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EXHIBIT 10.3
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (the "SECURITY
AGREEMENT") is executed as of October 31, 2000, by the undersigned Debtor,
whose address is One Digex Plaza, Beltsville, Maryland 20705 (whether doing
business in its own name or in one or more of the tradenames listed on ANNEX A
hereto, "DEBTOR"), and BANK OF AMERICA, N.A., a national banking association,
(in its capacity as "Administrative Agent" for the Lenders (hereafter
defined)), as "SECURED PARTY."
A. WHEREAS, Intermedia Communications Inc. ("BORROWER"), Bank of
America, N.A., as Administrative Agent (including its permitted successors and
assigns in such capacity, "ADMINISTRATIVE AGENT"), and Lenders now or
hereafter party to the Credit Agreement (including their respective permitted
successors and assigns, "LENDERS") have entered into a Revolving Credit
Agreement, dated as of December 22, 1999 (as amended, modified, supplemented,
or restated from time to time, the "CREDIT AGREEMENT"); and
B. WHEREAS, Debtor executed a Security Agreement in connection with the
closing of the Credit Agreement which was integral to the transactions
contemplated by the Loan Documents, and the execution and delivery thereof was
a condition precedent to Lenders' continuing obligations to extend credit
under the Loan Documents; and
C. WHEREAS, Debtor has requested that Lenders amend this Debtor's
Security Agreement to limit the Obligation of Debtor and Secured Party has
consented to such request.
NOW THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Debtor and Secured Party hereby agree as
follows:
1. REFERENCE TO CREDIT AGREEMENT. The terms, conditions, and
provisions of the Credit Agreement are incorporated herein by reference, the
same as if set forth herein verbatim, which terms, conditions, and provisions
shall continue to be in full force and effect hereunder so long as Lenders are
obligated to lend under the Credit Agreement and thereafter until the
Obligation is paid and performed in full.
2. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the
context hereof otherwise requires, each term defined in either of the Credit
Agreement or in the UCC is used in this Security Agreement with the same
meaning; provided that (a) if the definition given to such term in the Credit
Agreement conflicts with the definition given to such term in the UCC, the
Credit Agreement definition shall control to the extent legally allowable; and
(b) if any definition given to such term in Chapter 9 of the UCC conflicts
with the definition given to such term in any other chapter of the UCC, the
Chapter 9 definition shall prevail. As used herein, the following terms have
the meanings indicated:
COLLATERAL has the meaning set forth in PARAGRAPH 4 hereof.
DIGEX OBLIGATION means the Obligation (as defined below) to
the extent of the greater of either (a) $90,000,000 less any amounts
paid by any Subsidiary of Debtor under any Loan Document, or (b) the
aggregate amount of all loans, advances, extensions of credit, or
capital contributions from any Company to Debtor or any of Debtor's
Subsidiaries on or after the date of this Security Agreement or any
investments in Debtor or any of Debtor's Subsidiaries on or after the
date of this Security Agreement by any Company, less (x) any
repayment of any such loan, advance, extension of credit, or
investment by Debtor or any of Debtor's Subsidiaries, (y) the amount
of all dividends and distributions received by any Company by Debtor
or any of Debtor's Subsidiaries, and (z) any amounts paid by any
Subsidiary of Debtor under any Loan Document.
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FCC LICENSES means all authorizations, licenses, and permits
issued by the FCC to Debtor.
LENDER means, individually, or LENDERS means, collectively,
on any date of determination, the Administrative Agent, the Sole Lead
Arranger and Book Manager, the Syndication Agent, Documentation
Agent, Arranging Agents, and the Lenders.
OBLIGATION means, collectively, (a) the "Obligation" as
defined in the Credit Agreement, and (b) all indebtedness,
liabilities, and obligations of Debtor arising under this Security
Agreement; it being the intention and contemplation of Debtor and
Secured Party that future advances will be made by Secured Party or
one or more Lenders to Borrower for a variety of purposes, that
Debtor may guarantee (or otherwise become directly or contingently
obligated with respect to) the obligations of others to Secured Party
or to one or more Lenders, that from time to time overdrafts of
Borrower's accounts with Secured Party or with other Lenders may
occur, and that Secured Party or one or more Lenders may from time to
time acquire from others obligations of Borrower to such others, and
that payment and repayment of all of the foregoing are intended to
and shall be part of the Obligation secured hereby. The Obligation
shall include, without limitation, future, as well as existing,
advances, indebtedness, liabilities, and obligations owed by Debtor
and Borrower to Secured Party or to any Lender arising under the Loan
Documents or otherwise.
OBLIGOR means any Person obligated with respect to any of
the Collateral, whether as an account debtor, obligor on an
instrument, issuer of securities, or otherwise.
PARTNERSHIP means any partnership issuing a Partnership
Interest except Financial Place Communications Company to the extent
it is not a Subsidiary.
PLEDGED INTERESTS means, collectively, the Partnership
Interests (whether or not a security), and any other Collateral
constituting securities.
PUC CERTIFICATES means all authorizations, licenses, and
permits issued by any state PUC to Debtor.
SECURITY INTEREST means the security interest granted and
the pledge and assignment made under PARAGRAPH 3 hereof.
UCC means the Uniform Commercial Code as enacted in the
State of New York or other applicable jurisdiction, as amended at the
time in question.
3. SECURITY INTEREST. In order to secure the full and complete
payment and performance of the Digex Obligation when due, Debtor hereby grants
to Secured Party a Security Interest in all of Debtor's rights, titles, and
interests in and to the Collateral and pledges, collaterally transfers, and
assigns the Collateral to Secured Party, all upon and subject to the terms and
conditions of this Security Agreement. Such Security Interest is granted and
pledge and assignment are made as security only and shall not subject Secured
Party to, or transfer or in any way affect or modify, any obligation of Debtor
with respect to any of the Collateral or any transaction involving or giving
rise thereto. The grant contained herein is intended to confer upon Secured
Party all rights that a secured creditor may obtain and that may be granted in
the FCC Licenses or PUC Certificates under applicable Law as from time to time
in effect. If the Law is subsequently changed or clarified, or if the FCC's or
PUC's interpretation of existing Law is changed, to permit or further permit
the granting of such security interests in licenses issued by the FCC or PUC,
then Debtor's FCC Licenses and PUC Certificates, whether now held or
hereinafter acquired, shall automatically become subject to the Secured
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Party's Security Interest to the maximum extent permitted by the Law as then
in effect. If the grant, pledge, or collateral transfer or assignment of any
specific item of the Collateral is expressly prohibited by any contract, then
the Security Interest created hereby nonetheless remains effective to the
extent allowed by UCC Section 9-318 or other applicable Law, but is otherwise
limited by that prohibition. Notwithstanding anything to the contrary herein
or in any other Loan Document, the liability of Debtor to the Administrative
Agent and Lenders under any Loan Documents shall not exceed the Digex
Obligation.
4. COLLATERAL. As used herein, the term "COLLATERAL" means the
following items and types of property now owned or in the future acquired by
such Debtor:
(a) All present and future accounts, contract rights,
general intangibles, chattel paper, documents, instruments,
inventory, investment property, equipment, fixtures, other goods,
minerals, and money, wherever located, now owned or hereafter
acquired by Debtor, and any and all present and future Tax refunds of
any kind whatsoever to which Debtor is now or shall hereafter become
entitled.
(b) All rights, titles, and interests of Debtor in and
to all promissory notes and other instruments payable to such Debtor,
now or hereafter existing, including, without limitation, any
inter-company notes listed on ANNEX B (collectively, the "COLLATERAL
NOTES"), all rights, titles, interests, and Liens Debtor may have,
be, or become entitled to under all present and future security
agreements, pledge agreements, deeds of trust, mortgages, guarantees,
or other documents assuring or securing payment of the Collateral
Notes (the "COLLATERAL NOTE SECURITY") in, to, and under all other
loan and collateral documents relating to such instruments.
(c) All present and future rights, titles, interests,
and Liens (but none of the obligations) now owned or hereafter
acquired by Debtor in any partnership or joint venture (except
Financial Place Communications Company to the extent it is not a
Subsidiary), including, without limitation, the partnerships listed
on ANNEX B hereof (collectively, the "PARTNERSHIP INTERESTS").
(d) All present and future rights, titles, interests,
and Liens (but none of the obligations) now owned or hereafter
acquired by Debtor, as lessee or landlord, in and to each lease
covering real property or any interest therein, and equipment or
other personal property or any interest therein (each such lease
herein called an "ASSIGNED LEASE").
(e) All present and future rights, awards, and
judgments to which Debtor is entitled under any Litigation (whether
arising in equity, contract, or tort) now existing or hereafter
arising.
(f) All present and future rights (including, without
limitation, the right to sue for past, present, or future
infringements), titles, and interests of Debtor in and to all
trademark applications, trademarks, corporate names, company names,
tradenames, business names, fictitious business names, tradestyles,
service marks, logos, other source of business identifiers,
copyrights, designs, rights or licenses to use any trademarks, and
all registrations and recordings thereof, including, without
limitation, such Debtor's trademarks listed on ANNEX B hereto
(collectively, the "TRADEMARKS"), and the goodwill of each business
to which each Trademark relates.
(g) All present and future rights (including, without
limitation, the right to sue for past, present, and future
infringements), titles, and interests of Debtor in and to all
patents, patent applications, utility models, industrial models,
designs, and any other forms of industrial intellectual property,
including all grants, applications, reissues, continuations, and
divisions with respect thereto
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and any rights to use, manufacture, or sell any patent, including,
without limitation, the patents listed on ANNEX B hereto
(collectively, the "PATENTS").
(h) All Authorizations, licenses, and permits issued by
the FCC or any PUC, to the extent that the grant of a security
interest in any such license or permit does not result in the
forfeiture of, or default under, any such license or permit, and the
right of Debtor to apply to the FCC or PUC for approval of transfers
of licenses issued by the FCC or PUC.
(i) All proceeds of any sale or other disposition of
any Authorization, license, or permit issued by the FCC or any PUC,
whether or not any such license or permit may lawfully be included as
Collateral and whether or not the grant of a security interest in any
such Authorization, license, or permit is otherwise prohibited.
(j) All present and future increases, profits,
combinations, reclassifications, improvements, and products of,
accessions, attachments, and other additions to, tools, parts, and
equipment used in connection with, and substitutes and replacements
for, all or part of the Collateral heretofore described.
(k) All present and future accounts, contract rights,
general intangibles, chattel paper, documents, instruments, cash and
noncash proceeds, and other rights arising from or by virtue of, or
from the voluntary or involuntary sale or other disposition of, or
collections with respect to, or insurance proceeds payable with
respect to, or proceeds payable by virtue of warranty or other claims
against the manufacturer of, or claims against any other Person with
respect to, all or any part of the Collateral heretofore described in
this clause or otherwise.
(l) All present and future security for the payment to
any Company of any of the Collateral heretofore described and goods
which gave or will give rise to any of such Collateral or are
evidenced, identified, or represented therein or thereby.
The description of the Collateral contained in this PARAGRAPH 4 shall not be
deemed to permit any action prohibited by this Security Agreement or by the
terms incorporated in this Security Agreement. Furthermore, notwithstanding
any contrary provision, Debtor agrees that, if, but for the application of
this paragraph, granting a Security Interest in the Collateral would
constitute a fraudulent conveyance under 11 U.S.C. Section 548 or a fraudulent
conveyance or transfer under any state fraudulent conveyance, fraudulent
transfer, or similar Law in effect from time to time (each a "FRAUDULENT
CONVEYANCE"), then the Security Interest remains enforceable to the maximum
extent possible without causing such Security Interest to be a fraudulent
conveyance, and this Security Agreement is automatically amended to carry out
the intent of this paragraph.
5. REPRESENTATIONS AND WARRANTIES. Debtor represents and
warrants to Secured Party that:
(a) Credit Agreement. Certain representations and
warranties in the Credit Agreement are applicable to it or its assets
or operations, and each such representation and warranty is true and
correct.
(b) Binding Obligation. This Security Agreement creates
a legal, valid, and binding Lien in and to the Collateral in favor of
Secured Party and enforceable against Debtor. For Collateral in which
the Security Interest may be perfected by the filing of Financing
Statements, once those Financing Statements have been properly filed
in the jurisdictions described on ANNEX A hereto, the Security
Interest in that Collateral will be fully perfected. Once perfected
and, in the case of investment property or instruments, upon
possession or "control" (within the meaning of Sections 8-
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106 and 9-115 of the UCC) by Secured Party, the Security Interest
will constitute a first-priority Lien on the Collateral, subject only
to Permitted Liens. The creation of the Security Interest does not
require the consent of any Person that has not been obtained.
(c) Location. Debtor's place of business and chief
executive office is where Debtor is entitled to receive notices
hereunder; the present and foreseeable location of Debtor's books and
records concerning any of the Collateral that is accounts is as set
forth on ANNEX A hereto, and the location of all other Collateral,
including, without limitation, Debtor's inventory and equipment, is
as set forth on ANNEX A hereto (but the failure of such description
to be accurate or complete shall not impair the Security Interest in
such Collateral); and, except as noted on ANNEX A hereto, all such
books, records, and Collateral are in Debtor's possession.
(d) Partnerships and Partnership Interests. Each
Partnership issuing a Partnership Interest is duly organized,
currently existing, and in good standing under all applicable Laws;
there have been no amendments, modifications, or supplements to any
agreement or certificate creating any Partnership or any material
contract relating to the Partnerships, of which Secured Party has not
been advised in writing; no default or potential default has occurred
under the terms of any material contract relating to any Partnership;
and no approval or consent of the partners of any Partnership is
required as a condition to the validity and enforceability of the
Security Interest created hereby or the consummation of the
transactions contemplated hereby which has not been duly obtained by
Debtor. Debtor has good title to the Partnership Interests free and
clear of all liens and encumbrances (except for the Security Interest
granted hereby). The Partnership Interests are validly issued, fully
paid, and nonassessable and are not subject to statutory,
contractual, or other restrictions governing their transfer,
ownership, or control, except as set forth in applicable securities
Laws.
(e) Governmental Authority. No authorization, approval,
or other action by, and no notice to or filing with, any Governmental
Authority is required either (i) for the execution, delivery, or
performance of this Security Agreement by Debtor, or (ii) for the
exercise by Secured Party of the voting or other rights provided for
in this Security Agreement or the remedies in respect of the
Collateral pursuant to this Security Agreement (except as may be
required in connection with the transfer of control of FCC Licenses
and PUC Certificates).
(f) Accounts. Except as the same may be incurred in the
ordinary course of business, all Collateral that is accounts,
contract rights, chattel paper, instruments, or general intangibles
is free from any claim for credit, deduction, or allowance of an
Obligor and free from any defense, dispute, setoff, or counterclaim,
and there is no extension or indulgence with respect thereto.
(g) Instruments, Chattel Paper, Collateral Notes, and
Collateral Note Security. All instruments and chattel paper,
including, without limitation, the Collateral Notes, have been
delivered to Secured Party, together with corresponding endorsements
duly executed by Debtor in favor of Secured Party, and such
endorsements have been duly and validly executed and are binding and
enforceable against Debtor in accordance with their terms. Each
Collateral Note and the documents evidencing the Collateral Note
Security are in full force and effect; there have been no renewals or
extensions of, or amendments, modifications, or supplements to, any
thereof about which the Secured Party has not been advised in
writing; and no default or potential default has occurred and is
continuing under any such Collateral Note or documents evidencing the
Collateral Note Security, except as disclosed on ANNEX C hereto and
except those which could not be or result in a Material Adverse
Event.
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(h) Assigned Leases. All Collateral that is an Assigned
Lease is in full force and effect; Debtor is in possession of the
property covered by each such Assigned Lease; and no default or
potential default exists under any such Assigned Lease except those
which could not be or result in a Material Adverse Event.
(i) Maintenance of Collateral. All tangible Collateral
is in good repair and condition, ordinary wear and tear excepted.
(j) Liens. Debtor owns all presently existing
Collateral, and will acquire all hereafter-acquired Collateral, free
and clear of all Liens, except Permitted Liens.
The foregoing representations and warranties will be true and correct in all
respects with respect to any additional Collateral or additional specific
descriptions of certain Collateral delivered to Secured Party in the future by
Debtor.
The failure of any of these representations or warranties to be
accurate and complete does not impair the Security Interest in any Collateral.
6. COVENANTS. So long as Lenders are committed to extend
credit under the Credit Agreement and until the Obligation is paid and
performed in full, Debtor covenants and agrees with Secured Party that Debtor
will:
(a) Credit Agreement. (i) Comply with, perform, and be
bound by all covenants and agreements in the Credit Agreement that
are applicable to it, its assets, or its operations, each of which is
hereby ratified and confirmed (INCLUDING, WITHOUT LIMITATION, THE
INDEMNIFICATION AND RELATED PROVISIONS IN SECTION 11.12 OF THE CREDIT
AGREEMENT); AND (II) CONSENT TO AND APPROVE THE VENUE, SERVICE OF
PROCESS, AND WAIVER OF JURY TRIAL PROVISIONS OF SECTION 13.10 OF THE
CREDIT AGREEMENT.
(b) Record of Collateral. Maintain, at the place where
Debtor is entitled to receive notices under the Loan Documents, a
current record of where all Collateral is located, permit
representatives of Secured Party at any time during normal business
hours to inspect and make abstracts from such records, and furnish to
Secured Party, at such intervals as Secured Party may request, such
documents, lists, descriptions, certificates, and other information
as may be necessary or proper to keep Secured Party informed with
respect to the identity, location, status, condition, and value of
the Collateral.
(c) Perform Obligations. Fully perform all of Debtor's
duties under and in connection with each transaction to which the
Collateral, or any part thereof, relates, so that the amounts thereof
shall actually become payable in their entirety to Secured Party.
(d) Notices. (i) Promptly notify Secured Party of (A)
any material change in any fact or circumstances represented or
warranted by Debtor with respect to any of the Collateral or
Obligation, and (B) any material claim, action, or proceeding
affecting title to all or any of the Collateral or the Security
Interest and, at the request of Secured Party, appear in and defend,
at Debtor's expense, any such action or proceeding; and (ii) give
Secured Party thirty (30) days written notice before any proposed (A)
relocation of its principal place of business or chief executive
office, (B) change of its name, identity, or corporate structure, (C)
relocation of the place where its books and records concerning its
accounts are kept, and (D) relocation of any Collateral (other than
delivery of inventory
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in the ordinary course of business to third party contractors for
processing and sales of inventory in the ordinary course of business
or as permitted by the Credit Agreement) to a location not described
on the attached ANNEX A. Prior to making any of the changes
contemplated in clause (ii) preceding, Secured Party shall execute
and deliver all such additional documents and perform all additional
acts as Secured Party, in its sole discretion, may request in order
to continue or maintain the existence and priority of the Security
Interests in all of the Collateral.
(e) Collateral in Trust. Hold in trust (and not
commingle with other assets of Debtor) for Secured Party all
Collateral that is chattel paper, instruments, Collateral Notes, or
documents at any time received by Debtor, and promptly deliver same
to Secured Party, unless Secured Party at its option (which may be
evidenced only by a writing signed by Secured Party stating that
Secured Party elects to permit Debtor to so retain) permits Debtor to
retain the same, but any chattel paper, instruments, Collateral
Notes, or documents so retained shall be marked to state that they
are assigned to Secured Party; each such instrument shall be endorsed
to the order of Secured Party (but the failure of same to be so
marked or endorsed shall not impair the Security Interest thereon).
(f) Further Assurances. At Debtor's expense and Secured
Party's request, before or after a Default or Potential Default, (i)
file or cause to be filed such applications and take such other
actions as Secured Party may request to obtain the consent or
approval of any Governmental Authority to Secured Party's rights
hereunder, including, without limitation, the right to sell all the
Collateral upon a Default or Potential Default without additional
consent or approval from such Governmental Authority (and, because
Debtor agrees that Secured Party's remedies at Law for failure of
Debtor to comply with this provision would be inadequate and that
such failure would not be adequately compensable in damages, Debtor
agrees that its covenants in this provision may be specifically
enforced); (ii) from time to time promptly execute and deliver to
Secured Party all such other assignments, certificates, supplemental
documents, and financing statements, and do all other acts or things
as Secured Party may reasonably request in order to more fully
create, evidence, perfect, continue, and preserve the priority of the
Security Interest; and (iii) pay all filing fees in connection with
any financing, continuation, or termination statement or other
instrument with respect to the Security Interests, including, without
limitation, any filing fee required in connection with any procedure
hereafter developed for the recordation or registration of liens or
security interests in FCC Licenses or PUC Certificates.
(g) Estoppel and Other Agreements and Matters. Either
(upon request of Secured Party in its sole judgment without requiring
approval of any other Lender) (i) use commercially reasonable efforts
to cause the landlord or lessor for each location where any of its
inventory or equipment is maintained to execute and deliver to
Secured Party an estoppel and subordination agreement in such form as
may be reasonably acceptable to Secured Party and its counsel, or
(ii) deliver to Secured Party a legal opinion or other evidence (in
each case that is reasonably satisfactory to Secured Party and its
counsel) that neither the applicable lease nor the Laws of the
jurisdiction in which that location is situated provide for
contractual, common law, or statutory landlord's Liens that is senior
to or pari passu with the Security Interest.
(h) Impairment of Collateral. Not use any of the
Collateral, or permit the same to be used, for any unlawful purpose,
in any manner that is reasonably likely to adversely impair the value
or usefulness of the Collateral, or in any manner inconsistent with
the provisions or requirements of any policy of insurance thereon nor
affix or install any accessories, equipment, or device on the
Collateral or on any component thereof if such addition will impair
the original intended function or use of the Collateral or such
component.
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(i) Modifications to Agreements. Not modify or
substitute, or permit the modification or substitution of, any
Collateral Note or any document evidencing the Collateral Note
Security or contract to which any of the Collateral which is accounts
relates, nor extend or grant indulgences regarding any account which
is Collateral, other than such modifications or indulgences as are
reasonable and customary in the industry in which Debtor is engaged.
(j) Partnerships and Partnership Interests. (i)
Promptly perform, observe, and otherwise comply with each and every
material covenant, agreement, requirement, and condition set forth in
the contracts and agreements creating or relating to any Partnership;
(ii) do or cause to be done all things necessary or appropriate to
keep the Partnerships in full force and effect and the rights of
Debtor and Secured Party thereunder unimpaired; (iii) not consent to
any Partnership selling, leasing, or disposing of substantially all
of its assets in a single transaction or a series of transactions,
except to Debtor or any other Subsidiary or to Borrower; (iv) notify
Secured Party of the occurrence of any default under any material
contract or agreement creating or relating to the Partnerships; and
not consent to the amendment, modification, surrender, impairment,
forfeiture, cancellation, dissolution, or termination of any
Partnership, or material agreement relating thereto; (v) not
transfer, sell, or assign any of the Partnership Interests or any
part thereof, except to Debtor or any other Subsidiary or to
Borrower; (vi) cause each Partnership to refrain from granting any
partnership interests in addition to or in substitution for the
Partnership Interests granted by the Partnerships, except to Debtor;
(vii) pledge hereunder, immediately upon Debtor's acquisition
(directly or indirectly) thereof, any and all additional Partnership
Interests of any Partnership granted to Debtor; and (viii) take any
action necessary, required, or requested by Secured Party to allow
Secured Party to fully enforce its Security Interest in the
Partnership Interests, including, without limitation, the filing of
any claims with any court, liquidator, trustee, custodian, receiver,
or other like person or party.
7. DEFAULT; REMEDIES. If a Default or a Potential Default
exists, Secured Party may, at its election (but subject to the terms and
conditions of the Credit Agreement), exercise any and all rights available to
a secured party under the UCC, in addition to any and all other rights
afforded by the Loan Documents, at Law, in equity, or otherwise, including,
without limitation, (a) requiring Debtor to assemble all or part of the
Collateral and make it available to Secured Party at a place to be designated
by Secured Party which is reasonably convenient to Debtor and Secured Party,
(b) surrendering any policies of insurance on all or part of the Collateral
and receiving and applying the unearned premiums as a credit on the Digex
Obligation, and (c) applying by appropriate judicial proceedings for
appointment of a receiver for all or part of the Collateral (and Debtor hereby
consents to any such appointment), and (d) applying to the Digex Obligation
any cash held by Secured Party under this Security Agreement, including,
without limitation, any cash in the Cash Collateral Account. Notwithstanding
the foregoing, Secured Party will not exercise any remedies against the assets
of Debtor unless it has given at least ten days written notification to Debtor
and to the FCC, to the extent such notice is required under 47 C.F.R.
22.937(f).
(a) Notice. Reasonable notification of the time and
place of any public sale of the Collateral, or reasonable
notification of the time after which any private sale or other
intended disposition of the Collateral is to be made, shall be sent
to Debtor and to any other Person entitled to notice under the UCC;
provided, that if any of the Collateral threatens to decline speedily
in value or is of the type customarily sold on a recognized market,
Secured Party may sell or otherwise dispose of the Collateral without
notification, advertisement, or other notice of any kind. It is
agreed that notice sent or given not less than ten (10) Business Days
prior to the taking of the action to which the notice relates is
reasonable notification and notice for the purposes of this
subparagraph.
(b) Application of Proceeds. Secured Party shall apply
the proceeds of any sale or other disposition of the Collateral under
this PARAGRAPH 7 in the following order: first, to the payment of all
expenses incurred in retaking, holding, and preparing any of the
Collateral for sale(s) or other
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disposition, in arranging for such sale(s) or other disposition, and
in actually selling or disposing of the same (all of which are part
of the Obligation); and second, toward repayment of amounts expended
by Secured Party under PARAGRAPH 8. Any surplus remaining shall be
delivered to Debtor or as a court of competent jurisdiction may
direct. If the proceeds are insufficient to pay the Digex Obligation
in full, Debtor shall remain liable for any deficiency.
8. OTHER RIGHTS OF SECURED PARTY.
(a) Performance. If Debtor fails to keep the Collateral
in good repair, working order, and condition, as required in this
Security Agreement, or fails to pay when due all Taxes on any of the
Collateral in the manner required by the Loan Documents, or fails to
preserve the priority of the Security Interest in any of the
Collateral, or fails to keep the Collateral insured as required by
this Security Agreement, or otherwise fails to perform any of its
obligations under the Loan Documents with respect to the Collateral,
then Secured Party may, at its option, but without being required to
do so, make such repairs, pay such Taxes, prosecute or defend any
suits in relation to the Collateral, or insure and keep insured the
Collateral in any amount deemed appropriate by Secured Party, or take
all other action which Debtor is required, but has failed or refused,
to take under the Loan Documents. Any sum which may be expended or
paid by Secured Party under this subparagraph (including, without
limitation, court costs and attorneys' fees) shall bear interest from
the dates of expenditure or payment at the Default Rate until paid
and, together with such interest, shall be payable by Debtor to
Secured Party upon demand and shall be part of the Obligation.
(b) Collection. If a Default or Potential Default
exists and upon notice from Secured Party, each Obligor with respect
to any payments on any of the Collateral (including, without
limitation, dividends and other distributions with respect to
securities, payments on Collateral Notes, or insurance proceeds
payable by reason of loss or damage to any of the Collateral) is
hereby authorized and directed by Debtor to make payment directly to
Secured Party, regardless of whether Debtor was previously making
collections thereon. Subject to PARAGRAPH 8(e) hereof, until such
notice is given, Debtor is authorized to retain and expend all
payments made on Collateral. If a Default or Potential Default
exists, Secured Party shall have the right in its own name or in the
name of Debtor to compromise or extend time of payment with respect
to all or any portion of the Collateral for such amounts and upon
such terms as Secured Party may determine; to demand, collect,
receive, receipt for, sue for, compound, and give acquittances for
any and all amounts due or to become due with respect to Collateral;
to take control of cash and other proceeds of any Collateral; to
endorse the name of Debtor on any notes, acceptances, checks, drafts,
money orders, or other evidences of payment on Collateral that may
come into the possession of Secured Party; to sign the name of Debtor
on any invoice or bill of lading relating to any Collateral, on any
drafts against Obligors or other Persons making payment with respect
to Collateral, on assignments and verifications of accounts or other
Collateral and on notices to Obligors making payment with respect to
Collateral; to send requests for verification of obligations to any
Obligor; and to do all other acts and things necessary to carry out
the intent of this Security Agreement. If a Default or Potential
Default exists and any Obligor fails or refuses to make payment on
any Collateral when due, Secured Party is authorized, in its sole
discretion, either in its own name or in the name of Debtor, to take
such action as Secured Party shall deem appropriate for the
collection of any amounts owed with respect to Collateral or upon
which a delinquency exists. Regardless of any other provision hereof,
however, Secured Party shall never be liable for its failure to
collect, or for its failure to exercise diligence in the collection
of, any amounts owed with respect to Collateral, nor shall it be
under any duty whatsoever to anyone except Debtor to account for
funds that it shall actually receive hereunder. Without limiting the
generality of the foregoing, Secured Party shall have no
responsibility for ascertaining any maturities, calls, conversions,
exchanges, offers, tenders, or similar matters relating to any
Collateral, or for informing
9
<PAGE> 10
Debtor with respect to any of such matters (irrespective of whether
Secured Party actually has, or may be deemed to have, knowledge
thereof). The receipt of Secured Party to any Obligor shall be a full
and complete release, discharge, and acquittance to such Obligor, to
the extent of any amount so paid to Secured Party.
(c) Use and Operation of Collateral. Should any
Collateral come into the possession of Secured Party, Secured Party
may use or operate such Collateral for the purpose of preserving it
or its value pursuant to the order of a court of appropriate
jurisdiction or in accordance with any other rights held by Secured
Party in respect of such Collateral. Debtor covenants to promptly
reimburse and pay to Secured Party, at Secured Party's request, the
amount of all reasonable expenses (including, without limitation, the
cost of any insurance and payment of Taxes or other charges) incurred
by Secured Party in connection with its custody and preservation of
Collateral, and all such expenses, costs, Taxes, and other charges
shall bear interest at the Default Rate until repaid and, together
with such interest, shall be payable by Debtor to Secured Party upon
demand and shall become part of the Obligation. However, the risk of
accidental loss or damage to, or diminution in value of, Collateral
is on Debtor, and Secured Party shall have no liability whatever for
failure to obtain or maintain insurance, nor to determine whether any
insurance ever in force is adequate as to amount or as to the risks
insured. With respect to Collateral that is in the possession of
Secured Party, Secured Party shall have no duty to fix or preserve
rights against prior parties to such Collateral and shall never be
liable for any failure to use diligence to collect any amount payable
in respect of such Collateral, but shall be liable only to account to
Debtor for what it may actually collect or receive thereon. The
provisions of this subparagraph are applicable whether or not a
Default exists.
(d) Power of Attorney. Debtor hereby irrevocably
constitutes and appoints Secured Party as Debtor's attorney-in-fact,
with full irrevocable power and authority in the place and stead of
Debtor and in the name of Debtor, Secured Party, Lenders, or
otherwise, from time to time in Secured Party's discretion, for the
sole purpose of carrying out the terms of this Security Agreement
and, to the extent permitted by applicable Law, to take any action
and to execute any document and instrument which Secured Party may
deem necessary or advisable to accomplish the following when a
Default exists:
(x) to receive, endorse, and collect any
drafts or other instruments or documents in connection with
CLAUSE (b) above and this CLAUSE (d);
(y) to use the Patents and Trademarks or to
grant or issue any exclusive or non-exclusive license under
the Patents and Trademarks to anyone else, and to perform
any act necessary for the Secured Party to assign, pledge,
convey, or otherwise transfer title in or dispose of the
Patents and Trademarks to any other Person; and
(z) to execute on behalf of Debtor any
continuation statement with respect to the Security
Interests created hereby, and to do any and all acts and
things to protect and preserve the Collateral, including,
without limitation, the protection and prosecution of all
rights included in the Collateral.
(e) Purchase Money Collateral. To the extent that
Secured Party or any Lender has advanced or will advance funds to or
for the account of Debtor to enable Debtor to purchase or otherwise
acquire rights in Collateral, Secured Party or such Lender, at its
option, may pay such funds (i) directly to the Person from whom
Debtor will make such purchase or acquire such rights, or (ii) to
Debtor, in which case Debtor covenants to promptly pay the same to
such Person, and forthwith furnish to Secured Party evidence
satisfactory to Secured Party that such payment has been made from
the funds so provided.
10
<PAGE> 11
(f) Subrogation. If any of the Obligation is given in
renewal or extension or applied toward the payment of indebtedness
secured by any Lien, Secured Party shall be, and is hereby,
subrogated to all of the rights, titles, interests, and Liens
securing the indebtedness so renewed, extended, or paid.
(g) Indemnification. Debtor hereby assumes all
liability for the Collateral, for the Security Interest, and for any
use, possession, maintenance, and management of, all or any of the
Collateral, including, without limitation, any Taxes arising as a
result of, or in connection with, the transactions contemplated
herein, and agrees to assume liability for, and to indemnify and hold
Secured Party and each Lender harmless from and against, any and all
claims, causes of action, or liability, for injuries to or deaths of
Persons and damage to property, howsoever arising from or incident to
such use, possession, maintenance, and management, whether such
Persons be agents or employees of Debtor or of third parties, or such
damage be to property of Debtor or of others. Debtor agrees to
indemnify, save, and hold Secured Party and each Lender harmless from
and against, and covenants to defend Secured Party and each Lender
against, any and all losses, damages, claims, costs, penalties,
liabilities, and expenses (collectively, "CLAIMS"), including,
without limitation, court costs and attorneys' fees, AND ANY OF THE
FOREGOING ARISING FROM THE NEGLIGENCE OF SECURED PARTY OR ANY LENDER,
OR ANY OF THEIR RESPECTIVE OFFICERS, EMPLOYEES, AGENTS, ADVISORS,
EMPLOYEES, OR REPRESENTATIVES, howsoever arising or incurred because
of, incident to, or with respect to Collateral or any use,
possession, maintenance, or management thereof; provided, however,
that the indemnity set forth in this PARAGRAPH 8(g) will not apply to
Claims caused by the gross negligence or willful misconduct of
Secured Party or any Lender.
9. ACKNOWLEDGMENT OF REGULATORY CONSIDERATIONS
(a) No Prohibited Transfers. It is hereby acknowledged
that assignment or transfer of control of the FCC Licenses without
the prior approval of the FCC may constitute a prohibited transfer in
violation of FCC rules and regulations. Similarly, assignments or
transfer of control over certifications or authorizations issued by
state PUC's ("PUC CERTIFICATES") may require approval or
notification, as may certain other transactions. Secured Party agrees
that exercise of its rights hereunder, including, but not limited to,
assignment or transfer of FCC Licenses or PUC Certificates upon the
occurrence of a Default or Potential Default, shall be effected only
after obtaining any necessary approvals for such exercise.
(b) Actions by Debtor. If counsel to Secured Party
reasonably determines that the consent of the FCC or a state PUC is
required in connection with any of the actions which may be taken by
Secured Party on behalf of the Lenders in the exercise of their
rights hereunder or under the Loan Documents, then Debtor, at its
sole cost and expense, agrees to use its best efforts to secure such
consent and to cooperate with Secured Party and Lenders in any
actions commenced by Secured Party to secure such consent. In such
case Debtor shall retain control of its respective FCC Licenses and
PUC Certificates until the FCC and each such state PUC's shall have
granted their consent to the transfer of the FCC Licenses and related
permits and the PUC Certificates. Upon the occurrence and during the
continuation of a Default or Potential Default, Debtor shall promptly
execute or cause the execution of all applications, certificates,
instruments, and other documents and papers that the Secured Party
may be required to file in order to obtain any necessary governmental
consent, approval, or authorization, and if Debtor fails or refuses
to execute such documents, then, on the order of any court of
competent jurisdiction, the Clerk of the Court with jurisdiction may
execute such documents on behalf of Debtor. In addition, Debtor shall
execute such applications and other documents and will take such
other action as may be required in order for Secured Party to obtain
from the FCC consent
11
<PAGE> 12
to operate the system, through a receiver or otherwise, during the
time the Secured Party seeks to obtain a purchaser for the System and
to submit any sale of the System to the FCC or state PUC's for
approval. Debtor recognizes that FCC Licenses, PUC Certificates,
franchises, and other similar agreements or authorizations are unique
assets which (or the control of which) may have to be transferred in
order for the Lenders adequately to realize the value of their
Security Interests. Debtor further recognizes that a violation of
this covenant would result in irreparable harm to Lenders for which
monetary damages are not readily ascertainable and which might not
fully compensate such Lenders. Therefore, in addition to any other
remedy which may be available to the Lenders, at Law or in equity,
Secured Party on behalf of Lenders shall have the remedy of specific
performance of the provisions of this subsection.
(c) FCC/PUC Approval. Notwithstanding anything to the
contrary contained in the Security Agreement, Secured Party will not
take any action pursuant to this Security Agreement or any of the
documents executed pursuant hereto which, either because it would
constitute an assignment or transfer of control of an FCC License or
PUC Certificate or otherwise, would require under then-existing Law
(including the written rules and regulations promulgated by the FCC
or such other regulatory authority with jurisdiction) the prior
approval of the FCC or such other regulatory authority with
jurisdiction, without first obtaining such approval. Debtor agrees to
take or cause to be taken, any action which Secured Party may
reasonably request in order to obtain and enjoy the full rights and
benefits granted to Secured Party by this Security Agreement and any
other instruments or agreements executed pursuant hereto, including,
without limitation, at Debtor's cost and expense, the exercise of its
best efforts to cooperate in obtaining FCC and any necessary PUC
approval of any action or transaction contemplated by this Security
Agreement or any other instrument or agreement executed pursuant
hereto which is then required by Law.
(d) Subsequent Actions by Debtor. Debtor agrees that
if, for any reason, the FCC, state PUC or any such other regulatory
authority with jurisdiction does not approve within a reasonable
period of time the initial application for approval of the assignment
or transfer of control of the FCC Licenses or a PUC Certificate, then
PARAGRAPHS 9(b) and (c) above hereof shall be applicable to any
subsequent application for assignment or transfer of the FCC Licenses
or PUC Certificate pursuant to action taken by Secured Party in the
exercise of its rights hereunder or under the Loan Documents. With
respect to each subsequent proposed purchaser(s), Debtor agrees to
execute all such applications and other documents and take all such
other action as may be reasonably requested by Secured Party at any
time and from time to time in order to obtain the approval by the FCC
or any other regulatory authorities. Exercise by Secured Party of the
right to such cooperation shall not be exhausted by the initial or
any subsequent exercise thereof.
10. MISCELLANEOUS.
(a) Continuing Security Interest. This Security
Agreement creates a continuing security interest in the Collateral
and shall (i) remain in full force and effect until the termination
of the obligations of the Lenders to fund Borrowings under the Credit
Agreement, the payment in full of the Obligation, and the expiration
of all Financial Hedges or until payment in full of the Digex
Obligation; (ii) be binding upon Debtor, its successors, and assigns;
and (iii) inure to the benefit of and be enforceable by the Secured
Party, Lenders, and their respective successors, transferees, and
assigns. Without limiting the generality of the foregoing CLAUSE
(iii), the Secured Party and Lenders may assign or otherwise transfer
any of their respective rights under this agreement to any other
Person in accordance with the terms and provisions of SECTION 13.13
of the Credit Agreement, and to the extent of such assignment or
transfer such Person shall thereupon become vested with all the
rights and benefits in respect thereof granted herein or otherwise to
the Secured Party or the Lenders, as the case
12
<PAGE> 13
may be. Upon payment in full of the Obligation, the termination of
the commitment of Lenders to extend credit, and the expiration of all
Financial Hedges or upon payment in full of the Digex Obligation,
Debtor shall be entitled to the return, upon its request and at its
expense, of such of the Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof.
(b) Reference to Miscellaneous Provisions. This
Security Agreement is one of the "Loan Documents" referred to in the
Credit Agreement, and all provisions relating to Loan Documents set
forth in SECTION 13 of the Credit Agreement, other than the
provisions set forth in SECTION 13.7, are incorporated herein by
reference, the same as if set forth herein verbatim.
(c) Term. Upon full and final payment and performance
of the Obligation or the Digex Obligation, this agreement shall
thereafter terminate upon receipt by Secured Party of Debtor's
written notice of such termination; provided that no Obligor, if any,
on any of the Collateral shall ever be obligated to make inquiry as
to the termination of this agreement, but shall be fully protected in
making payment directly to Secured Party until actual notice of such
total payment of the Obligation is received by such Obligor.
(d) Actions Not Releases. The Security Interest and
Debtor's obligations and Secured Party's rights hereunder shall not
be released, diminished, impaired, or adversely affected by the
occurrence of any one or more of the following events: (i) the taking
or accepting of any other security or assurance for any or all of the
Obligation; (ii) any release, surrender, exchange, subordination, or
loss of any security or assurance at any time existing in connection
with any or all of the Obligation; (iii) the modification of,
amendment to, or waiver of compliance with any terms of any of the
other Loan Documents without the notification or consent of Debtor,
except as required therein (the right to such notification or consent
being herein specifically waived by Debtor); (iv) the insolvency,
bankruptcy, or lack of corporate or trust power of any party at any
time liable for the payment of any or all of the Obligation, whether
now existing or hereafter occurring; (v) any renewal, extension, or
rearrangement of the payment of any or all of the Obligation, either
with or without notice to or consent of Debtor, or any adjustment,
indulgence, forbearance, or compromise that may be granted or given
by Secured Party or any Lender to Debtor; (vi) any neglect, delay,
omission, failure, or refusal of Secured Party or any Lender to take
or prosecute any action in connection with any other agreement,
document, guaranty, or instrument evidencing, securing, or assuring
the payment of all or any of the Obligation; (vii) any failure of
Secured Party or any Lender to notify Debtor of any renewal,
extension, or assignment of the Obligation or any part thereof, or
the release of any security, or of any other action taken or
refrained from being taken by Secured Party or any Lender against
Debtor or any new agreement between or among Secured Party or one or
more Lenders and Debtor, it being understood that neither Secured
Party nor any Lender shall be required to give Debtor any notice of
any kind under any circumstances whatsoever with respect to or in
connection with the Obligation, including, without limitation, notice
of acceptance of this Security Agreement or any Collateral ever
delivered to or for the account of Secured Party hereunder; (viii)
the illegality, invalidity, or unenforceability of all or any part of
the Obligation against any party obligated with respect thereto by
reason of the fact that the Obligation, or the interest paid or
payable with respect thereto, exceeds the amount permitted by Law,
the act of creating the Obligation, or any part thereof, is ultra
vires, or the officers, partners, or trustees creating same acted in
excess of their authority, or for any other reason; or (ix) if any
payment by any party obligated with respect thereto is held to
constitute a preference under applicable Laws or for any other reason
Secured Party or any Lender is required to refund such payment or pay
the amount thereof to someone else.
(e) Waivers. Except to the extent expressly otherwise
provided herein or in other Loan Documents and to the fullest extent
permitted by applicable Law, Debtor waives (i) any right to
13
<PAGE> 14
require Secured Party or any Lender to proceed against any other
Person, to exhaust its rights in Collateral, or to pursue any other
right which Secured Party or any Lender may have; (ii) with respect
to the Obligation, presentment and demand for payment, protest,
notice of protest and nonpayment, and notice of the intention to
accelerate; and (iii) all rights of marshaling in respect of any and
all of the Collateral.
(f) Financing Statement. Secured Party shall be
entitled at any time to file this agreement or a carbon,
photographic, or other reproduction of this agreement, as a financing
statement, but the failure of Secured Party to do so shall not impair
the validity or enforceability of this agreement.
(g) Amendments. This instrument may be amended only by
an instrument in writing executed jointly by Debtor and Secured
Party, and supplemented only by documents delivered or to be
delivered in accordance with the express terms hereof.
(h) Multiple Counterparts. This Security Agreement has
been executed in a number of identical counterparts, each of which
shall be deemed an original for all purposes and all of which
constitute, collectively, one agreement; but, in making proof of this
Security Agreement, it shall not be necessary to produce or account
for more than one such counterpart.
(i) Parties Bound; Assignment. This Security Agreement
shall be binding on Debtor and Debtor's heirs, legal representatives,
successors, and assigns and shall inure to the benefit of Secured
Party and Secured Party's successors and assigns.
(i) Secured Party is the agent for each Lender
under the Credit Agreement, the Security Interest and all
Rights granted to Secured Party hereunder or in connection
herewith are for the ratable benefit of each Lender, and
Secured Party may, without the joinder of any Lender,
exercise any and all Rights in favor of Secured Party or
Lenders hereunder, including, without limitation, conducting
any foreclosure sales hereunder, and executing full or
partial releases hereof, amendments or modifications hereto,
or consents or waivers hereunder. The Rights of each Lender
vis-a-vis Secured Party and each other Lender may be subject
to one or more separate agreements between or among such
parties, but Debtor need not inquire about any such
agreement or be subject to any terms thereof unless Debtor
specifically joins therein; and consequently, neither Debtor
nor Debtor's heirs, personal representatives, successors,
and assigns shall be entitled to any benefits or provisions
of any such separate agreements or be entitled to rely upon
or raise as a defense, in any manner whatsoever, the failure
or refusal of any party thereto to comply with the
provisions thereof.
(ii) Debtor may not, without the prior written
consent of Secured Party, assign any rights, duties, or
obligations hereunder.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AS
TO ITS VALIDITY, INTERPRETATION, AND EFFECT IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT IF THE VALIDITY OR PERFECTION OF THE
SECURITY INTERESTS HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF
ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK. UNLESS THE CONTEXT OTHERWISE
REQUIRES, ALL TERMS USED HEREIN WHICH ARE DEFINED IN THE UNIFORM
COMMERCIAL CODE AS
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<PAGE> 15
ENACTED IN THE STATE OF NEW YORK SHALL HAVE THE MEANINGS THEREIN
STATED.
(k) Restatement of Existing Security Agreement. The
parties hereto agree that this Amended and Restated Security
Agreement is intended to, and hereby does, restate, renew, amend,
modify, supercede, and replace the existing Security Agreement in its
entirety, but does not constitute a novation, extinguishment,
discharge, or release in any way of the security interest granted
under the existing Security Agreement, which security interest is
hereby renewed, extended, ratified, and confirmed without lapse or
interruption of creation, attachment, perfection, or priority.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE(S) TO FOLLOW.
15
<PAGE> 16
EXECUTED as of the day and year first herein set forth.
DIGEX, INCORPORATED, as Debtor
By /s/ TIMOTHY M. ADAMS
--------------------------------------------
Name: Timothy M. Adams
-----------------------------------
Title: Chief Executive Officer
-----------------------------------
BANK OF AMERICA, N.A.,
as Secured Party on behalf of Lenders from
time to time party to the Credit Agreement
By /s/ CHARLES E. BRINLEY
--------------------------------------------
Name: Charles E. Brinley
-----------------------------------
Title: Vice President
-----------------------------------
16
<PAGE> 17
ANNEX A TO SECURITY AGREEMENT
(Digex, Incorporated)
A. DEBTOR'S TRADENAMES
- Any interest the Debtor may have in the tradenames set out
in the Attachment to this Security Agreement marked
"Attachment 1".
B. LOCATION OF BOOKS AND RECORDS
- One Digex Plaza, Beltsville, Maryland 20705.
C. LOCATION OF COLLATERAL
(i) One Digex Plaza, Beltsville, MD 20705; and
(ii) any locations where the Debtor has an interest in any
Collateral in the states listed at "E" below.
D. LOCATION OF REAL PROPERTY
- Any locations where the Debtor has an interest in any leased
real estate in California and Maryland.
E. JURISDICTION FOR FILING FINANCING STATEMENTS
California Maryland
----------------------------------------------------
Florida
----------------------------------------------------
17
<PAGE> 18
ANNEX B TO SECURITY AGREEMENT
(Digex, Incorporated)
A. INTERCOMPANY PROMISSORY NOTES
- None
B. PARTNERSHIP INTERESTS
- None
C. TRADEMARKS
- See "Attachment 2"
D. PATENTS
- None
18
<PAGE> 19
ANNEX C TO SECURITY AGREEMENT
(Digex, Incorporated)
DEFAULTS OR EVENTS OF DEFAULT UNDER ANY COLLATERAL NOTE
OR DOCUMENTS EVIDENCING THE COLLATERAL NOTE SECURITY
None
19
<PAGE> 20
ANNEX D TO SECURITY AGREEMENT
PLEDGE INSTRUCTION
PARTNERSHIP:
-------------------------------
INTEREST OWNER:
--------
BY THIS PLEDGE INSTRUCTION, dated as of __________, 2000, __________
("INTEREST OWNER"), hereby instructs __________ (the "PARTNERSHIP") to register
a pledge in favor of Bank of America, N.A. ("PLEDGEE"), in its capacity as
Administrative Agent for certain Lenders and as Secured Party under that certain
Security Agreement dated as of __________, 2000 (the "SECURITY AGREEMENT"),
against, and a security interest in favor of Pledgee in, all of the Interest
Owner's rights in connection with any partnership interest in the Partnership
now and hereafter owned by the Interest Owner ("PARTNERSHIP INTEREST").
- Pledge Instructions. The Partnership is hereby
instructed by the Interest Owner to register all of
the Interest Owner's right, title, and interest in
and to all of the Interest Owner's Partnership
Interest as subject to a pledge and security
interest in favor of Pledgee who, upon such
registration of pledge, shall become the registered
pledgee of the Partnership Interest with all rights
incident thereto.
- Initial Transaction Statement. The Partnership
is further instructed by the Interest Owner to
promptly inform Pledgee of the registration of the
pledge by sending the initial transaction statement,
in the form attached hereto as EXHIBIT A, to Pledgee
at its office located at __________, with a copy to
Interest Owner.
C. Partnership Distributions, Accounts, and
Correspondence. The Partnership is further instructed by the Interest Owner to
promptly (i) cause the Partnership to pay and remit to the Pledgee all
proceeds, distributions, and other amounts payable to the Interest Owner upon
demand or otherwise, including, without limitation, upon the termination,
liquidation, and dissolution of the Partnership, (ii) cause the Partnership to
hold all funds in deposit accounts for the benefit of Pledgee, and (iii) cause
the Partnership to provide to the Pledgee all future correspondence,
accountings of distributions, and tax returns of the Partnership.
D. Warranties of the Interest Owner. The Interest
Owner hereby warrants that (i) the Interest Owner is an appropriate person to
originate this instruction; (ii) the Interest Owner is entitled to effect the
instruction here given; and (iii) the Interest Owner's taxpayer identification
number is ___________________________.
IN WITNESS WHEREOF, the Interest Owner has caused this
Pledge Instruction to be duly executed and delivered as of the date first
above written.
-------------------------------------------------
By
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
20
<PAGE> 21
CONSENT OF THE GENERAL PARTNER
The undersigned, __________, in its capacity as general
partner of the Partnership (in such capacity, the "GENERAL PARTNER") hereby
acknowledges and consents to, and agrees to cause to be registered on the books
and records of the Partnership, the Pledge of Partnership Interests, and further
agrees that upon receipt of written notice from the Pledgee, the General Partner
shall (i) cause the Partnership to pay and remit to the Pledgee all
distributions and other amounts payable to the Interest Owner upon demand or
otherwise, including, without limitation, upon the termination, liquidation, and
dissolution of the Partnership, (ii) cause the Partnership to hold all funds in
deposit accounts for the benefit of Pledgee, and (iii) cause the Partnership to
provide to the Pledgee all future correspondence, accountings of distributions,
and tax returns of the Partnership.
------------------------------------------------,
as General Partner
By
---------------------------------------
Name:
------------------------------
Title:
------------------------------
21
<PAGE> 22
EXHIBIT A TO PLEDGE INSTRUCTION
FORM OF INITIAL TRANSACTION STATEMENT
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS
OF THE TIME OF ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF,
CONFERS NO RIGHTS ON THE RECIPIENT. THIS STATEMENT IS NEITHER A
NEGOTIABLE INSTRUMENT NOR A SECURITY.
NAME AND ADDRESS OF PLEDGOR
Tax ID or Social Security Number:
------------------------
Bank of America, N.A.
ADDRESS
Tax ID Number:
-------------
On ______________, 2000, the undersigned, ________________________,
in its capacity as managing general partner of ________________________ (in
such capacity, the "MANAGING GENERAL PARTNER") caused the pledge of
________________________ (__________%) of the outstanding partnership
interests in ________________________ ("PARTNERSHIP INTEREST") by
________________________ (the "PLEDGOR"), in favor of Bank of America, N.A. on
behalf of Lenders (the "PLEDGEE") to be registered on the books and records of
the Partnership. Except for the pledge in favor of the Pledgee, to the
knowledge of the undersigned (including, without limitation, any information
which may appear on the undersigned's books and records) there are no liens,
restrictions, or adverse claims to which the Partnership Interest is, or may
be, subject as of the date hereof.
-------------------------------------------------
By
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
22
