SECURITY AGREEMENT AND PLEDGE AGREEMENT
Dated as of [●], 2025
among
CASCADIA FIBER NETWORKS, INC. a Delaware corporation (as Borrower and Grantor)
NTP HOLDINGS USA, INC. a Delaware corporation (as Pledgor and Grantor)
and
PINNACLE ATLANTIC BANK, N.A. a national banking association (as Collateral Agent for the Secured Parties)
Securing Obligations under the
$500,000,000 SENIOR SECURED CREDIT AGREEMENT
dated as of [●], 2025
among
Cascadia Fiber Networks, Inc. (as Borrower), Northgate Telecommunications PLC (as Guarantor), Pinnacle Atlantic Bank, N.A. (as Administrative Agent and Collateral Agent), and the Lenders party thereto
comprising
$300,000,000 Term Loan A and $200,000,000 Revolving Credit Facility
Prepared by: Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, NY 10022 Matter No. 1022-00006
Governed by the Laws of the State of New York
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SECURITY AGREEMENT AND PLEDGE AGREEMENT
THIS SECURITY AGREEMENT AND PLEDGE AGREEMENT (this "Agreement"), dated as of [●], 2025, is entered into by and among:
(1) CASCADIA FIBER NETWORKS, INC., a corporation duly organized and existing under the laws of the State of Delaware (EIN: 45-6128937; DE File Number: 5197843), with its principal offices located at 2750 NW Thurman Street, Suite 400, Portland, OR 97210 (the "Borrower" or the "Company" and, together with the Pledgor, a "Grantor");
(2) NTP HOLDINGS USA, INC., a corporation duly organized and existing under the laws of the State of Delaware, with its principal offices located at c/o Northgate Telecommunications PLC, 14 Broadwick Place, London W1F 8HN, United Kingdom (the "Pledgor" and, together with the Borrower, the "Grantors"), acting as the U.S. holding subsidiary of Northgate Telecommunications PLC, a public limited company organized under the laws of England and Wales (the "Parent Guarantor"); and
(3) PINNACLE ATLANTIC BANK, N.A., a national banking association organized under the laws of the United States, with offices at 270 Park Place, Charlotte, NC 28202 (the "Collateral Agent"), acting in its capacity as collateral agent on behalf of and for the ratable benefit of the Secured Parties (as defined herein).
RECITALS
A. Reference is made to that certain Agreement and Plan of Merger, dated as of April 7, 2025 (the "Merger Agreement"), among Northgate Telecommunications PLC, a public limited company organized under the laws of England and Wales, NTP Acquisition Sub, Inc., a Delaware corporation (DE File Number: 7301524; EIN: 93-2587401), and Cascadia Fiber Networks, Inc., a Delaware corporation, pursuant to which NTP Acquisition Sub, Inc. merged with and into Cascadia Fiber Networks, Inc., with Cascadia Fiber Networks, Inc. surviving as the surviving corporation and a wholly owned subsidiary of Northgate Telecommunications PLC (the "Merger"). The Merger was consummated on or about the date hereof in accordance with the terms of the Merger Agreement and the applicable provisions of the Delaware General Corporation Law.
B. Reference is further made to that certain Senior Secured Credit Agreement, dated as of [●], 2025 (as amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"), among Cascadia Fiber Networks, Inc. (as Borrower), Northgate Telecommunications PLC (as Guarantor), Pinnacle Atlantic Bank, N.A. (as Administrative Agent and Collateral Agent), and the lenders party thereto from time to time (collectively, the "Lenders"), pursuant to which the Lenders have agreed to make available to the Borrower a senior secured credit facility in an aggregate principal amount of Five Hundred Million Dollars ($500,000,000), consisting of (i) a term loan A facility in an aggregate principal amount of Three Hundred Million Dollars ($300,000,000) (the "Term Loan A") and (ii) a revolving credit facility in an aggregate principal amount of Two Hundred Million Dollars ($200,000,000) (the "Revolving Credit Facility"), in each case on the terms and subject to the conditions set forth therein. The Credit Agreement provides for a maturity date of five (5) years from the closing date, an interest rate equal to the Secured Overnight Financing Rate ("SOFR") plus 225 basis points (subject to leverage-based step-downs as more particularly described therein), and financial covenants including a Total Net Leverage Ratio not to exceed 4.50 to 1.00 (stepping down to 3.75 to 1.00 by Year 3) and an Interest Coverage Ratio of not less than 2.50 to 1.00.
C. Reference is further made to that certain Commitment Letter, dated as of March 10, 2025 (Reference: PAB-CL-2025-03102), from Pinnacle Atlantic Bank, N.A., in its capacity as sole lead arranger, sole bookrunner, and administrative agent for the credit facilities contemplated by the Credit Agreement (the "Commitment Letter"), pursuant to which Pinnacle Atlantic Bank, N.A. committed to arrange the financing described therein, subject to the terms and conditions set forth in the Commitment Letter and the related fee letter.
D. The lending syndicate under the Credit Agreement is comprised of the following Lenders with the following respective commitments: (i) Pinnacle Atlantic Bank, N.A., with a total commitment of Two Hundred Million Dollars ($200,000,000); (ii) Commonwealth Trust Bank, with a total commitment of One Hundred Twenty-Five Million Dollars ($125,000,000); (iii) Dralvecen National Bank, with a total commitment of One Hundred Million Dollars ($100,000,000); and (iv) Elkhorn Capital Markets, LLC, with a total commitment of Seventy-Five Million Dollars ($75,000,000).
E. It is a condition precedent to the making of the loans and the issuance and maintenance of the commitments under the Credit Agreement that each Grantor execute and deliver this Agreement and grant to the Collateral Agent, for the ratable benefit of the Secured Parties, a first-priority security interest in and lien on the Collateral (as defined herein) to secure the prompt and complete payment, performance, and discharge of all Obligations (as defined herein) of the Borrower and the Grantors under the Credit Agreement and the other Loan Documents.
F. In connection with the consummation of the Merger and the closing of the credit facilities under the Credit Agreement, the Borrower's prior indebtedness to Elkhorn Capital Markets, LLC, consisting of an outstanding term loan in the original principal amount of Eighty-Two Million Six Hundred Thousand Dollars ($82,600,000), together with a prepayment premium of one percent (1.0%) thereof in the amount of Eight Hundred Twenty-Six Thousand Dollars ($826,000), has been repaid in full at or immediately prior to the closing of the transactions contemplated hereby, and all liens and security interests previously granted by the Borrower in favor of Elkhorn Capital Markets, LLC in connection with such prior indebtedness have been irrevocably released and terminated.
G. Following the consummation of the Merger, the Pledgor is the sole record and beneficial holder of one hundred percent (100%) of the issued and outstanding equity interests of Cascadia Fiber Networks, Inc., and desires to pledge such equity interests to the Collateral Agent for the ratable benefit of the Secured Parties as additional security for the Obligations.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements herein contained, the making of the loans and the issuance of the commitments under the Credit Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I — DEFINITIONS AND INTERPRETATION
Section 1.01 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Administrative Agent" means Pinnacle Atlantic Bank, N.A., in its capacity as administrative agent under the Credit Agreement, and any successor administrative agent appointed in accordance with the terms of the Credit Agreement.
"Agreement" means this Security Agreement and Pledge Agreement, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Borrower" means Cascadia Fiber Networks, Inc., a corporation organized under the laws of the State of Delaware.
"Collateral" means, collectively, all Company Collateral and all Pledged Equity, in each case as defined herein.
"Collateral Agent" means Pinnacle Atlantic Bank, N.A., in its capacity as collateral agent for the Secured Parties under this Agreement and the Credit Agreement, and any successor collateral agent appointed in accordance with the terms of the Credit Agreement.
"Company Collateral" has the meaning set forth in Section 2.01.
"Credit Agreement" means the Senior Secured Credit Agreement, dated as of [●], 2025, in an aggregate principal amount of Five Hundred Million Dollars ($500,000,000), among the Borrower, the Parent Guarantor, the Administrative Agent, the Collateral Agent, and the Lenders party thereto from time to time, as the same may be amended, restated, supplemented, replaced, refinanced, or otherwise modified from time to time.
"Equity Interests" means all issued and outstanding shares of common stock (or other equity interests, if applicable) of Cascadia Fiber Networks, Inc., all of which, following the consummation of the Merger, are held by the Pledgor.
"Event of Default" has the meaning ascribed to such term in the Credit Agreement.
"Grantor" or "Grantors" means, collectively, Cascadia Fiber Networks, Inc. (as Borrower and grantor of the Company Collateral) and NTP Holdings USA, Inc. (as Pledgor and grantor of the Pledged Equity), and each individually a "Grantor."
"Guaranteed Obligations" has the meaning ascribed to such term in the Guaranty Agreement.
"Guaranty Agreement" means the Guaranty Agreement, dated as of [●], 2025, executed by Northgate Telecommunications PLC and NTP Holdings USA, Inc. in favor of the Collateral Agent for the ratable benefit of the Secured Parties, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Lenders" means the lenders party to the Credit Agreement from time to time, including their successors and permitted assigns.
"Loan Documents" has the meaning ascribed to such term in the Credit Agreement and includes, without limitation, this Agreement, the Credit Agreement, the Guaranty Agreement, and all other agreements, instruments, and documents executed and delivered in connection therewith.
"Merger" has the meaning set forth in Recital A.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of April 7, 2025, among Northgate Telecommunications PLC, NTP Acquisition Sub, Inc., and Cascadia Fiber Networks, Inc., as the same may have been amended prior to the date hereof.
"Obligations" means all present and future indebtedness, liabilities, and obligations of the Borrower and each other Grantor to the Secured Parties under or in connection with the Credit Agreement and the other Loan Documents, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including, without limitation, (a) all principal of and interest (including post-petition interest accruing after the commencement of any bankruptcy, insolvency, receivership, or similar proceeding, whether or not a claim for such interest is allowed in such proceeding) on all loans and advances under the Credit Agreement (including the Term Loan A and the Revolving Credit Facility), (b) all fees, commissions, charges, costs, and expenses (including the commitment fee of 37.5 basis points on the undrawn portion of the Revolving Credit Facility), (c) all reimbursement obligations, (d) all indemnification obligations, (e) all costs of collection, enforcement, and preservation (including reasonable attorneys' fees and disbursements), and (f) all other amounts payable under or in respect of the Credit Agreement and the other Loan Documents.
"Parent Guarantor" means Northgate Telecommunications PLC, a public limited company organized under the laws of England and Wales.
"Permitted Liens" has the meaning ascribed to such term in the Credit Agreement.
"Pledged Equity" has the meaning set forth in Section 6.01.
"Pledged Shares" has the meaning set forth in Section 6.01(a).
"Pledgor" means NTP Holdings USA, Inc., a corporation organized under the laws of the State of Delaware, which is the direct parent and sole stockholder of Cascadia Fiber Networks, Inc. following the Merger, and which is an indirect wholly owned subsidiary of Northgate Telecommunications PLC.
"Required Lenders" has the meaning ascribed to such term in the Credit Agreement.
"Secured Parties" means, collectively, the Administrative Agent, the Collateral Agent, and the Lenders, and their respective successors and permitted assigns.
"Security Interest" means the security interest and lien granted by each Grantor to the Collateral Agent pursuant to this Agreement.
"UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that if, by reason of mandatory provisions of law, the perfection, the effect of perfection or non-perfection, or the priority of the Security Interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York (including, without limitation, the State of Delaware), the term "UCC" shall mean the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection, or priority.
Section 1.02 — Interpretation and Construction
(a) Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Credit Agreement. All terms defined in the UCC and used but not otherwise defined in this Agreement or the Credit Agreement shall have the respective meanings ascribed to such terms in the UCC, as in effect from time to time.
(b) Unless the context otherwise requires: (i) words in the singular include the plural and vice versa; (ii) references to "Sections," "Articles," "Schedules," and "Exhibits" refer to sections and articles of, and schedules and exhibits to, this Agreement; (iii) the words "herein," "hereof," "hereunder," and words of similar import refer to this Agreement as a whole and not to any particular provision hereof; (iv) the words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation"; (v) references to any agreement, document, or instrument mean such agreement, document, or instrument as amended, restated, supplemented, or otherwise modified from time to time; and (vi) references to any Person include such Person's successors and permitted assigns.
(c) This Agreement shall be construed in accordance with and governed by the laws of the State of New York, and all references herein to the UCC shall be deemed to refer to the Uniform Commercial Code as in effect in the State of New York, except as the context otherwise specifically requires (including, without limitation, for purposes of determining the jurisdiction in which UCC financing statements are to be filed or the law governing perfection and priority of the Security Interest).
(d) The headings and captions in this Agreement are for convenience of reference only and shall not define, limit, or otherwise affect the meaning or interpretation of any provision of this Agreement.
Section 1.03 — Credit Agreement Controls
In the event of any conflict or inconsistency between the terms and provisions of this Agreement and the terms and provisions of the Credit Agreement, the terms and provisions of the Credit Agreement shall govern and control; provided, however, that the foregoing shall not be construed to limit or otherwise affect the grant, perfection, or priority of the Security Interest in the Collateral as set forth herein, and with respect to the definition, creation, perfection, and enforcement of the Security Interest and the rights and remedies of the Collateral Agent with respect to the Collateral, the terms and provisions of this Agreement shall govern and control to the extent not inconsistent with the express terms of the Credit Agreement.
PART A — SECURITY AGREEMENT (COMPANY COLLATERAL)
ARTICLE II — GRANT OF SECURITY INTEREST IN COMPANY COLLATERAL
Section 2.01 — Grant of Security Interest
As collateral security for the prompt and complete payment, performance, and discharge of all Obligations, the Borrower hereby grants, assigns, conveys, mortgages, pledges, hypothecates, and transfers to the Collateral Agent, for the ratable benefit of the Secured Parties, a continuing first-priority security interest in and lien on all of the following property and assets of the Borrower, wherever located and whether now owned or existing or hereafter acquired or arising, and all proceeds and products thereof (collectively, the "Company Collateral"):
(a) Accounts Receivable. All accounts (as defined in the UCC), accounts receivable, and rights to payment, whether or not earned by performance, including, without limitation, all revenue derived from fiber-optic services, data center interconnection services, lit and dark fiber services, wavelength provisioning, wholesale fiber indefeasible right of use ("IRU") arrangements, managed network services, and all other telecommunications and data services provided by the Borrower (the Borrower's aggregate revenue for fiscal year 2024 being approximately $187.4 million), together with all rights in any merchandise or goods which any of the same may relate to or which are returned or reclaimed, and all rights of stoppage in transit and of replevin or reclamation.
(b) General Intangibles. All general intangibles (as defined in the UCC), including, without limitation, all intellectual property of every kind and nature, including (i) all patents, patent applications, and patent licenses, (ii) all trademarks, service marks, trade names, trademark and service mark registrations, and trademark and service mark applications, together with the goodwill of the business symbolized thereby, (iii) all copyrights, copyright registrations, and copyright applications, (iv) all domain names and internet addresses, (v) all trade secrets, proprietary information, know-how, inventions, processes, formulae, designs, and technical data, (vi) all network management software developed by or for the Borrower, including all source code, object code, documentation, and related materials, (vii) all customer lists, supplier lists, and marketing information, (viii) all licenses and sublicenses (to the extent assignable or pledgeable under applicable law and the terms thereof), (ix) all payment intangibles, and (x) all tax refunds and tax claims.
(c) Equipment. All equipment (as defined in the UCC), including, without limitation, all fiber-optic cables (including single-mode and multi-mode fiber strands), network equipment, optical transport equipment, switches, routers, multiplexers, amplifiers, regenerators, dense wavelength division multiplexing (DWDM) equipment, servers, racks, cabinets, power supplies, uninterruptible power supply (UPS) systems, generators, heating, ventilation, and air conditioning (HVAC) systems, tools, machinery, furniture, fixtures, vehicles, and all related telecommunications infrastructure, covering approximately 4,800 route miles of fiber-optic network spanning the States of Oregon, Washington, and Idaho, and the northern portion of the State of Nevada, together with all accessions, additions, attachments, improvements, substitutions, and replacements thereto and therefor.
(d) Inventory. All inventory (as defined in the UCC), including, without limitation, all raw materials, work-in-progress, finished goods, supplies, spare parts, and other tangible personal property held for sale, lease, or furnishing under contracts of service, or used or consumed in the Borrower's business.
(e) Instruments, Documents, and Chattel Paper. All instruments (as defined in the UCC), including promissory notes and drafts, all documents (as defined in the UCC), including documents of title, and all chattel paper (as defined in the UCC), whether tangible or electronic.
(f) Deposit Accounts and Securities Accounts. All deposit accounts (as defined in the UCC) maintained by the Borrower at any depository institution, and all securities accounts (as defined in the UCC) maintained by the Borrower at any securities intermediary, in each case whether now existing or hereafter established, together with all funds, cash, and cash equivalents on deposit therein or credited thereto, and all claims and rights of the Borrower with respect thereto.
(g) Investment Property. All investment property (as defined in the UCC), including, without limitation, all securities (whether certificated or uncertificated), security entitlements, securities accounts, commodity contracts, and commodity accounts.
(h) Letter-of-Credit Rights. All letter-of-credit rights (as defined in the UCC), including the right to receive payment or performance under any letter of credit, whether as beneficiary or assignee.
(i) Commercial Tort Claims. All commercial tort claims (as defined in the UCC) identified on Schedule 4.08 hereto, and all commercial tort claims hereafter arising and identified by the Borrower in a supplement to Schedule 4.08 delivered to the Collateral Agent in accordance with Section 5.03.
(j) Contracts and Contract Rights. All contracts, contract rights, and other agreements to which the Borrower is a party or under which the Borrower has any right, title, or interest, including, without limitation:
(i) the Master Services Agreement between the Borrower and Pacific Ridge Data Centers, LLC, dated as of [●] (as amended from time to time), generating approximately $22 million in annual revenue;
(ii) the Wholesale Fiber IRU Agreement between the Borrower and Clearpath Internet Services, Inc., dated as of [●] (as amended from time to time);
(iii) the Oregon Municipal Broadband Cooperative Agreement between the Borrower and certain municipal and county entities in the State of Oregon, dated as of [●] (as amended from time to time); and
(iv) all other material commercial agreements to which the Borrower is a party, as more particularly described on Schedule 2.01 attached hereto.
(k) Permits, Licenses, and Authorizations. All permits, licenses, certifications, authorizations, approvals, and franchises issued by any governmental authority and held by the Borrower, including, without limitation, the Borrower's international Section 214 authorization issued by the Federal Communications Commission ("FCC") and all state public utility commission ("PUC") certifications and authorizations held by the Borrower in the States of Oregon, Washington, Idaho, and Nevada, in each case to the extent that the grant of a security interest therein is permitted by applicable law and the terms thereof.
(l) Leasehold Interests. All leasehold interests and rights of the Borrower as lessee or sublessee under any lease or sublease of real or personal property, including, without limitation, all rights under capital leases (aggregate capital lease obligations of the Borrower being approximately $12.3 million as of the date hereof), together with all options to renew or extend such leases and all security deposits and prepaid rent thereunder.
(m) Real Property Interests. All right, title, and interest of the Borrower in and to any real property, including, without limitation, all fee interests, easements, rights-of-way, licenses, permits, access rights, and fiber conduit rights, whether now owned or hereafter acquired, and all improvements, fixtures, and appurtenances thereto.
(n) Books and Records. All books, records, ledgers, files, correspondence, and documents of the Borrower (whether in tangible or electronic form), including, without limitation, all customer records, billing records, financial records, engineering records, network maps and schematics, and all rights of access thereto.
(o) Proceeds and Products. All proceeds (as defined in the UCC) and products of any and all of the foregoing, including, without limitation, all cash proceeds, non-cash proceeds, insurance proceeds, condemnation awards, and all other amounts received or receivable on account of any disposition, collection, exchange, substitution, or other realization of or upon any of the foregoing Company Collateral.
Section 2.02 — Security Interest Secures Obligations
The Security Interest granted in Section 2.01 secures the prompt and complete payment, performance, and discharge of all Obligations under the Credit Agreement, including, without limitation, (a) all principal of and interest on the Term Loan A in the aggregate original principal amount of Three Hundred Million Dollars ($300,000,000), (b) all principal of and interest on the Revolving Credit Facility in the aggregate principal amount of Two Hundred Million Dollars ($200,000,000), (c) all interest thereon at the rate of SOFR plus 225 basis points per annum (or such adjusted rate as may be in effect from time to time under the Credit Agreement, including any default rate of interest), (d) all fees payable under or in connection with the Credit Agreement, including, without limitation, the commitment fee of 37.5 basis points per annum on the average daily undrawn amount of the Revolving Credit Facility, (e) all costs and expenses (including reasonable attorneys' fees and disbursements) payable by the Borrower under the Credit Agreement and the other Loan Documents, and (f) all other amounts from time to time owing by the Borrower to any Secured Party under or in connection with the Credit Agreement and the other Loan Documents, in each case whether now existing or hereafter arising.
Section 2.03 — Excluded Assets
Notwithstanding anything to the contrary contained in Section 2.01, the Company Collateral shall not include the following assets (collectively, the "Excluded Assets"):
(a) Any FCC license, FCC authorization (including the Borrower's international Section 214 authorization), state PUC certification, or other governmental permit, license, or authorization, in each case to the extent that the grant of a security interest therein is prohibited or restricted by applicable law, regulation, or rule (including, without limitation, rules and regulations of the FCC restricting the encumbrance of broadcast or common carrier licenses); provided that the grant of the Security Interest in any such Excluded Asset shall automatically attach, and such asset shall automatically become part of the Company Collateral, immediately upon any such prohibition or restriction ceasing to be applicable.
(b) Any lease, license, contract, or agreement to the extent that the grant of a security interest therein would constitute a breach or violation of, or result in a termination of, such lease, license, contract, or agreement under the terms thereof (but only to the extent that the applicable anti-assignment or anti-encumbrance provision is enforceable under applicable law, including after giving effect to the applicable provisions of the UCC, including Sections 9-406, 9-407, 9-408, and 9-409 thereof); provided that (i) the Security Interest shall attach immediately at such time as such prohibition or restriction shall no longer be applicable or shall be rendered unenforceable under applicable law, and (ii) the exclusion set forth in this clause (b) shall not apply to the extent that the UCC or other applicable law renders such anti-assignment or anti-encumbrance provision ineffective.
(c) Any intent-to-use trademark application filed with the United States Patent and Trademark Office ("USPTO") to the extent that the grant of a security interest therein prior to the filing of a "Statement of Use" or an "Amendment to Allege Use" would invalidate or render void such application under applicable trademark law, including the Lanham Act, 15 U.S.C. § 1051 et seq.; provided that the Security Interest shall automatically attach to any such application immediately upon the filing of such Statement of Use or Amendment to Allege Use.
(d) Any assets held by the Borrower in trust for, or on behalf of, third parties, to the extent that the grant of a security interest therein would violate the Borrower's fiduciary obligations with respect to such assets.
(e) Any "margin stock" (as defined in Regulation U of the Board of Governors of the Federal Reserve System), if any, owned by the Borrower.
For the avoidance of doubt, the Excluded Assets shall be narrowly construed, and the Company Collateral shall include all proceeds and products of any Excluded Asset to the extent that a security interest in such proceeds and products is not itself prohibited or restricted by applicable law or the terms of the applicable agreement giving rise to the exclusion.
ARTICLE III
[Reserved for Pledge Agreement — See Part B, Article VI below.]
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE BORROWER (AS GRANTOR)
The Borrower hereby represents and warrants to the Collateral Agent and each Secured Party as of the date hereof and as of the date of each borrowing under the Credit Agreement (except to the extent any such representation or warranty expressly relates to a specific earlier date, in which case as of such earlier date) as follows:
Section 4.01 — Organization and Good Standing
The Borrower is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware (DE File Number: 5197843; EIN: 45-6128937). The Borrower has the corporate power and authority to own, lease, and operate its properties and assets and to conduct its business as presently conducted. The Borrower is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the nature of its business or the ownership or leasing of its properties requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect (as defined in the Credit Agreement). The Borrower's chief executive office and principal place of business is located at 2750 NW Thurman Street, Suite 400, Portland, OR 97210.
Section 4.02 — Authorization
The execution, delivery, and performance of this Agreement by the Borrower have been duly authorized by all necessary corporate action on the part of the Borrower, including the approval of the Borrower's board of directors (or, following the Merger, the sole stockholder acting in its capacity as such). No other corporate proceedings on the part of the Borrower are necessary to authorize the execution, delivery, or performance of this Agreement. This Agreement has been duly executed and delivered by the Borrower and constitutes the legal, valid, and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, or other similar laws affecting creditors' rights generally and (b) general principles of equity (whether considered in a proceeding in equity or at law).
Section 4.03 — Ownership of Collateral
The Borrower is the sole legal and beneficial owner of the Company Collateral, and the Company Collateral is free and clear of all liens, encumbrances, security interests, claims, options, charges, and other adverse interests of every kind and nature whatsoever, other than (a) the Security Interest created by this Agreement and (b) Permitted Liens (as defined in the Credit Agreement). Without limiting the generality of the foregoing, all liens, security interests, and encumbrances previously granted by the Borrower in favor of Elkhorn Capital Markets, LLC in connection with the Borrower's prior term loan in the original principal amount of Eighty-Two Million Six Hundred Thousand Dollars ($82,600,000) have been irrevocably released and terminated, and all UCC financing statements and other filings evidencing such prior liens have been or will be promptly terminated.
Section 4.04 — Validity and Perfection
This Agreement creates a valid and enforceable security interest in favor of the Collateral Agent in the Company Collateral, which security interest secures the Obligations. Upon the filing of UCC-1 financing statements naming the Borrower as debtor and the Collateral Agent as secured party in the office of the Secretary of State of the State of Delaware (the Borrower's jurisdiction of organization), and upon the delivery of possession or control of any Company Collateral (to the extent perfection by possession or control is required or appropriate under the UCC), and upon the filing of appropriate notices and registrations with the USPTO and the U.S. Copyright Office (with respect to registered intellectual property), the Security Interest will constitute a fully perfected, first-priority security interest in and lien on the Company Collateral (subject only to Permitted Liens), enforceable as such against the Borrower and all third parties.
Section 4.05 — No Conflicting Liens
No UCC financing statement, fixture filing, or other filing or recording covering all or any portion of the Company Collateral is on file in any public recording or filing office, except (a) such filings as may have been made in connection with Permitted Liens, (b) filings previously made in connection with the Borrower's prior indebtedness to Elkhorn Capital Markets, LLC, all of which have been or will be promptly terminated, and (c) filings to be made in favor of the Collateral Agent pursuant to this Agreement. The Borrower has not authorized any filing of any financing statement or similar instrument covering any portion of the Company Collateral other than filings in favor of the Collateral Agent or in connection with Permitted Liens.
Section 4.06 — Location of Collateral
The Borrower's chief executive office and principal place of business is located at 2750 NW Thurman Street, Suite 400, Portland, OR 97210. The Borrower's fiber-optic network infrastructure and related telecommunications equipment is located across the States of Oregon, Washington, and Idaho, and in the northern portion of the State of Nevada, encompassing approximately 4,800 route miles of fiber-optic cable and conduit. A complete listing of all material locations where tangible Company Collateral (including equipment, inventory, and other tangible personal property) is located is set forth on Schedule 4.06 attached hereto. The Borrower has no other places of business or locations of material Collateral other than as disclosed on Schedule 4.06.
Section 4.07 — Intellectual Property
The Borrower owns or has valid and enforceable licenses to use all intellectual property constituting Company Collateral, free and clear of all liens and encumbrances other than Permitted Liens and the Security Interest. A complete listing of all registered patents, registered trademarks and service marks, and registered copyrights owned by the Borrower, including registration numbers, dates of registration, and descriptions thereof, is set forth on Schedule 4.07 attached hereto. To the knowledge of the Borrower, none of the Borrower's intellectual property is the subject of any pending or threatened litigation, administrative proceeding, or other claim of infringement, misappropriation, or invalidity that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Borrower's proprietary network management software and related intellectual property assets are owned by the Borrower free and clear of any third-party claims (other than open-source software components, to the extent disclosed on Schedule 4.07).
Section 4.08 — Commercial Tort Claims
Schedule 4.08 attached hereto sets forth a true and complete list of all commercial tort claims (as defined in the UCC) of the Borrower as of the date hereof, including a brief description of each such claim and the parties involved. As of the date hereof, the Borrower has no known commercial tort claims other than as set forth on Schedule 4.08. The Borrower acknowledges and agrees that, promptly upon becoming aware of any additional commercial tort claim, it shall deliver to the Collateral Agent a supplement to Schedule 4.08 describing such claim in reasonable detail and shall execute and deliver such additional documents and instruments as may be reasonably requested by the Collateral Agent to ensure that the Security Interest attaches to such claim.
Section 4.09 — Deposit Accounts and Securities Accounts
Schedule 4.09 attached hereto sets forth a true and complete list of all deposit accounts and securities accounts maintained by the Borrower as of the date hereof, including the name and address of each depository bank or securities intermediary, the account number of each such account, and the type and purpose of each such account. The Borrower has no deposit accounts or securities accounts other than those listed on Schedule 4.09. The Collateral Agent shall be named as control party or shall have received duly executed deposit account control agreements or securities account control agreements, as applicable, with respect to each such account, in each case in form and substance reasonably satisfactory to the Collateral Agent, in accordance with Section 5.08 hereof.
ARTICLE V — COVENANTS OF THE BORROWER (AS GRANTOR)
The Borrower hereby covenants and agrees with the Collateral Agent and each Secured Party as follows, in each case until the Obligations have been indefeasibly paid in full and all commitments under the Credit Agreement have been terminated:
Section 5.01 — Maintenance of Collateral
The Borrower shall (a) maintain the Company Collateral in good condition, working order, and repair (ordinary wear and tear excepted), consistent with prudent industry practices and in a manner consistent with the Borrower's past practices, (b) make all necessary repairs to and replacements of the Company Collateral as may be necessary to keep the Company Collateral in such condition, (c) maintain insurance on the Company Collateral in accordance with the requirements set forth in the Credit Agreement, including the types, amounts, and deductible levels specified therein, and naming the Collateral Agent as loss payee or additional insured, as applicable, and (d) comply in all material respects with all laws, rules, regulations, and governmental orders applicable to the Company Collateral, including, without limitation, all applicable environmental laws and regulations.
Section 5.02 — Defense of Title
The Borrower shall, at its own cost and expense, defend title to the Company Collateral and the first-priority lien and security interest of the Collateral Agent therein against all claims, demands, and actions of all persons and entities whomsoever, and shall take all actions necessary to maintain and preserve the Collateral Agent's first-priority lien on and security interest in the Company Collateral. The Borrower shall promptly notify the Collateral Agent of any claim, demand, or action that could reasonably be expected to adversely affect the Collateral Agent's security interest in any material portion of the Company Collateral.
Section 5.03 — Further Assurances
The Borrower shall, at its own cost and expense, promptly execute and deliver to the Collateral Agent such additional documents, instruments, and agreements as the Collateral Agent may from time to time reasonably request in order to create, preserve, perfect, maintain, continue, and protect the Security Interest in the Company Collateral and the first-priority status thereof, including, without limitation:
(a) UCC-1 financing statements, UCC-3 amendments and continuation statements, and other filings under the UCC in each jurisdiction in which such filing is necessary or desirable to perfect or maintain the perfection of the Security Interest;
(b) intellectual property security agreements, short-form assignments, and other filings and notices with the USPTO and the U.S. Copyright Office, as applicable, with respect to all registered patents, trademarks, and copyrights constituting Company Collateral;
(c) deposit account control agreements and securities account control agreements in form and substance reasonably satisfactory to the Collateral Agent;
(d) supplements to the Schedules hereto as may be necessary to ensure that the Schedules remain true, complete, and accurate in all material respects; and
(e) such other documents, instruments, certificates, and agreements as the Collateral Agent may reasonably request to carry out the purposes and intent of this Agreement.
Section 5.04 — No Disposition
The Borrower shall not sell, lease, license, transfer, assign, convey, exchange, or otherwise dispose of any Company Collateral, or attempt to do any of the foregoing, except as expressly permitted under the Credit Agreement, including, without limitation, (a) dispositions of inventory in the ordinary course of business, (b) dispositions of worn-out, obsolete, or surplus equipment not useful in the Borrower's business, (c) dispositions of accounts receivable in connection with the collection or compromise thereof in the ordinary course of business, and (d) other dispositions expressly permitted under Section [●] of the Credit Agreement, in each case subject to the terms and conditions set forth therein.
Section 5.05 — No Additional Liens
The Borrower shall not create, incur, assume, suffer, or permit to exist any lien, encumbrance, security interest, charge, claim, option, or other adverse interest of any kind or nature on or with respect to any Company Collateral, other than (a) the Security Interest created by this Agreement and (b) Permitted Liens (as defined in the Credit Agreement). The Borrower shall take all actions necessary to defend the Company Collateral against, and to remove and discharge, any lien or encumbrance that is not a Permitted Lien.
Section 5.06 — Changes in Identity or Location
The Borrower shall provide the Collateral Agent with not less than thirty (30) days' prior written notice of any change in:
(a) the Borrower's legal name, as set forth in its certificate of incorporation or other organizational documents;
(b) the Borrower's state or jurisdiction of organization;
(c) the Borrower's organizational identification number (including its Delaware file number);
(d) the location of the Borrower's chief executive office or principal place of business; or
(e) the location of any material portion of the tangible Company Collateral (including the relocation or redeployment of equipment or fiber infrastructure to a location not previously disclosed on Schedule 4.06).
The Borrower shall not make any change described in clauses (a) through (c) above without the prior written consent of the Collateral Agent (not to be unreasonably withheld, conditioned, or delayed) and shall, prior to any such change, execute and deliver to the Collateral Agent such additional financing statements, amendments, or other documents as the Collateral Agent may reasonably request to maintain the perfection and priority of the Security Interest.
Section 5.07 — Books and Records; Inspection
The Borrower shall maintain complete and accurate books and records relating to the Company Collateral, including, without limitation, records of all accounts receivable, equipment, inventory, contracts, intellectual property, and other assets constituting Company Collateral, and shall keep such books and records at the Borrower's chief executive office or such other location as the Borrower may designate with prior written notice to the Collateral Agent. The Collateral Agent and its agents, representatives, and designees shall have the right, upon reasonable prior written notice to the Borrower (which notice shall not be required during the continuance of an Event of Default), during normal business hours and at the Borrower's expense (but no more frequently than once per fiscal year absent the occurrence of an Event of Default, in which case at any time and from time to time), to (a) inspect and examine the Company Collateral, (b) examine, audit, and copy the Borrower's books and records relating to the Company Collateral, and (c) discuss the affairs, finances, operations, and condition of the Borrower with the Borrower's officers, directors, employees, and independent certified public accountants.
Section 5.08 — Deposit Account Control Agreements
The Borrower shall, within sixty (60) days after the date hereof, deliver to the Collateral Agent duly executed deposit account control agreements (in form and substance reasonably satisfactory to the Collateral Agent), with respect to each existing deposit account maintained by the Borrower as of the date hereof and listed on Schedule 4.09 hereto. With respect to any deposit account or securities account opened by the Borrower after the date hereof, the Borrower shall, within thirty (30) days after the opening of such account, (a) provide the Collateral Agent with written notice of the opening of such account, including the name and address of the depository institution or securities intermediary, the account number, and the purpose of such account, (b) deliver to the Collateral Agent a duly executed deposit account control agreement or securities account control agreement, as applicable, in form and substance reasonably satisfactory to the Collateral Agent, and (c) deliver a supplement to Schedule 4.09 reflecting such new account.
Section 5.09 — Intellectual Property Covenants
(a) The Borrower shall maintain and preserve all material intellectual property constituting Company Collateral in full force and effect, and shall timely file all applications for renewal, extensions, and maintenance fees with respect to all material registered patents, trademarks, and copyrights.
(b) The Borrower shall not abandon, cancel, or allow to lapse any material intellectual property constituting Company Collateral without the prior written consent of the Collateral Agent, which consent shall not be unreasonably withheld, conditioned, or delayed; provided that the Borrower may abandon intellectual property that is no longer material to its business or operations, so long as such abandonment does not, individually or in the aggregate, have a Material Adverse Effect.
(c) The Borrower shall promptly notify the Collateral Agent of (i) any infringement, misappropriation, or other unauthorized use of the Borrower's material intellectual property by any third party of which the Borrower becomes aware, and (ii) any claim, demand, or action by any third party alleging that the Borrower's intellectual property infringes or misappropriates the intellectual property rights of such third party, in each case where such infringement, misappropriation, or claim could reasonably be expected to have a Material Adverse Effect.
(d) The Borrower shall, promptly upon acquiring any new registered intellectual property (including any patent, trademark, or copyright registration), deliver to the Collateral Agent a supplement to Schedule 4.07 and execute and deliver any additional documents or instruments reasonably requested by the Collateral Agent to ensure that the Security Interest attaches to and is perfected with respect to such intellectual property.
Section 5.10 — Compliance with FCC and PUC Requirements
(a) The Borrower shall maintain in full force and effect all licenses, certifications, authorizations, and permits issued by the FCC (including the Borrower's international Section 214 authorization) and by the applicable state public utility commissions in the States of Oregon, Washington, Idaho, and Nevada, and shall comply in all material respects with all applicable rules, regulations, orders, and requirements of the FCC and such state public utility commissions.
(b) The Borrower acknowledges that certain FCC licenses and authorizations may not be directly pledged or encumbered as Collateral under applicable law and FCC rules and regulations. The Borrower shall cooperate with the Collateral Agent in good faith to implement alternative arrangements with respect to such licenses and authorizations, including, without limitation, (i) the inclusion of all proceeds of such licenses and authorizations in the Company Collateral, (ii) the provision of prior consent to the transfer of such licenses and authorizations to the extent permitted by applicable law, and (iii) the execution and delivery of such additional documents and instruments as the Collateral Agent may reasonably request to protect the Collateral Agent's interests with respect to such licenses and authorizations, in each case to the extent not prohibited by applicable law or FCC rules and regulations.
(c) The Borrower shall promptly notify the Collateral Agent of any material change in the status of any FCC license or state PUC certification, including any revocation, suspension, modification, non-renewal, or threatened revocation, suspension, modification, or non-renewal thereof.
Section 5.11 — Collection of Accounts Receivable
(a) Subject to the provisions of clause (b) below, the Borrower shall have the right to collect all accounts receivable constituting Company Collateral in the ordinary course of business, consistent with the Borrower's past practices, and to use and apply the proceeds thereof in the ordinary course of its business for any purpose not prohibited by the Credit Agreement or this Agreement.
(b) Upon the occurrence and during the continuance of an Event of Default, (i) the Collateral Agent shall have the right, upon written notice to the Borrower, to direct the Borrower to remit all collections on accounts receivable to a blocked account or cash collateral account designated by the Collateral Agent, (ii) the Collateral Agent shall have the right to notify account debtors and other obligors of the Security Interest and to direct such account debtors and obligors to make payments directly to the Collateral Agent or to such blocked account, and (iii) the Borrower shall hold all collections received after such notice in trust for the benefit of the Collateral Agent and shall promptly remit the same to the Collateral Agent or to such blocked account, as directed by the Collateral Agent.
PART B — PLEDGE AGREEMENT (PLEDGED EQUITY)
ARTICLE VI — GRANT OF SECURITY INTEREST IN PLEDGED EQUITY
Section 6.01 — Pledge and Grant
As collateral security for the prompt and complete payment, performance, and discharge of all Obligations, NTP Holdings USA, Inc. (as the direct parent and sole stockholder of Cascadia Fiber Networks, Inc. following the Merger) hereby pledges, assigns, conveys, transfers, hypothecates, and grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a continuing first-priority security interest in and lien on all of the following property and assets of the Pledgor, wherever located and whether now owned or existing or hereafter acquired or arising (collectively, the "Pledged Equity"):
(a) Pledged Shares. One hundred percent (100%) of the issued and outstanding shares of common stock of Cascadia Fiber Networks, Inc., a corporation organized under the laws of the State of Delaware, representing all of the equity interests of every class and series in Cascadia Fiber Networks, Inc. (the "Pledged Shares"), which Pledged Shares are more particularly described on Schedule 6.02 attached hereto.
(b) Dividends and Distributions. All dividends, distributions (whether in cash, stock, property, or otherwise), cash, instruments, and other property or proceeds from time to time received, receivable, or otherwise distributed in respect of, in exchange for, or upon the conversion of any or all of the Pledged Shares.
(c) Stockholder Rights. All rights, title, and interest of the Pledgor under and in respect of any stockholder agreements, voting agreements, registration rights agreements, preemptive rights agreements, rights of first refusal, co-sale agreements, and any other agreements or instruments relating to the Pledged Shares, in each case whether now existing or hereafter arising.
(d) After-Acquired Shares. All additional shares of stock or other equity interests of Cascadia Fiber Networks, Inc. from time to time acquired by the Pledgor by purchase, stock dividend, stock split, reclassification, conversion, exchange, merger, consolidation, or otherwise, together with all certificates representing such additional shares and all rights appurtenant thereto.
(e) Proceeds. All proceeds (as defined in the UCC) and products of any and all of the foregoing Pledged Equity, including, without limitation, all cash proceeds, non-cash proceeds, and all other amounts received or receivable on account of any sale, disposition, collection, exchange, substitution, or other realization of or upon any of the foregoing.
Section 6.02 — Delivery of Pledged Shares
(a) Concurrently with the execution and delivery of this Agreement (or, in the case of uncertificated securities, as promptly as practicable thereafter), the Pledgor shall deliver to the Collateral Agent (or to a bailee designated by the Collateral Agent) all certificates, if any, representing the Pledged Shares, in each case accompanied by undated stock powers or other instruments of transfer duly executed in blank by the Pledgor.
(b) If any Pledged Shares are uncertificated, the Pledgor shall cause the issuer thereof (i.e., Cascadia Fiber Networks, Inc.) to register the pledge and the Collateral Agent's security interest on the issuer's books and records, and to deliver to the Collateral Agent a written acknowledgment confirming such registration, in form and substance reasonably satisfactory to the Collateral Agent. To the extent that any Pledged Shares constitute "uncertificated securities" within the meaning of UCC Section 8-102(a)(18), the Pledgor shall cause the issuer to comply with UCC Section 8-106(c)(2) by agreeing to comply with instructions originated by the Collateral Agent without further consent of the Pledgor.
(c) Schedule 6.02 attached hereto sets forth, with respect to the Pledged Shares: (i) the name of the issuer (Cascadia Fiber Networks, Inc.), (ii) the jurisdiction of organization of the issuer (Delaware), (iii) the certificate number(s) (or notation that shares are uncertificated), (iv) the number of shares pledged, (v) the par value per share, (vi) the percentage of the total outstanding shares of the issuer represented by the Pledged Shares (100%), and (vii) the registered holder (NTP Holdings USA, Inc.).
Section 6.03 — Security Interest Secures Obligations
The pledge and Security Interest granted in this Article VI secures the same Obligations described in Section 2.02 of this Agreement. For the avoidance of doubt, the Pledged Equity and the Company Collateral each secure the prompt and complete payment, performance, and discharge of all Obligations under the Credit Agreement and the other Loan Documents.
ARTICLE VII — REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR
The Pledgor hereby represents and warrants to the Collateral Agent and each Secured Party as of the date hereof and as of the date of each borrowing under the Credit Agreement (except to the extent any such representation or warranty expressly relates to a specific earlier date, in which case as of such earlier date) as follows:
Section 7.01 — Organization and Authority of Pledgor
NTP Holdings USA, Inc. is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Pledgor has the corporate power and authority to execute, deliver, and perform its obligations under this Agreement. The execution, delivery, and performance of this Agreement by the Pledgor have been duly authorized by all necessary corporate action on the part of the Pledgor. This Agreement has been duly executed and delivered by the Pledgor and constitutes the legal, valid, and binding obligation of the Pledgor, enforceable against the Pledgor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity. The Pledgor is an indirect wholly owned subsidiary of Northgate Telecommunications PLC, a public limited company organized under the laws of England and Wales.
Section 7.02 — Ownership of Pledged Equity
The Pledgor is the sole record and beneficial owner of one hundred percent (100%) of the issued and outstanding equity interests (including all shares of common stock of every class and series) of Cascadia Fiber Networks, Inc. The Pledgor holds such equity interests free and clear of all liens, encumbrances, security interests, claims, options, charges, proxies, voting trusts, and other adverse interests of every kind and nature, other than (a) the Security Interest created by this Agreement and (b) Permitted Liens (as defined in the Credit Agreement). The Pledged Shares have been duly authorized, validly issued, fully paid, and non-assessable, and were not issued in violation of any preemptive rights, rights of first refusal, or similar rights.
Section 7.03 — No Restrictions on Pledge
There are no contractual, statutory, or other restrictions on the pledge, assignment, transfer, hypothecation, or encumbrance of the Pledged Shares, other than (a) restrictions imposed by applicable federal and state securities laws, (b) restrictions set forth in the Credit Agreement or this Agreement, and (c) any restrictions contained in the organizational documents of Cascadia Fiber Networks, Inc. that have been waived or are otherwise inapplicable in connection with the transactions contemplated hereby. No consent, approval, or authorization of Cascadia Fiber Networks, Inc. or any other person or entity is required for the valid pledge of the Pledged Shares under this Agreement (Cascadia Fiber Networks, Inc. being a wholly owned subsidiary of the Pledgor following the Merger), other than such consents, approvals, and authorizations as have been obtained prior to the date hereof.
Section 7.04 — No Options or Warrants
As of the date hereof, there are no outstanding options, warrants, rights, convertible securities, or other agreements or instruments obligating Cascadia Fiber Networks, Inc. to issue or sell any shares of its capital stock or other equity interests, or any securities or obligations exercisable or exchangeable for, or convertible into, any shares of capital stock or other equity interests of Cascadia Fiber Networks, Inc. All options, warrants, and similar rights to acquire equity interests in Cascadia Fiber Networks, Inc. that were outstanding prior to the consummation of the Merger have been cancelled, terminated, or cashed out in connection with the Merger at a price of $15.79 per share, in accordance with the terms of the Merger Agreement. There are no outstanding stock appreciation rights, phantom stock awards, restricted stock units, or similar equity-based awards with respect to the capital stock of Cascadia Fiber Networks, Inc.
Section 7.05 — No Prior Pledges
The Pledged Shares are not, and have not been, subject to any prior pledge, lien, security interest, encumbrance, charge, option, or other adverse claim or interest, other than the Security Interest created by this Agreement. Without limiting the generality of the foregoing, all liens, security interests, and encumbrances previously granted in favor of Elkhorn Capital Markets, LLC with respect to the equity interests of Cascadia Fiber Networks, Inc. (if any) have been irr