall have determined to exercise the right to
purchase such additional Preferred Securities granted to the
Placement Agents;
WHEREAS, the Issuer hereby agrees to (i) purchase or
cause the purchase of Pledged Securities (as defined herein) in
an amount that will be sufficient upon receipt of scheduled
interest and principal payments in respect thereof to provide for
the payment of the first thirteen cash dividends due on the
Preferred Securities through and including November 15, 2000 and
(ii) place such Pledged Securities (as defined herein) (or cause
them to be placed) in an account held by the Escrow Agent for the
benefit of Holders of the Preferred Securities; and
WHEREAS, to secure the obligations of the Issuer under
the LLC Agreement to pay in cash the first thirteen dividends on
the Preferred Securities through and including November 15, 2000
(the "Obligations"), the Issuer has agreed to (i) pledge to the
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Escrow Agent for its benefit and the ratable benefit of the
Holders of the Preferred Securities, a security interest in the
Pledged Securities (as defined herein) and related collateral and
(ii) execute and deliver this Escrow Agreement in order to secure
the payment and performance by the Issuer of all the Obligations.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings given to such terms in the Agreement of
Limited Liability Company of the Issuer (as amended, restated,
supplemented or otherwise modified from time to time, the "LLC
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Agreement") or the Preferred Securities Designation. Unless
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otherwise defined herein or in the LLC Agreement, terms used in
Articles 8 or 9 of the Uniform Commercial Code ("UCC") as in
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effect in the State of New York are used herein as therein
defined and terms used in Revised Article 8, as such term is
defined in 31 C.F.R. Section 357.2, as modified by the amendments
promulgated at 61 Fed. Reg. 43,628 (Aug. 23, 1996) ("Revised
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Article 8"), are used herein as therein defined.
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AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises
herein contained, and in order to induce the Holders of the
Preferred Securities to purchase the Preferred Securities and as
a condition to the Closing of the offering of the Preferred
Securities, the Issuer hereby agrees with the Escrow Agent, for
the benefit of the Escrow Agent and for the ratable benefit of
the Holders of the Preferred Securities, as follows:
SECTION 1. Pledge and Grant of Security Interest.
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(a) The Issuer hereby pledges to the Escrow Agent for its benefit
and for the ratable benefit of the Holders of the Preferred
Securities, and grants to the Escrow Agent for its benefit and
for the ratable benefit of the Holders of the Preferred
Securities, a continuing first priority security interest in and
to all of the Issuer's right, title and interest in, to and under
the following (hereinafter collectively referred to as the
"Collateral"), whether characterized as investment property,
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general intangibles or otherwise: (a) the United States Treasury
securities identified in Annex 1 to Exhibit A to this Escrow
Agreement (the "Firm Pledged Securities" and, together with the
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Additional Pledged Securities, the "Pledged Securities"), (b) the
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United States Treasury securities, if any, to be purchased
pursuant to Section 1(b), (c) any and all applicable security
entitlements to the Pledged Securities, (d) the Norwest Bank
Colorado, National Association account in the name of "Norwest
Bank Colorado, National Association, as Escrow Agent for the
benefit of the holders of the 6 % Exchangeable Limited Liability
Company Preferred Securities mandatorily redeemable 2009 of ICG
Funding, LLC Collateral Escrow Account", Administrative Account
No. 1185943909 (the "Escrow Account") established and maintained
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by the Escrow Agent pursuant to this Escrow Agreement, (e) any
and all related securities accounts in which security
entitlements to the Pledged Securities are carried, and (f) all
proceeds of any and all of the foregoing Collateral (including,
without limitation, proceeds that constitute property of the
types described in clauses (a) - (e) of this Section 1) and, to
the extent not otherwise included, all cash.
(b) In the event the Placement Agents shall decide to
exercise the right to purchase the Additional Preferred
Securities pursuant to the Placement Agreement, the Issuer
shall use a portion of the proceeds from such purchase by
the Placement Agents to purchase and deliver to the Escrow
Agent additional United States Treasury securities (the
"Additional Pledged Securities") in such amount as will be
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sufficient upon receipt of scheduled interest and/or
principal payments of all Pledged Securities thereafter held
in the Pledged Account to provide payment for the first
thirteen cash dividends due on the Preferred Securities.
The Additional Pledged Securities shall be pledged by the
Issuer to the Escrow Agent for the benefit of the Holders
and shall be held by the Escrow Agent in the Pledged
Account.
(c) In the event the Shelf Registration Statement (as
defined in the Registration Rights Agreement dated as of
September 24, 1997 among ICG, the Issuer and Xxxxxx Xxxxxxx
& Co. Incorporated and Deutsche Xxxxxx Xxxxxxxx Inc. (the
"Registration Rights Agreement")) has not been filed on or
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prior to December 22, 1997 and the dividends payable on the
Preferred Securities (in addition to the dividends otherwise
payable on the Preferred Securities) accrue at an additional
annual rate of .25% of the liquidation preference thereof
and/or the Shelf Registration Statement is not declared
effective on or prior to March 22, 1998 and the dividends
payable on the Preferred Securities (in addition to the
dividends otherwise payable on the Preferred Securities)
accrue at an additional annual rate of .25% of the
liquidation preference thereof as required by the
Registration Rights Agreement, ICG shall pay a special
dividend in shares of Common Stock, par value $.01 per share
("ICG Common Stock"), of ICG to the Issuer as the holder of
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ICG's preferred stock, par value $.01 per share, which will
be mandatorily redeemable on November 15, 2009, in such
number that when the Issuer sells such shares of Common
Stock, the Issuer will have sufficient funds to purchase and
deliver to the Escrow Agent additional Pledged Securities in
such amount as will be sufficient upon receipt of scheduled
interest and/or principal payments of all Pledged Securities
thereafter held in the Pledged Account to provide payment
for the first thirteen cash dividends due on the Preferred
Securities (assuming the additional annual rate of .25% or
.5%, as the case may be, of the liquidation preference
remains in effect through November 15, 2000). The
additional Pledged Securities pursuant to this Section 1(c)
shall be pledged by the Issuer to the Escrow Agent for the
benefit of the Holders and shall be held by the Escrow Agent
in the Pledged Account.
SECTION 2. Security for Obligation. This Escrow
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Agreement and the pledge of Collateral hereunder secures the
prompt and complete payment and performance when due (whether at
stated maturity, by acceleration or otherwise) of all the
Obligations.
SECTION 3. Delivery of Collateral; Escrow Account;
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Interest. (a) The Pledged Securities shall be pledged and
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transferred to the Escrow Agent and the Escrow Agent shall become
the holder of a security entitlement to the Pledged Securities,
through action by the Federal Reserve Bank of New York ("FRBNY")
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or another securities intermediary, as confirmed (in writing or
electronically or otherwise in accordance with standard industry
practice) to the Escrow Agent by FRBNY or such other securities
intermediary (i) indicating by book-entry that the Pledged
Securities or a security entitlement thereto has been credited to
the Escrow Agent's account, or (ii) acquiring the Pledged
Securities or a security entitlement thereto for the Escrow Agent
and accepting the same for credit to a securities account of the
Escrow Agent.
(b) Prior to or concurrently with the execution and
delivery hereof and prior to the transfer to the Escrow
Agent of the Pledged Securities (or acquisition by the
Escrow Agent of any security entitlement thereto), as
provided in subsection (a) of this Section 3, the Escrow
Agent shall establish the Escrow Account on its books as an
account segregated from all other custodial or collateral
accounts at its office at 0000 Xxxxxxxx, Xxxxxx, Xxxxxxxx
00000 Attention: Corporate Trust and Escrow Securities.
Upon transfer of the Pledged Securities to the Escrow Agent
(or the Escrow Agent's acquisition of a security entitlement
thereto), as confirmed to the Escrow Agent by FRBNY or
another securities intermediary, the Escrow Agent shall make
appropriate book entries indicating that the Pledged
Securities and/or such security entitlement have been
credited to and are held in the Escrow Account. Subject to
the other terms and conditions of this Escrow Agreement, all
funds or other property held by the Escrow Agent pursuant to
this Escrow Agreement shall be held in the Escrow Account
subject (except as expressly provided in Sections 4(a), (b)
and (c) hereof) to the exclusive dominion and control of the
Escrow Agent and exclusively for the benefit of the Escrow
Agent and for the ratable benefit of the Holders of the
Preferred Securities and segregated from all other funds or
other property otherwise held by the Escrow Agent.
(c) All Collateral shall be retained in the Escrow
Account pending disbursement pursuant to the terms hereof.
(d) Concurrently with the execution and delivery of
this Escrow Agreement the Escrow Agent is delivering to the
Issuer and the Placement Agents a duly executed certificate,
in the form of Exhibit A hereto, of an officer of the Escrow
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Agent, confirming the Escrow Agent's establishment and
maintenance of the Escrow Account and its receipt and
holding of the Firm Pledged Securities or a security
entitlement thereto and the crediting of the Firm Pledged
Securities or such security entitlement to the Escrow
Account, all in accordance with this Escrow Agreement.
(e) In the event the Placement Agents shall decide to
exercise the right to purchase the Additional Preferred
Securities pursuant to the Placement Agreement, the Escrow
Agent shall deliver, on the Option Closing Date (as defined
in the Placement Agreement), to the Issuer and the Placement
Agents a duly executed certificate, substantially in the
form of Exhibit A hereto, with respect to the Additional
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Pledged Securities, of an officer of the Escrow Agent,
confirming the Escrow Agent's maintenance of the Escrow
Account and its receipt and holding of the Additional
Pledged Securities or a security entitlement thereto and the
crediting of the Additional Pledged Securities or such
security entitlement to the Escrow Account, all in
accordance with this Escrow Agreement.
(f) Concurrently with the execution and delivery of
this Escrow Agreement, the Issuer is delivering to the
Escrow Agent acknowledgement copies or stamped receipt
copies of proper financing statements, duly filed on or
before the Closing Date (as defined in the LLC Agreement)
under the UCC of the State of Colorado, covering the
Collateral described in this Escrow Agreement.
SECTION 4. Disbursements. (a) Three business days
prior to the date of any of the first thirteen scheduled dividend
payments on the Preferred Securities, the Issuer shall, pursuant
to written instructions given by the Issuer to the Escrow Agent
(an "Issuer Order"), direct the Escrow Agent to release from the
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Escrow Account and pay to the Holders of the Preferred Securities
proceeds sufficient to provide for payment in full of such
dividend payment then due on the Preferred Securities. Upon
receipt of an Issuer Order, the Escrow Agent will release funds
in an amount sufficient to provide for the payment of the
dividend on the Preferred Securities in accordance with the
Issuer Order and the payment provisions of the LLC Agreement to
the Holders of the Preferred Securities from (and to the extent
of) proceeds of the Pledged Securities in the Escrow Account.
(b) If the Issuer makes any dividend payment or
portion of a dividend payment for which the Collateral is
security from a source of funds other than the Escrow
Account ("Issuer Funds"), the Issuer may, after payment in
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full of such dividend payment, direct the Escrow Agent
pursuant to an Issuer Order to release to the Issuer or to
another party at the direction of the Issuer (the "Issuer's
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Designee") proceeds from the Escrow Account in an amount
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less than or equal to the amount of Issuer Funds applied to
such dividend payment. Upon receipt by the Escrow Agent of
such Issuer Order and provided the Escrow Agent has received
such dividend payment, the Escrow Agent shall pay over to
the Issuer or the Issuer's Designee, as the case may be, the
requested amount from proceeds in the Escrow Account as soon
as practicable.
(c) Upon (i) payment in full of the first thirteen
scheduled dividend payments on the Preferred Securities or
(ii) exchange of all of the Preferred Securities into shares
of ICG Common Stock, the security interest in the Collateral
(except, with respect to subsection (ii) in this Section
4(c), the Class of Pledged Securities (as defined below), if
any, that will mature within 15 days from the date of such
exchange) evidenced by this Escrow Agreement and held in the
Escrow Account will automatically terminate and be of no
further force and effect and the Collateral (except, with
respect to subsection (ii) in this Section 4(c), the Class
of Pledged Securities, if any, that will mature within 15
days from the date of such exchange) shall promptly be paid
over and transferred to the Issuer. Furthermore, upon the
release of any Collateral from the Escrow Account in
accordance with the terms of this Escrow Agreement, whether
upon release of Collateral to Holders as payment of
dividends or otherwise, the security interest evidenced by
this Escrow Agreement in such released Collateral will
automatically terminate and be of no further force and
effect.
(d) At least three Business Days prior to the due date
of each of the first thirteen scheduled dividend payments on
the Preferred Securities, the Issuer shall give the Escrow
Agent notice (by Issuer Order) as to whether such dividend
payment will be made pursuant to Section 4(a) or 4(b) and
the respective amounts of the dividend that will be paid
from the Escrow Account and from Issuer Funds. Any Issuer
Funds to be used to make any dividend payment shall be
delivered to the Escrow Agent, in immediately available
funds, prior to 10 a.m. one business day prior to such
dividend payment date. If no such notice is given or such
Issuer Funds have not been so delivered, the Escrow Agent
will act pursuant to Section 4(a) as if it had received an
Issuer Order pursuant thereto for the payment in full of the
dividend then due from the Escrow Account.
(e) Upon any Provisional Redemption, the Escrow Agent,
pursuant to a written instruction given by the Issuer to the
Escrow Agent, shall release from the Escrow Account and pay
the Holders whose Preferred Securities are being redeemed
pursuant to such Provisional Redemption, such Holders' pro
rata share of the entire Collateral.
(f) The Escrow Agent shall liquidate Collateral in the
Escrow Account (pursuant to written instructions from
Issuer) in order to make any scheduled payment of dividends
or payment pursuant to Section 4(e) above unless there are
sufficient funds in the Escrow Account on such dividend
payment date.
(g) In the event that, prior to November 15, 2000, a
holder of the Preferred Securities exchanges such Preferred
Securities with the Issuer for shares of ICG Common Stock in
accordance with the LLC Agreement, the Escrow Agent,
pursuant to a written notice of the Issuer, shall release
from the Escrow Account an amount of each Class of Pledged
Securities (other than the Class of Pledged Securities, if
any, that will mature within 15 days from the date of such
exchange) that are then held in the Escrow Account equal to
all of the Pledged Securities in such Class of Pledged
Securities multiplied by a fraction, the numerator of which
is the number of Preferred Securities which are being
exchanged and the denominator of which is all of the
outstanding Preferred Securities; provided however, that the
Escrow Agent shall only release each such Class of Pledged
Securities to the extent that it receives from an officer of
the Issuer a written notice stating that it is his/her
reasonable opinion that after such release, the Pledged
Securities remaining in the Escrow Account will be
sufficient upon receipt of scheduled interest and/or
principal payment of all remaining Pledged Securities
thereafter held in the Pledged Account to provide payment
for the remaining cash dividends due on the Preferred
Securities. Each group of Pledged Securities that will
mature on or about a dividend payment date with respect to
the Preferred Securities shall be considered, for purposes
of this Section 4, a "Class of Pledged Securities".
(h) Nothing contained in this Escrow Agreement shall
(i) afford the Issuer any right to issue entitlement orders
with respect to any security entitlement to the Pledged
Securities or any securities account in which any such
security entitlement may be carried, or otherwise afford the
Issuer control of any such security entitlement or (ii)
otherwise give rise to any rights of the Issuer with respect
to the Pledged Securities, any security entitlement thereto
or any securities account in which any such security
entitlement may be carried, other than the Issuer's rights
under this Escrow Agreement as the beneficial owner of
Collateral pledged to and subject to the exclusive dominion
and control (except as expressly provided in Sections 4(a),
(b), (c), (e) and (g) hereof) of the Escrow Agent in its
capacity as such (and not as a securities intermediary).
The Issuer acknowledges, confirms and agrees that the Escrow
Agent is an entitlement holder of the security entitlements
to the Pledged Securities solely as Escrow Agent for the
Holders of the Preferred Securities and not as a securities
intermediary.
SECTION 5. Representations and Warranties. The
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Issuer hereby represents and warrants that:
(a) The execution and delivery by the Issuer of, and
the performance by the Issuer of its obligations under, this
Escrow Agreement will not contravene any provision of
applicable law or the Certificate of Formation of the Issuer
or any material agreement or other material instrument
binding upon the Issuer or any of its subsidiaries or any
judgment, order or decree of any governmental body, agency
or court having jurisdiction over the Issuer or any of its
subsidiaries, or result in the creation or imposition of any
lien on any assets of the Issuer, except for the security
interests granted under this Escrow Agreement; no consent,
approval, authorization or order of, or qualification with,
any governmental body or agency is required (i) for the
performance by the Issuer of its obligations under this
Escrow Agreement, (ii) for the pledge by the Issuer of the
Collateral pursuant to this Escrow Agreement or (iii) except
for any such consents, approvals, authorizations or orders
required to be obtained by the Escrow Agent (or the Holders)
for reasons other than the consummation of this transaction,
for the exercise by the Escrow Agent of the rights provided
for in this Escrow Agreement or the remedies in respect of
the Collateral pursuant to this Escrow Agreement.
(b) The Issuer is the beneficial owner of the
Collateral, free and clear of any Lien or claims of any
person or entity (except for the security interests granted
under this Escrow Agreement). No financing statement
covering the Issuer's interest in the Pledged Securities is
on file in any public office, other than the financing
statements filed pursuant to this Escrow Agreement.
(c) This Escrow Agreement has been duly authorized,
validly executed and delivered by the Issuer and constitutes
a valid and binding agreement of the Issuer, enforceable
against the Issuer in accordance with its terms, except as
(i) the enforceability hereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, preference,
reorganization, moratorium or similar laws now or hereafter
in effect relating to or affecting creditors' rights or
remedies generally, (ii) the availability of equitable
remedies may be limited by equitable principles of general
applicability, (iii) the exculpation provisions and rights
to indemnification hereunder may be limited by U.S. federal
and state securities laws and public policy considerations
and (iv) the waiver of rights and defenses contained in
Section 11(b), Section 14.11 and Section 14.15 hereof may be
limited by applicable law.
(d) Upon the transfer to the Escrow Agent of the
Pledged Securities and the acquisition by the Escrow Agent
of a security entitlement thereto, in accordance with
Section 3, the pledge of and grant of a security interest in
the Collateral securing the payment of the Obligations for
the benefit of the Escrow Agent and the Holders of the
Preferred Securities will constitute a perfected security
interest in such Collateral with first priority against all
creditors of the Issuer (and any persons purporting to
purchase any of the Collateral from the Issuer).
(e) There are no legal or governmental proceedings
pending or, to the best of the Issuer's knowledge,
threatened to which the Issuer or any of its subsidiaries is
a party or to which any of the properties of the Issuer or
any such subsidiary is subject that would materially
adversely affect the power or ability of the Issuer to
perform its obligations under this Escrow Agreement or to
consummate the transactions contemplated hereby.
(f) The pledge of the Collateral pursuant to this
Escrow Agreement is not prohibited by law or governmental
regulation (including, without limitation, Regulations G, T,
U and X of the Board of Governors of the Federal Reserve
System) applicable to the Issuer.
(g) No Event of Default exists.
SECTION 6. Further Assurances. The Issuer will,
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promptly upon request by the Escrow Agent, execute and deliver or
cause to be executed and delivered, or use its reasonable best
efforts to procure, all assignments, instruments and other
documents, all in form and substance reasonably satisfactory to
the Escrow Agent, deliver any instruments to the Escrow Agent and
take any other actions that are necessary or, in the reasonable
opinion of the Escrow Agent, desirable to perfect, continue the
perfection of, or protect the first priority of the Escrow
Agent's security interest in and to the Collateral, to protect
the Collateral against the rights, claims, or interests of third
persons (other than any such rights, claims or interests created
by or arising through the Escrow Agent) or to effect the purposes
of this Escrow Agreement including those contemplated by the
Offering Memorandum dated September 18, 1997 relating to the
Preferred Securities. The Issuer also hereby authorizes the
Escrow Agent to file any financing or continuation statements in
the United States with respect to the Collateral without the
signature of the Issuer (to the extent permitted by applicable
law). The Issuer will promptly pay all reasonable costs incurred
in connection with any of the foregoing within 45 days of receipt
of an invoice therefor. The Issuer also agrees, whether or not
requested by the Escrow Agent, to take all actions that are
necessary to perfect or continue the perfection of, or to protect
the first priority of, the Escrow Agent's security interest in
and to the Collateral, including the filing of all necessary
financing and continuation statements, and to protect the
Collateral against the rights, claims or interests of third
persons (other than any such rights, claims or interests created
by or arising through the Escrow Agent).
SECTION 7. Covenants. The Issuer covenants and agrees
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with the Escrow Agent and the Holders of the Preferred Securities
that from and after the date of this Escrow Agreement until the
earlier of payment in full in cash of the Obligations:
(a) that (i) it will not (and will not purport to)
sell or otherwise dispose of, or grant any option or warrant
with respect to, any of the Collateral or its beneficial
interest therein, and (ii) it will not create or permit to
exist any Lien or other adverse interest in or with respect
to its beneficial interest in any of the Collateral (except
for the security interests granted under this Escrow
Agreement); and
(b) that it will not (i) enter into any agreement or
understanding that restricts or inhibits or purports to
restrict or inhibit the Escrow Agent's rights or remedies
hereunder, including, without limitation, the Escrow Agent's
right to sell or otherwise dispose of the Collateral or (ii)
fail to pay or discharge any tax, assessment or levy of any
nature with respect to its beneficial interest in the
Collateral not later than five days prior to the date of any
proposed sale under any judgment, writ or warrant of
attachment with respect to such beneficial interest.
SECTION 8. Power of Attorney. In addition to all
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of the powers granted to the Escrow Agent pursuant to the LLC
Agreement, the Issuer hereby appoints and constitutes the Escrow
Agent as the Issuer's attorney-in-fact (with full power of
substitution) to exercise to the fullest extent permitted by law
all of the following powers upon and at any time after the
occurrence and during the continuance of an Event of Default:
(a) collection of proceeds of any Collateral; (b) conveyance of
any item of Collateral to any purchaser thereof; (c) giving of
any notices or recording of any Liens under Section 6 hereof; and
(d) paying or discharging taxes or Liens levied or placed upon
the Collateral, the legality or validity thereof and the amounts
necessary to discharge the same to be determined by the Escrow
Agent in its sole reasonable discretion, and such payments made
by the Escrow Agent to become part of the Obligations of the
Issuer to the Escrow Agent, due and payable immediately upon
demand. The Escrow Agent's authority under this Section 8 shall
include, without limitation, the authority to endorse and
negotiate any checks or instruments representing proceeds of
Collateral in the name of the Issuer, execute and give receipt
for any certificate of ownership or any document constituting
Collateral, transfer title to any item of Collateral, sign the
Issuer's name on all financing statements (to the extent
permitted by applicable law) or any other documents deemed
necessary or appropriate by the Escrow Agent to preserve, protect
or perfect the security interest in the Collateral and to file
the same, prepare, file and sign the Issuer's name on any notice
of Lien, and to take any other actions arising from or incident
to the powers granted to the Escrow Agent in this Escrow
Agreement. This power of attorney is coupled with an interest
and is irrevocable by the Issuer.
SECTION 9. No Assumption of Duties; Reasonable Care.
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The rights and powers granted to the Escrow Agent hereunder are
being granted in order to preserve and protect the security
interest of the Escrow Agent and the Holders of the Preferred
Securities in and to the Collateral granted hereby and shall not
be interpreted to, and shall not impose any duties on the Escrow
Agent in connection therewith other than those expressly provided
herein or imposed under applicable law. Except as provided by
applicable law or by the LLC Agreement, the Escrow Agent shall be
deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that
which the Escrow Agent accords similar property held by the
Escrow Agent for similar accounts, it being understood that the
Escrow Agent in its capacity as such shall not have any
responsibility for (a) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities or other matters
relative to any Collateral, whether or not the Escrow Agent has
or is deemed to have knowledge of such matters, (b) taking any
necessary steps to preserve rights against any parties with
respect to any Collateral or (c) investing or reinvesting any of
the Collateral or any loss on any investment. The Escrow Agent
may reasonably rely on the written instructions of the Issuer
without any further investigation on its part. Furthermore, the
Escrow Agent assumes no responsibility for the validity of the
Pledged Securities nor the sufficiency of such Pledged Securities
to cover the first thirteen dividend payments on the Preferred
Securities.
SECTION 10. Indemnity. The Issuer shall indemnify,
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hold harmless and defend the Escrow Agent and its directors,
officers, agents and employees, from and against any and all
claims, actions, obligations, liabilities and expenses, including
reasonable defense costs, reasonable investigative fees and
costs, and reasonable legal fees and damages arising from the
Escrow Agent's performance as Escrow Agent under this Escrow
Agreement, except to the extent that such claim, action,
obligation, liability or expense is directly attributable to the
bad faith, gross negligence or wilful misconduct of such
indemnified person.
SECTION 11. Remedies Upon Event of Default. If any
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Event of Default under the LLC Agreement or default hereunder
(any such Event of Default or default being referred to in this
Escrow Agreement as an "Event of Default") shall have occurred
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and be continuing:
(a) The Escrow Agent and the Holders of the Preferred
Securities shall have, in addition to all other rights given
by law or by this Escrow Agreement or the LLC Agreement, all
of the rights and remedies with respect to the Collateral of
a secured party under the UCC in effect in the State of New
York at that time. In addition, with respect to any
Collateral that shall then be in or shall thereafter come
into the possession or custody of the Escrow Agent, the
Escrow Agent may sell or cause the same to be sold at any
broker's board or at public or private sale, in one or more
sales or lots, at such price or prices as the Escrow Agent
may deem best, for cash or on credit or for future delivery,
without assumption of any credit risk. The purchaser of any
or all Collateral so sold shall thereafter hold the same
absolutely, free from any claim, encumbrance or right of any
kind whatsoever created by or through the Issuer. Unless
any of the Collateral threatens, in the reasonable judgment
of the Escrow Agent, to decline speedily in value or is or
becomes of a type sold on a recognized market, the Escrow
Agent will give the Issuer reasonable notice of the time and
place of any public sale thereof, or of the time after which
any private sale or other intended disposition is to be
made. Any sale of the Collateral conducted in conformity
with reasonable commercial practices of banks, insurance
companies, commercial finance companies, or other financial
institutions disposing of property similar to the Collateral
shall be deemed to be commercially reasonable. Any
requirements of reasonable notice shall be met if such
notice is mailed to the Issuer as provided in Section 14.1
hereof at least ten (10) days before the time of the sale or
disposition. The Escrow Agent or any Holder of Preferred
Securities may, in its own name or in the name of a designee
or nominee, buy any of the Collateral at any public sale
and, if permitted by applicable law, at any private sale.
All expenses (including court costs and reasonable
attorneys' fees, expenses and disbursements) of, or incident
to, the enforcement of any of the provisions hereof shall be
recoverable from the proceeds of the sale or other
disposition of the Collateral.
(b) The Issuer further agrees to use its reasonable
best efforts to do or cause to be done all such other acts
as may be necessary to make such sale or sales of all or any
portion of the Collateral pursuant to this Section 11 valid
and binding and in compliance with any and all other
applicable requirements of law. The Issuer further agrees
that a breach of any of the covenants contained in this
Section 11 will cause irreparable injury to the Escrow Agent
and the Holders of the Preferred Securities, that the Escrow
Agent and the Holders of the Preferred Securities have no
adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this
Section 11 shall be specifically enforceable against the
Issuer, and the Issuer hereby waives and agrees not to
assert any defenses against an action for specific
performance of such covenants except for a defense that no
Event of Default has occurred.
SECTION 12. Expenses. The Issuer will upon demand pay
--------
to the Escrow Agent the amount of any and all reasonable
expenses, including, without limitation, the reasonable fees,
expenses and disbursements of its counsel, experts and agents
retained by the Escrow Agent, that the Escrow Agent may incur in
connection with (a) the review, negotiation and administration of
this Escrow Agreement, (b) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the
Collateral, (c) the exercise or enforcement of any of the rights
of the Escrow Agent and the Holders of the Preferred Securities
hereunder or (d) the failure by the Issuer to perform or observe
any of the provisions hereof.
SECTION 13. Security Interest Absolute. All rights of
--------------------------
the Escrow Agent and the Holders of the Preferred Securities and
security interests hereunder, and all obligations of the Issuer
hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the LLC
Agreement or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any
departure from the LLC Agreement;
(c) any exchange, surrender, release or non-perfection
of any Liens on any other collateral for all or any of the
Obligations; or
(d) to the extent permitted by applicable law, any
other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Issuer in
respect of the Obligations or of this Escrow Agreement.
SECTION 14. Miscellaneous Provisions.
------------------------
Section 14.1. Notices. Any notice or communication
-------
given hereunder shall be sufficiently given if in writing and
delivered in person or mailed by first class mail, commercial
courier service or telecopier communication, addressed as
follows:
if to the Issuer:
----------------
ICG Funding, LLC
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Executive Vice President and
Chief Financial Officer
with copy to:
Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxx
if to ICG:
---------
ICG Communications, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Executive Vice President and
Chief Financial Officer
with copy to:
Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxx
if to the Escrow Agent:
----------------------
Norwest Bank Colorado, National Association
0000 Xxxxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Corporate Trust and Escrow Services
Section 14.2. No Adverse Interpretation of Other
----------------------------------
Agreements. This Escrow Agreement may not be used to interpret
----------
another pledge, security or debt agreement of the Issuer. No
such pledge, security or debt agreement (other than the LLC
Agreement) may be used to interpret this Escrow Agreement.
Section 14.3. Severability. The provisions of this
------------
Escrow Agreement are severable, and if any clause or provision
shall be held invalid, illegal or unenforceable in whole or in
part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such
clause or provision, or part thereof, and shall not in any manner
affect such clause or provision in any other jurisdiction or any
other clause or provision of this Escrow Agreement in any
jurisdiction.
Section 14.4. Headings. The headings in this Escrow
--------
Agreement have been inserted for convenience of reference only,
are not to be considered a part hereof and shall in no way modify
or restrict any of the terms or provisions hereof.
Section 14.5. Counterpart Originals. This Escrow
---------------------
Agreement may be signed in two or more counterparts, each of
which shall be deemed an original, but all of which shall
together constitute one and the same agreement.
Section 14.6. No Third Party Beneficiaries. Nothing
----------------------------
in this Escrow Agreement, express or implied, shall give to any
person, other than the parties hereto and their successors
hereunder, and the Holders of the Preferred Securities, any
benefit or any legal or equitable right, remedy or claim under
this Escrow Agreement.
Section 14.7. Amendments, Waivers and Consents. Any
--------------------------------
amendment or waiver of any provision of this Escrow Agreement and
any consent to any departure by the Issuer from any provision of
this Escrow Agreement shall be effective only if made or duly
given in compliance with all of the terms and provisions of the
LLC Agreement, and neither the Escrow Agent nor any Holder of
Preferred Securities shall be deemed, by any act, delay,
indulgence, omission or otherwise, to have waived any right or
remedy hereunder or to have acquiesced in any Event of Default or
in any breach of any of the terms and conditions hereof. Failure
of the Escrow Agent or any Holder of Preferred Securities to
exercise, or delay in exercising, any right, power or privilege
hereunder shall not preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
A waiver by the Escrow Agent or any Holder of Preferred
Securities of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy that the
Escrow Agent or such Holder of Preferred Securities would
otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies
provided by law.
Section 14.8. Interpretation of Agreement. To the
---------------------------
extent a term or provision of this Escrow Agreement conflicts
with the LLC Agreement, the LLC Agreement shall control with
respect to the subject matter of such term or provision.
Acceptance of or acquiescence in a course of performance rendered
under this Escrow Agreement shall not be relevant to determine
the meaning of this Escrow Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance
and opportunity for objection.
Section 14.9. Continuing Security Interest;
-----------------------------
Termination. (a) This Escrow Agreement shall create a
-----------
continuing security interest in and to the Collateral and shall,
unless otherwise provided in this Escrow Agreement, remain in
full force and effect until the payment in full in cash of the
Obligations. This Escrow Agreement shall be binding upon the
Issuer, its transferees, successors and assigns, and shall inure,
together with the rights and remedies of the Escrow Agent
hereunder, to the benefit of the Escrow Agent, the Holders of the
Preferred Securities and their respective successors, transferees
and assigns.
(b) This Escrow Agreement (other than Issuer's
obligations under Sections 10 and 12) shall terminate upon
the payment in full in cash of the Obligations. At such
time, the Escrow Agent shall, pursuant to an Issuer Order,
reassign and redeliver to the Issuer all of the Collateral
hereunder that has not been sold, disposed of, retained or
applied by the Escrow Agent in accordance with the terms of
this Escrow Agreement and the LLC Agreement and take all
actions that are necessary to release the security interest
created by this Escrow Agreement in and to the Collateral,
including the execution and delivery of all termination
statements necessary to terminate any financing or
continuation statements filed with respect to the
Collateral. Such reassignment and redelivery shall be
without warranty by or recourse to the Escrow Agent in its
capacity as such, except as to the absence of any Liens on
the Collateral created by or arising through the Escrow
Agent, and shall be at the reasonable expense of the Issuer.
Section 14.10. Survival of Representations and
-------------------------------
Covenants. All representations, warranties and covenants of the
---------
Issuer contained herein shall survive the execution and delivery
of this Escrow Agreement, and shall terminate only upon the
termination of this Escrow Agreement.
Section 14.11. Waivers. The Issuer waives presentment
-------
and demand for payment of any of the Obligations, protest and
notice of dishonor or default with respect to any of the
Obligations, and all other notices to which the Issuer might
otherwise be entitled, except as otherwise expressly provided
herein or in the LLC Agreement.
Section 14.12. Authority of the Escrow Agent. (a)
-----------------------------
The Escrow Agent shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Escrow
Agent by the terms hereof, together with such powers as are
reasonably incident thereto. The Escrow Agent may perform any of
its duties hereunder or in connection with the Collateral by or
through agents or employees and shall be entitled to retain
counsel and to act in reliance upon the advice of counsel
concerning all such matters. Except as otherwise expressly
provided in this Pledge Agreement or the LLC Agreement, neither
the Escrow Agent nor any director, officer, employee, attorney or
agent of the Escrow Agent shall be liable to the Issuer for any
action taken or omitted to be taken by the Escrow Agent, in its
capacity as Escrow Agent, hereunder, except for its own bad
faith, gross negligence or willful misconduct, and the Escrow
Agent shall not be responsible for the validity, effectiveness or
sufficiency hereof or of any document or security furnished
pursuant hereto. The Escrow Agent and its directors, officers,
employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document believed by it or them to
be genuine and correct and to have been signed or sent by the
proper person or persons.
(b) The Issuer acknowledges that the rights and
responsibilities of the Escrow Agent under this Escrow
Agreement with respect to any action taken by the Escrow
Agent or the exercise or non-exercise by the Escrow Agent of
any option, right, request, judgment or other right or
remedy provided for herein or resulting or arising out of
this Escrow Agreement shall, as between the Escrow Agent and
the Holders of the Preferred Securities, be governed by the
LLC Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as
between the Escrow Agent and the Issuer, the Escrow Agent
shall be conclusively presumed to be acting as agent for the
Holders of the Preferred Securities with full and valid
authority so to act or refrain from acting, and the Issuer
shall not be obligated or entitled to make any inquiry
respecting such authority.
Section 14.13. Rights of Holders of the Preferred
----------------------------------
Securities. No Holder of Preferred Securities shall have any
----------
independent rights hereunder other than those rights granted to
individual Holders of the Preferred Securities pursuant to the
LLC Agreement; provided that nothing in this subsection shall
limit any rights granted to the Escrow Agent under the Preferred
Securities or the LLC Agreement.
Section 14.14. GOVERNING LAW; SUBMISSION TO
----------------------------
JURISDICTION; WAIVER OF JURY TRIAL; WAIVER OF DAMAGES. (A) THIS
-----------------------------------------------------
ESCROW AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE
LAWS OF THE STATE OF NEW YORK. NOTWITHSTANDING THE FOREGOING:
THE MATTERS IDENTIFIED IN 31 C.F.R. PART 357, 61 FED. REG. 43626
AUG. 23, 1996), INCLUDING REVISED ARTICLE 8, SHALL BE GOVERNED
SOLELY BY THE LAWS SPECIFIED THEREIN.
(B) THE ISSUER HAS APPOINTED ICG COMMUNICATIONS, INC.,
0000 XXXX XXXXXX XXXXXX, XXXXXXXXX, XX 00000 AS ITS AGENT FOR
SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT
TO THIS ESCROW AGREEMENT AND FOR ACTIONS BROUGHT UNDER U.S.
FEDERAL OR STATE SECURITIES LAWS BROUGHT IN ANY FEDERAL OR STATE
COURT LOCATED IN THE CITY OF NEW YORK AND AGREES TO SUBMIT TO THE
JURISDICTION OF ANY SUCH COURT.
(C) THE ISSUER AGREES THAT THE ESCROW AGENT SHALL, IN
ITS CAPACITY AS ESCROW AGENT OR IN THE NAME AND ON BEHALF OF ANY
HOLDER OF PREFERRED SECURITIES, HAVE THE RIGHT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE ISSUER OR THE
COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD
FAITH (AND HAVING PERSONAL OR IN REM JURISDICTION OVER THE ISSUER
OR THE COLLATERAL, AS THE CASE MAY BE) TO ENABLE THE ESCROW AGENT
TO REALIZE ON SUCH COLLATERAL, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER ENTERED IN FAVOR OF THE ESCROW AGENT. THE ISSUER
AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR
CROSSCLAIMS IN ANY PROCEEDING BROUGHT BY THE ESCROW AGENT TO
REALIZE ON SUCH PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF THE ESCROW AGENT, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN
ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED.
THE ISSUER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION
OF THE COURT IN THE CITY OF NEW YORK ONCE THE ESCROW AGENT HAS
COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS.
(D) THE ISSUER AGREES THAT NEITHER ANY HOLDER OF
PREFERRED SECURITIES NOR (EXCEPT AS OTHERWISE PROVIDED IN THIS
ESCROW AGREEMENT OR THE LLC AGREEMENT) THE ESCROW AGENT IN ITS
CAPACITY AS ESCROW AGENT SHALL HAVE ANY LIABILITY TO THE ISSUER
(WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES
SUFFERED BY THE ISSUER IN CONNECTION WITH, ARISING OUT OF, OR IN
ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE
RELATIONSHIP ESTABLISHED BY THIS ESCROW AGREEMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT
IS BINDING ON THE ESCROW AGENT OR SUCH HOLDER OF PREFERRED
SECURITIES, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT
OF ACTS OR OMISSIONS ON THE PART OF THE ESCROW AGENT OR SUCH
HOLDERS OF PREFERRED SECURITIES, AS THE CASE MAY BE, CONSTITUTING
BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(E) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
ISSUER WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE
ESCROW AGENT OR ANY HOLDER OF PREFERRED SECURITIES IN CONNECTION
WITH ANY JUDICIAL PROCESS OR PROCEEDING TO ENFORCE ANY JUDGMENT
OR OTHER COURT ORDER PERTAINING TO THIS ESCROW AGREEMENT OR ANY
RELATED AGREEMENT OR DOCUMENT ENTERED IN FAVOR OF THE ESCROW
AGENT OR ANY HOLDER OF PREFERRED SECURITIES, OR TO ENFORCE BY
SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY
OR PERMANENT INJUNCTION, THIS ESCROW AGREEMENT OR ANY RELATED
AGREEMENT OR DOCUMENT BETWEEN THE ISSUER ON THE ONE HAND AND THE
ESCROW AGENT AND/OR THE HOLDERS OF THE PREFERRED SECURITIES ON
THE OTHER HAND.
IN WITNESS WHEREOF, the Issuer, ICG and the Escrow
Agent have each caused this Escrow Agreement to be duly executed
and delivered as of the date first above written.
Issuer:
ICG FUNDING, LLC
By ICG Communications, Inc.,
its manager
By: /s/ J. Xxxxxx Xxxxx
-------------------------------
Name: J. Xxxxxx Xxxxx
Title: President and
Chief Executive Officer
Escrow Agent:
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION,
as Escrow Agent
By: /s/ Xxx X. Xxxx
------------------------------
Name: Xxx X. Xxxx
Title: Vice President
ICG:
ICG COMMUNICATIONS, INC.
By: /s/ J. Xxxxxx Xxxxx
------------------------------
Name: J. Xxxxxx Xxxxx
Title: President and Chief
Executive Officer
EXHIBIT A
NORWEST BANK COLORADO, NATIONAL ASSOCIATION
OFFICER'S CERTIFICATE
Pursuant to Section 3(d) of the Escrow and Security
Agreement (the "Escrow Agreement") dated as of September 24, 1997
among ICG Funding, LLC (the "Issuer"), ICG Communications, Inc.
("ICG") and Norwest Bank Colorado, National Association as escrow
agent (the "Escrow Agent") for the holders of the Issuer's 6 %
Exchangeable Limited Liability Company Preferred Securities,
liquidation preference $50 per preferred security, which will be
mandatorily redeemable on November 15, 2009, the undersigned
officer of the Escrow Agent, on behalf of the Escrow Agent, makes
the following certifications to the Issuer, ICG, Xxxxxx Xxxxxxx &
Co. Incorporated and Deutsche Xxxxxx Xxxxxxxx Inc. Capitalized
terms used and not defined in this Officer's Certificate have the
meanings set forth or referred to in the Escrow Agreement.
1. Substantially contemporaneously with the execution
and delivery of this Officer's Certificate, the Escrow Agent has
established a securities account in the name of "Norwest Bank
Colorado, National Association, as Escrow Agent for the benefit
of the holders of the 6 % Exchangeable Limited Liability Company
Preferred Securities mandatorily redeemable 2009 of ICG Funding,
LLC Collateral Escrow Account", Administrative Account No.
1185943909 with respect to which the Escrow Agent is the
entitlement holder and through which the Escrow Agent has
acquired a security entitlement to the United States Treasury
securities identified in Annex 1 to this Officer's Certificate
-------
(the "Pledged Securities") and has made appropriate book entries
in its records establishing that the Pledged Securities and the
Escrow Agent's securities entitlement thereto have been credited
to and are held in the Norwest Bank Colorado, National
Association's Administrative Account No. 1185943909 entitled
"Norwest Bank Colorado, National Association, as Escrow Agent for
the benefit of the holders of the 6 % Exchangeable Limited
Liability Company Preferred Securities mandatorily redeemable
2009 of ICG Funding, LLC Collateral Escrow Account" (the "Escrow
Account").
2. The Escrow Agent has established and maintained and
will maintain the Escrow Account and all securities entitlements
and other positions carried in the Escrow Account solely in its
capacity as Escrow Agent and has not asserted and will not assert
any claim to or interest in the Escrow Account or any such
securities entitlements or other positions except in such
capacity.
3. The Escrow Agent has acquired its security
entitlement to the Pledged Securities for value and without
notice to an officer of the Escrow Agent of any adverse claim
thereto. Without limiting the generality of the foregoing, the
Pledged Securities are not and the Escrow Agent's security
entitlement to the Pledged Securities is not, to the Escrow
Agent's knowledge, subject to any lien granted by the Escrow
Agent in favor of any securities intermediary (including, without
limitation, the Federal Reserve Bank of New York) through which
the Escrow Agent derives its security entitlement to the Pledged
Securities.
4. The Escrow Agent has not caused or permitted the
Pledged Securities or its security entitlement thereto to become
subject to any Lien created by or arising through the Escrow
Agent.
IN WITNESS WHEREOF, the undersigned officer has
executed this Officer's Certificate on behalf of Norwest Bank
Colorado, National Association as Escrow Agent this 24th day of
September, 1997.
---------------------------------
Name:
Title:
