COLLATERAL PLEDGE
AND SECURITY AGREEMENT
Dated as of May 4, 1998
from
GST NETWORK FUNDING, INC.,
AS PLEDGOR
to
UNITED STATES TRUST COMPANY
OF NEW YORK,
AS TRUSTEE
T A B L E O F C O N T E N T S
SECTION PAGE
SECTION 1. Definitions; Appointment; Deposit and Investment..............2
1.1. Definitions...................................................2
1.2. Appointment of the Trustee....................................3
1.3. Pledge and Grant of Security Interest.........................3
1.4. Deposit of Proceeds of Offering...............................6
SECTION 2. Security for Obligation.......................................6
SECTION 3. Delivery of Collateral........................................6
SECTION 4. Maintaining the Collateral Accounts...........................6
SECTION 5. Investing of Amounts in the Collateral Investments Account....7
SECTION 6. Delivery of Collateral Investments; Filing....................7
SECTION 7. Disbursements Relating to Collateral..........................8
SECTION 8. Representations and Warranties................................9
SECTION 9. Further Assurances...........................................12
SECTION 10. Covenants....................................................12
SECTION 11. As to Acquired Equipment.....................................13
SECTION 12. Insurance....................................................13
SECTION 13. Power of Attorney............................................14
SECTION 14. No Assumption of Duties; Reasonable Care.....................15
SECTION 15. Indemnity....................................................15
SECTION 16. Remedies upon Event of Default...............................16
SECTION 17. Expenses.....................................................17
SECTION 18. Security Interest Absolute...................................17
SECTION PAGE
SECTION 19. Voting Rights; Dividends; Etc................................17
SECTION 20. Miscellaneous Provisions.....................................18
20.1. Notices......................................................18
20.2. No Adverse Interpretation of Other Agreements................19
20.3. Severability.................................................19
20.4. Headings.....................................................19
20.5. Counterpart Originals........................................19
20.6. Benefits of Pledge Agreement.................................19
20.7. Amendments, Waivers and Consents.............................19
20.8. Interpretation of Agreement..................................20
20.9. Continuing Security Interest; Termination; Release...........20
20.10. Survival Provisions..........................................21
20.11. Waivers......................................................21
20.12. Authority of the Trustee.....................................21
20.13. Final Expression.............................................22
20.14. Rights of Holders............................................22
21.15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL; WAIVER OF DAMAGES................................22
SCHEDULES
Schedule I - Locations of Collateral
EXHIBITS
Exhibit A - Form of Fee Note
Exhibit B - Trustee's Officer Certificate
Exhibit C - Form of Acknowledgement of Control of Collateral
Investment Account
Exhibit D - Form of Consent and Agreement
Exhibit E - Form of Intercompany Note
Exhibit F - Form of Intercompany Security Agreement
Exhibit G - Form of GST Guaranty
COLLATERAL PLEDGE
AND SECURITY AGREEMENT
This COLLATERAL PLEDGE AND SECURITY AGREEMENT (this "PLEDGE AGREEMENT")
is made and entered into as of May 4, 1998 by and among GST NETWORK FUNDING,
INC., a Delaware corporation (the "PLEDGOR"), having its principal office at
0000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, in favor of United States Trust
Company of New York ("U.S. TRUST"), a banking and trust company duly organized
and existing under the laws of the State of New York, having an office at 000
Xxxx 00xx Xxxxxx, Xxx Xxxx, X.X. 00000, as trustee (the "TRUSTEE") for the
holders (the "HOLDERS") of the Notes (as defined herein) issued by the Pledgor
under the Indenture referred to below.
W I T N E S S E T H
WHEREAS, the Pledgor, GST Telecommunications, Inc., a corporation
organized under the federal laws of Canada ("GST"), GST USA, Inc., a Delaware
corporation ("GST USA"), and the Trustee have entered into that certain
indenture dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the "INDENTURE"), pursuant to which the
Pledgor is initially issuing $500,000,000 in aggregate principal amount at
maturity of its 10 1/2% Senior Secured Discount Notes due 2008 (the "NOTES") on
the date hereof (the "OFFERING");
WHEREAS, in consideration for the Pledgor making the financing from the
Offering available to GST USA and for the Pledgor facilitating the purchase of
equipment for GST USA, GST USA, GST and the Pledgor have entered into a
Reimbursement and Commitment Fee Agreement pursuant to which GST USA and GST
have agreed to pay any fees or expenses incurred by the Pledgor in connection
therewith (the "REIMBURSEMENT OBLIGATION") and to pay GST Network a commitment
fee (the "COMMITMENT FEE") in an amount equal to 4.5% per annum of the amount by
which the aggregate principal amount of the Notes exceeds the aggregate
principal amount of the Intercompany Notes (as defined below) then held as
security for the Notes and such Commitment Fee may be paid by the issuance of
indebtedness ("FEE NOTES") of GST USA in a principal amount equal to such
Commitment Fee in the form attached hereto as Exhibit A;
WHEREAS, the Pledgor is required to apply the net proceeds of the
Offering to acquire Collateral Investments (as defined below) which will be
pledged to the Trustee on the Closing Date, to be held by the Trustee for the
benefit of the Holders to secure the Pledgor's obligations under the Indenture
and the Notes;
WHEREAS, the Pledgor is permitted to use the proceeds of the Collateral
Investments (as defined below) from time to time pay the cost (including,
without limitation, the cost of design, development, construction, acquisition,
installation and integration) (the
"ACQUIRED EQUIPMENT COST") of the Acquired Equipment (as defined below) and sell
the Acquired Equipment to GST USA in exchange for indebtedness of GST USA in a
principal amount equal to the Acquired Equipment Cost to be evidenced by one or
more promissory notes in the form attached hereto as Exhibit D (the
"INTERCOMPANY NOTES");
WHEREAS, the Pledgor has agreed to pledge all Intercompany Notes and
Fee Notes (collectively, the "PLEDGED DEBT") it receives to the Trustee for the
benefit of the Holders to secure the Pledgor's obligations under the Indenture
and the Notes;
WHEREAS, the Pledgor has opened a securities account (the "COLLATERAL
INVESTMENTS ACCOUNT") with Bear, Xxxxxxx Asset Management, Inc. ("BSAM") at its
office at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, Account No.
[__________] in the name of the Pledgor but under the sole dominion and control
of the Trustee and subject to the terms of this Pledge Agreement; and
WHEREAS, to secure the obligations of the Pledgor now or hereafter
existing under the Indenture and the Notes whether for principal, premium,
interest, fees, expenses or otherwise (the "OBLIGATIONS"), the Pledgor has
agreed to (i) pledge to the Trustee for its benefit and the ratable benefit of
the Holders, a security interest in the Collateral (as hereinafter defined) and
(ii) execute and deliver this Pledge Agreement in order to secure the payment
and performance by the Pledgor of all the Obligations. Capitalized terms used
herein and not otherwise defined herein shall have the meanings given to such
terms in the Indenture.
AGREEMENT
NOW, THEREFORE, in consideration of the premises herein contained, and
in order to induce the Holders to purchase the Notes, the Pledgor and the
Trustee hereby agree, for the benefit of the Trustee and for the ratable benefit
of the Holders, as follows:
SECTION 1. DEFINITIONS; APPOINTMENT; DEPOSIT AND INVESTMENT.
1.1. DEFINITIONS.
"AMENDED BOOK-ENTRY REGULATIONS" means 31 C.F.R. Part 357 as amended by
the amendments thereto promulgated at 61 Fed. Reg. 43626-43638 (August 23,
1996).
"CASH EQUIVALENTS" means U.S. Government Securities, as defined in the
Indenture.
"OFFICER'S CERTIFICATE" shall mean a certificate signed by the Chairman
of the Board, the President or any Vice President of the Pledgor (i) stating (A)
the amount of
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funds needed by the Pledgor to pay the Acquired Equipment Cost of any Acquired
Equipment to be purchased by the Pledgor and confirming that the cost of design,
development, construction, installation and integration of all Acquired
Equipment will not exceed 50% of the aggregate Acquired Equipment Cost of such
Acquired Equipment; (B) that GST USA has entered into a legally binding and
enforceable agreement (a "PURCHASE AGREEMENT") with the Pledgor to purchase
promptly, but in no event later than the earliest date such Acquired Equipment
can be commercially operational, such Acquired Equipment in exchange for
indebtedness with a principal amount equal to the Acquired Equipment Cost and
that bears interest at 200 basis points above the rate equal to that of the
Notes and evidenced by an Intercompany Note in the form of Exhibit D hereto,
guaranteed by GST under a Guaranty in the form of Exhibit F; and (C) that the
Pledgor will pledge the Intercompany Note to the Trustee for the benefit of the
Holders, and (ii) having attached thereto, an invoice or other appropriate
documentation for the Acquired Equipment stating the Acquired Equipment Cost to
be paid.
"QUALIFIED FINANCIAL INSTITUTION" shall mean any person meeting the
minimum requirements imposed upon the Trustee pursuant to Section 7.10 of the
Indenture.
"REVISED ARTICLE 8" has the meaning set forth in ss.357.2 of the
Amended Book- Entry Regulations.
"TRUSTEE" shall mean the Person named as the "Trustee" in the first
paragraph of this Agreement until a successor Trustee shall have become such,
and thereafter "Trustee" shall mean the Person who is then the Trustee
hereunder.
All defined terms used herein without definition shall have the
respective meanings ascribed to them in the Indenture. Unless otherwise defined
herein or in the Indenture, terms used in Articles 8 or 9 of the Uniform
Commercial Code as in effect in the State of New York (the "U.C.C."), Revised
Article 8 and the Amended Book-Entry Regulations are used herein as therein
defined.
1.2. APPOINTMENT OF THE TRUSTEE. The Pledgor hereby appoints the
Trustee as Trustee in accordance with the terms and conditions set forth herein
and the Trustee hereby accepts such appointment.
1.3. PLEDGE AND GRANT OF SECURITY INTEREST. The Pledgor hereby assigns
and pledges to the Trustee for its benefit and the ratable benefit of the
Holders, and hereby grants to the Trustee for its benefit and the ratable
benefit of the Holders a security interest in, the following (collectively, the
"COLLATERAL"):
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(a) all of the Pledgor's right, title and interest, whether
now owned or hereafter acquired, in and to all equipment in all of its
forms, wherever located, now or hereafter existing (including, but not
limited to, all telecommunications equipment of every type), all
fixtures and all parts thereof and all accessions thereto (any and all
such equipment, fixtures, parts and accessions being the "ACQUIRED
EQUIPMENT");
(b) all of the Pledgor's right, title and interest, whether
now owned or hereafter acquired, in and to all accounts, contract
rights, chattel paper, instruments, deposit accounts, general
intangibles and other obligations of any kind, now or hereafter
existing, whether or not arising out of or in connection with the sale
or lease of Acquired Equipment or other goods or the rendering of
services, and all rights now or hereafter existing in and to all
security agreements, leases and other contracts securing or otherwise
relating to any such accounts, contract rights, chattel paper,
instruments, deposit accounts, general intangibles or obligations (any
and all such accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and obligations, to the extent
not referred to in clause (d), (e) or (f) below, being the
"RECEIVABLES", and any and all such leases, security agreements and
other contracts being the "RELATED CONTRACTS");
(c) all of the following (the "SECURITY COLLATERAL"):
(i) the Pledged Debt and the instruments evidencing
the Pledged Debt and GST's guarantee thereof, and all
interest, cash, instruments and other property from time
to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged
Debt; and
(ii) all additional indebtedness from time to time
owed to the Pledgor and the instruments evidencing such
indebtedness, and all interest, cash, instruments and
other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any
or all of such indebtedness;
(d) all of the Pledgor's right, title and interest in and to
each of the Purchase Agreements entered into by the Pledgor from time
to time, and the Intercompany Security Agreement and the Reimbursement
and Commitment Fee Agreement, as such agreements may be amended or
otherwise modified from time to time (collectively, the "ASSIGNED
AGREEMENTS"), including, without limitation, (i) all rights of the
Pledgor to receive moneys due and to become due
4
under or pursuant to the Assigned Agreements, (ii) all claims of the
Pledgor for damages arising out of or for breach of or default under
the Assigned Agreements and (iii) the right of the Pledgor to terminate
the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder (all such
Collateral being the "AGREEMENT COLLATERAL");
(e) all of the following (collectively, the "ACCOUNT
COLLATERAL"):
(i) the Collateral Investments Account, all funds
held therein and all certificates and instruments, if any,
from time to time representing or evidencing the
Collateral Investments Account;
(ii) all other deposit accounts of the Pledgor, all
funds held therein and all certificates and instruments,
if any, from time to time representing or evidencing such
deposit accounts;
(iii) all Collateral Investments (as hereinafter
defined) from time to time and all certificates and
instruments, if any, from time to time representing or
evidencing the Collateral Investments;
(iv) all notes, certificates of deposit, deposit
accounts, checks and other instruments from time to time
hereafter delivered to or otherwise possessed by BSAM for
or on behalf of the Pledgor in substitution for or in
addition to any or all of the then existing Account
Collateral; and
(v) all interest, dividends, cash, instruments and
other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any
or all of the then existing Account Collateral; and
(f) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of
the types described in clauses (a) - (e) of this Section 1.3) and, to
the extent not otherwise included, all (i) payments under insurance
(whether or not the Trustee is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Collateral and (ii)
cash.
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1.4. DEPOSIT OF PROCEEDS OF OFFERING. The Pledgor shall deposit the net
proceeds of the Offering and all other cash on hand on the date hereof into the
Collateral Investments Account and direct BSAM to purchase Cash Equivalents to
be held in the Collateral Investments Account.
SECTION 2. SECURITY FOR OBLIGATION. This Pledge Agreement secures the
payment of all Obligations of the Pledgor now or hereafter existing under the
Indenture and the Notes, whether for principal, premium, interest, fees,
expenses or otherwise (all such Obligations being the "SECURED OBLIGATIONS").
Without limiting the generality of the foregoing, this Agreement secures the
payment of all amounts that constitute part of the Secured Obligations and would
be owed by the Pledgor to the Trustee or the Holders under the Indenture but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Pledgor.
SECTION 3. DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing the Security Collateral or Account Collateral shall
be delivered to and held by or on behalf of the Trustee pursuant hereto and
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Trustee or shall be credited to the Collateral
Investments Account. For the better perfection of the Trustee's rights in and to
the Security Collateral and Account Collateral, the Pledgor shall forthwith,
upon the pledge of any Security Collateral or Account Collateral hereunder,
cause all such Security Collateral or Account Collateral, including the
Collateral Investments Account and all other accounts representing a security
entitlement to or containing any Collateral (including, without limitation, any
Collateral Investments) to be registered in the name "United States Trust
Company of New York for the benefit of the holders of the 10 1/2% Senior Secured
Discount Notes of GST Network Funding, Inc. Due 2008" and to be under the sole
dominion and control of the Trustee, which dominion and control shall be agreed
to and acknowledged by BSAM or any other securities intermediary holding any
such account in an acknowledgement in the form of Exhibit B hereto, subject only
to the revocable rights specified in Section 7. In addition, the Trustee or
BSAM, as the case may be, shall have the right at any time to exchange
certificates or instruments representing or evidencing any Security Collateral
or Account Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. MAINTAINING THE COLLATERAL ACCOUNTS. (a) So long as any
Obligation shall remain unpaid, the Pledgor will maintain the Collateral
Investments Account.
(b) It shall be a term and condition of the Collateral Investments
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the Collateral Investments Account and except as otherwise
provided by the provisions of Section 7 and Section 16, that no amount
(including interest on Collateral Investments) shall be
6
paid or released to or for the account of, or withdrawn by or for the account
of, the Pledgor or any other Person from the Cash Collateral Account.
(c) The Collateral Investments Account shall be subject to such
applicable laws, and such applicable regulations of the Board of Governors of
the Federal Reserve System and of any other appropriate banking or governmental
authority, as may now or hereafter be in effect.
(d) Notwithstanding the provisions of this Section 4 or any other term
of this Agreement, the Trustee shall relocate the Account Collateral to accounts
at a Qualified Financial Institution designated by the Pledgor upon receipt of
the following documentation: (i) written instructions from a duly authorized
officer of the Pledgor (A) authorizing such relocation of the Collateral; and
(B) designating the account at the Qualified Financial Institution to which the
Collateral is to be relocated; (ii) a letter agreement in the form of Exhibit C,
duly executed by the Qualified Financial Institution; and (iii) an opinion of
counsel to the Pledgor, in form and substance satisfactory to the Trustee,
stating that the Trustee has a valid and perfected first priority security
interest in the Collateral relocated pursuant to this Section 4(d). In the event
of the relocation of an Account Collateral pursuant to this Section 4(d), the
accounts to which such Account Collateral is relocated shall for all purposes
under this Agreement thereafter be the Collateral Investment Account.
SECTION 5. INVESTING OF AMOUNTS IN THE COLLATERAL INVESTMENTS ACCOUNT.
The Pledgor will, subject to the provisions of Section 7 and Section 16, from
time to time (a) invest amounts on deposit in the Collateral Investments Account
in such Cash Equivalents in the name of the Trustee as the Pledgor may select
and (b) invest interest paid on the Cash Equivalents referred to in clause (a)
above, and reinvest other proceeds of any such Cash Equivalents that may mature
or be sold, in each case in such Cash Equivalents, as the Pledgor may select
(the Cash Equivalents referred to in clauses (a) and (b) above being
collectively "COLLATERAL INVESTMENTS"). Interest and proceeds that are not
invested or reinvested in Collateral Investments as provided above shall be
deposited and held in the Collateral Investments Account.
SECTION 6. DELIVERY OF COLLATERAL INVESTMENTS; FILING. (a) Subject to
the other terms and conditions of this Pledge Agreement, all Collateral
Investments under this Pledge Agreement shall be held in the Collateral
Investments Account, subject (except as expressly provided in subsections 7(a)
and 7(b) hereof) to the exclusive dominion and control of the Trustee and
exclusively for the benefit of the Trustee and for the ratable benefit of the
Holders and segregated from all other funds or other property otherwise held by
the Trustee.
(b) All Account Collateral shall be retained in the Collateral
Investments Account pending disbursement pursuant to the terms hereof and upon
request from the
7
Pledgor, the Trustee shall report to the Pledgor the amount and type of assets
contained in each such account.
(c) Concurrently with the execution and delivery of this Agreement,
BSAM is delivering to the Pledgor a duly executed certificate, in the form of
Exhibit B hereto, of an officer of BSAM, confirming BSAM's establishment and
maintenance of the Collateral Investment Account and its receipt and holding of
the Collateral Investments or a security entitlement thereto and the crediting
of the Collateral Investments or such security entitlement to the Collateral
Investment Account, all in accordance with this Pledge Agreement.
(d) Concurrently with the execution and delivery of this Agreement, the
Pledgor is delivering to the Trustee duly executed financing statements, in
proper form for filing under the Uniform Commercial Code of the State of New
York and each state listed on Schedule I hereto covering the Collateral
described in this Pledge Agreement.
SECTION 7. DISBURSEMENTS RELATING TO COLLATERAL. The assets in the
Collateral Investments Account shall be released only as follows:
(a) Three business days prior to the due date of any scheduled
cash interest payments on the Notes, any Payment Date with respect to
an Offer to Purchase the Notes under the Indenture or a Redemption Date
with respect to the Notes, the Pledgor may, pursuant to written
instructions executed by the Pledgor (an "ISSUER ORDER"), direct the
Trustee to direct BSAM to release from the Collateral Investments
Account and, if necessary, to liquidate the Collateral Investments
indicated on the Issuer Order and pay to the Holders proceeds
sufficient to provide for payment in full of such principal, premium or
interest then due on the Notes. Upon receipt of an Issuer Order, the
Trustee will take any action necessary to provide for the payment of
the principal, premium or interest on the Notes in accordance with the
payment provisions of the Indenture to the Holders from (and to the
extent of) proceeds of the Collateral Investments Account. Nothing in
this Section 7 shall affect the Trustee's rights to apply the
Collateral to the payments of amounts due on the Notes upon
acceleration thereof.
(b) Upon receipt by the Trustee of an Issuer Order and an
Officer's Certificate with respect to the payment of any Acquired
Equipment Cost, the Trustee shall direct BSAM to immediately release
proceeds from the Collateral Investments Account and if necessary
liquidate the Collateral Investments indicated in the Officer's
Certificate or Issuer Order in such amount as will be sufficient to
provide for payment in full of the Acquired Equipment Cost. The Pledgor
agrees to use the disbursed proceeds to pay such Acquired Equipment
Cost on the date of such release, and any
8
such released funds will be disbursed directly to the supplier of the
Acquired Equipment pursuant to the invoice attached to the Officer's
Certificate.
(c) Nothing contained in Section 1, Section 5, this Section 7,
or any other provision of this Agreement shall (i) afford the Pledgor
any right to issue entitlement orders with respect to any security
entitlement to the Collateral Investments or any securities account in
which any such security entitlement may be carried, or otherwise afford
the Pledgor control of any such security entitlement or (ii) otherwise
give rise to any rights of Pledgor with respect to the Collateral
Investments, any security entitlement thereto or any securities account
in which any such security entitlement may be carried, other than the
Pledgor's rights under this Pledge Agreement as the beneficial owner of
collateral pledged to and subject to the exclusive dominion and control
(except as expressly provided in Sections 7(a) and (b) hereof) of the
Trustee in its capacity as such (and not as a securities intermediary).
The Pledgor acknowledges, confirms and agrees that the Trustee holds a
security entitlement to the Collateral Investments solely as trustee
for the Holders and not as a securities intermediary.
(d) The Pledgor shall prepare and deliver to the Trustee or
shall provide the Trustee with all information necessary for the
Trustee to prepare and deliver to BSAM, instructions to BSAM for the
release of funds from the Collateral Investments Account in accordance
with the terms of Section 7.
SECTION 8. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby
represents and warrants, and in connection with each purchase or sale of
Acquired Equipment will be deemed to represent and warrant, that:
(a) The execution and delivery by the Pledgor of, and the
performance by the Pledgor of its obligations under, this Pledge
Agreement will not contravene any provision of applicable law or the
Certificate of Incorporation of the Pledgor or any material agreement
or other material instrument binding upon the Pledgor or any of its
subsidiaries or any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Pledgor or any of its
subsidiaries, or result in the creation or imposition of any Lien on
any assets of the Pledgor, except for the security interests granted
under this Pledge Agreement; no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required (i) for the performance by the Pledgor of its obligations
under this Pledge Agreement, (ii) for the pledge by the Pledgor of the
Collateral pursuant to this Pledge Agreement or (iii) except for any
such consents, approvals, authorizations or orders required to be
obtained by the Trustee (or the Holders) for reasons other than the
consummation of this transaction, for the exercise by the Trustee of
the rights provided for in this Pledge
9
Agreement or the remedies in respect of the Collateral pursuant to this
Pledge Agreement.
(b) The Pledgor is the beneficial owner of the Collateral,
free and clear of any Lien or claims of any person or entity (except
for the security interests granted under this Pledge Agreement). No
financing statement covering the Pledgor's interest in the Collateral
is on file in any public office other than the financing statements, if
any, filed pursuant to this Pledge Agreement. The Pledgor has no trade
names.
(c) This Pledge Agreement has been duly authorized, validly
executed and delivered by the Pledgor and (assuming the due
authorization and valid execution and delivery of this Pledge Agreement
by the Trustee and enforceability of the Pledge Agreement against the
Trustee in accordance with its terms) constitutes a valid and binding
agreement of the Pledgor, enforceable against the Pledgor in accordance
with its terms, except as (i) the enforceability hereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, preference,
reorganization, moratorium or similar laws now or hereafter in effect
relating to or affecting creditors' rights or remedies generally, (ii)
the availability of equitable remedies may be limited by equitable
principles of general applicability and the discretion of the court
before which any proceeding therefor may be brought, and (iii) the
exculpation provisions hereunder may be limited by public policy
considerations.
(d) Upon the delivery to the Trustee of the certificates or
instruments, if any, representing or evidencing the Collateral, the
filing of financing statements, if any, required by the UCC in the
appropriate offices in the State of New York and each state listed on
Schedule 1 hereto, and the transfer and pledge to the Trustee of the
Account Collateral and the acquisition by the Trustee of a security
entitlement thereto, in accordance with Section 3, the pledge of and
grant of a security interest in the Collateral securing the payment of
the Secured Obligations for the benefit of the Trustee and the Holders
will constitute a first priority perfected security interest in such
Collateral, enforceable as such against all creditors of the Pledgor
(and any persons purporting to purchase any of the Collateral from the
Pledgor).
(e) There are no legal or governmental proceedings pending or,
to the best of the Pledgor's knowledge, threatened to which the Pledgor
or any of its subsidiaries is a party or to which any of the properties
of the Pledgor or any such subsidiary is subject that would materially
adversely affect the power or ability of the Pledgor to perform its
obligations under this Pledge Agreement or to consummate the
transactions contemplated hereby.
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(f) The pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by law or governmental regulation
(including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System) applicable to the Pledgor.
(g) All of the Acquired Equipment is or will be located at the
places specified in Schedule I hereto. The chief place of business and
chief executive office of the Pledgor and the office where the Pledgor
keeps its records concerning the Receivables, and the original copies
of each Assigned Agreement and all originals of all chattel paper that
evidence Receivables, are located at the address first specified above
for the Pledgor. Original copies of each Assigned Agreement and all
originals of all chattel paper that evidence Receivables have been
delivered to the Trustee. None of the Receivables or Agreement
Collateral is evidenced by a promissory note or other instrument. The
Pledgor has exclusive possession and control of the Acquired Equipment.
(h) Each Intercompany Note issued to the Pledgor hereunder and
each Fee Note issued to the Pledgor under the Reimbursement and
Commitment Fee Agreement will be duly authorized, executed or issued
and delivered by GST USA and will be the legal, valid and binding
obligation of GST USA.
(i) Each guaranty of an Intercompany Note and a Fee Note
issued to the Pledgor will be duly authorized, executed and delivered
by GST and will be the legal valid and binding obligation of GST.
(j) The Intercompany Security Agreement, a true and complete
copy of which has been furnished to the Trustee, has been duly
authorized, executed and delivered by all parties thereto, has not been
amended or otherwise modified, is in full force and effect and is
binding upon and enforceable against all parties thereto in accordance
with its terms. GST USA has executed and delivered to the Pledgor a
consent, in substantially the form of Exhibit D, to the assignment of
the Intercompany Security Agreement and all related Agreement
Collateral to the Trustee pursuant to this Agreement.
(k) Each Purchase Agreement delivered to the Pledgor will be
duly authorized, executed and delivered by GST USA and will be the
legal, valid and binding obligation of GST USA enforceable in
accordance with its terms.
(l) No Event of Default (as defined below) exists.
11
SECTION 9. FURTHER ASSURANCES. The Pledgor will, promptly upon request
by the Trustee (which request the Trustee may submit at the direction of the
Holders of a majority in principal amount of the Notes then outstanding),
execute and deliver or cause to be executed and delivered, or use its reasonable
best efforts to procure, all assignments, instruments and other documents, all
in form and substance reasonably satisfactory to the Trustee, deliver any
instruments to the Trustee and take any other actions that are necessary or
desirable to perfect, continue the perfection of, or protect the first priority
of the Trustee's security interest in and to the Collateral, to protect the
Collateral against the rights, claims, or interests of third persons (other than
any such rights, claims or interests created by or arising through the Trustee)
or to effect the purposes of this Pledge Agreement. The Pledgor also hereby
authorizes the Trustee to file any financing or continuation statements in the
United States with respect to the Collateral without the signature of the
Pledgor (to the extent permitted by applicable law). The Pledgor will promptly
pay all reasonable costs incurred in connection with any of the foregoing within
45 days of receipt of an invoice therefor. The Pledgor also agrees, whether or
not requested by the Trustee, to take all actions that are necessary to perfect
or continue the perfection of, or to protect the first priority of, the
Trustee's security interest in and to the Collateral, including the filing of
all necessary financing and continuation statements, and to protect the
Collateral against the rights, claims or interests of third persons (other than
any such rights, claims or interests created by or arising through the Trustee).
SECTION 10. COVENANTS. The Pledgor covenants and agrees with the
Trustee and the Holders that from and after the date of this Pledge Agreement
until the earlier of payment in full in cash of all Secured Obligations due and
owing under the Indenture and the Notes:
(a) that (i) it will not (and will not purport to) sell or
otherwise dispose of, or grant any option or warrant with respect to,
any of the Collateral and at times will be the sole beneficial owner of
the Collateral, except as contemplated by this Agreement or the
Indenture or (ii) it will not create or permit to exist any Lien upon
or with respect to any of the Collateral (except for the security
interests granted under this Pledge Agreement, the Intercompany
Security Agreement and any Lien created by or arising through the
Trustee under the Indenture);
(b) that it will not (i) enter into any agreement or
understanding that restricts or inhibits or purports to restrict or
inhibit the Trustee's rights or remedies hereunder, including, without
limitation, the Trustee's right to sell or otherwise dispose of the
Collateral or (ii) fail to pay or discharge any tax, assessment or levy
of any nature with respect to the Collateral not later than five days
prior to the date of any proposed sale under any judgment, writ or
warrant of attachment with respect to the Collateral;
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(c) in the event the Pledgor is required to make an Offer to
Purchase the Notes under the Indenture, it will fund such Offer to
Purchase (i) first from funds (or the proceeds of Collateral
Investments) held in the Collateral Investments Account, (ii) second
from the proceeds of Intercompany Offers (as defined in the
Intercompany Notes) under the Intercompany Notes and (iii) third from
the proceeds of a Fee Note Offer (as defined in the Fee Notes). The
Pledgor covenants that it will not accept any Intercompany or Fee Note
Offer except and to the extent required to fund an Offer to Purchase in
accordance with the terms of the preceding sentence; and
(d) it will deliver to the Trustee, true and complete copies
of each Purchase Agreement, promptly after each such agreement is
entered into by GST USA and the Pledgor, and will require as a
condition to its entry into any such Purchase Agreement that GST USA
execute and deliver to the Pledgor a consent, in substantially the form
of Exhibit C, to the assignment of the Purchase Agreement and all
related Agreement Collateral to the Trustee pursuant to this Agreement;
(e) Subject to the terms and conditions of this Agreement, the
Pledgor shall at its expense perform and observe all the terms and
provisions of the Assigned Agreements to be performed or observed by
it, maintain the Assigned Agreements in full force and effect, enforce
the Assigned Agreements in accordance with their respective terms and
take all such action to such end as may be from time to time requested
by the Trustee; and
(f) Subject to the terms and conditions of this Agreement, the
Pledgor shall not:
(i) cancel or terminate any Assigned Agreement or consent to
or accept any cancellation or termination thereof;
(ii) amend or otherwise modify any Assigned Agreement or give
any consent, waiver or approval thereunder;
(iii) waive any default under or breach of any Assigned
Agreement;
(iv) consent to or permit or accept any prepayment of amounts
to become due under or in connection with any Assigned Agreement,
except as expressly provided therein; or
(v) take any other action in connection with any Assigned
Agreement that would impair the value of the interest or rights of the
Pledgor thereunder or that would impair the interest or rights of the
Trustee.
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SECTION 11. AS TO ACQUIRED EQUIPMENT. (a) The Pledgor shall keep the
Acquired Equipment at the places therefor specified in Section 8(g) or, upon 30
days' prior written notice to the Trustee, at such other places in a
jurisdiction where all action required by Section 8(g) or 9 or shall have been
taken with respect to the Acquired Equipment to perfect, continue the perfection
of or protect the first priority of the Trustee's security interest in and to
such Collateral.
(b) The Pledgor shall cause the Acquired Equipment to be
maintained and preserved in the same condition, repair and working order as when
new, ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and shall forthwith, or in the case of any loss or damage to any of the
Acquired Equipment as quickly as practicable after the occurrence thereof, make
or cause to be made all repairs, replacements and other improvements in
connection therewith that are necessary or desirable to such end. The Pledgor
shall promptly furnish to the Trustee a statement respecting any loss or damage
to any of the Acquired Equipment.
(c) The Pledgor shall pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including claims for labor, materials and supplies) against, the
Acquired Equipment.
SECTION 12. INSURANCE. (a) The Pledgor shall, at its own expense,
maintain insurance with respect to the Acquired Equipment in such amounts,
against such risks, in such form and with such insurers, as is reasonable and
customary for persons in the telecommunications business. Each policy for
liability insurance shall provide for all losses to be paid on behalf of the
Trustee and the Pledgor as their interests may appear, and each policy for
property damage insurance shall provide for all losses (except for losses of
less than $1,000,000 per occurrence) to be paid directly to the Trustee. Each
such policy shall in addition (i) name the Pledgor and the Trustee as insured
parties thereunder (without any representation or warranty by or obligation upon
the Trustee) as their interests may appear, (ii) contain the agreement by the
insurer that any loss thereunder shall be payable to the Trustee notwithstanding
any action, inaction or breach of representation or warranty by the Pledgor,
(iii) provide that there shall be no recourse against the Trustee for payment of
premiums or other amounts with respect thereto and (iv) provide that at least 10
days' prior written notice of cancellation or of lapse shall be given to the
Trustee by the insurer. The Pledgor shall deliver to the Trustee original or
duplicate policies of such insurance and, on each anniversary of the Closing
Date, a report of a reputable insurance broker with respect to such insurance.
Further, the Pledgor shall, at the request of the Trustee, duly exercise and
deliver instruments of assignment of such insurance policies to comply with the
requirements of Section 9 and cause the insurers to acknowledge notice of such
assignment.
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(b) Reimbursement under any liability insurance maintained by
the Pledgor pursuant to this Section 12 may be paid directly to the Person who
shall have suffered a loss covered by such insurance. In case of any loss
involving damage to Acquired Equipment, the Pledgor shall make or cause to be
made the necessary repairs to or replacements of such Acquired Equipment, and
any proceeds of insurance maintained by the Pledgor which are received by the
Trustee pursuant to this Section 12 shall be paid to the Pledgor as
reimbursement for the costs of such repairs or replacements.
SECTION 13. POWER OF ATTORNEY. In addition to all of the powers granted
to the Trustee pursuant to the Indenture, the Pledgor hereby appoints and
constitutes the Trustee as the Pledgor's attorney-in-fact (with full power of
substitution) to exercise to the fullest extent permitted by law all of the
following powers upon and at any time after the occurrence and during the
continuance of an Event of Default: (a) collection of proceeds of any
Collateral; (b) conveyance of any item of Collateral to any purchaser thereof;
(c) giving of any notices or recording of any Liens under Section 6 hereof; and
(d) paying or discharging taxes or Liens levied or placed upon the Collateral,
the legality or validity thereof and the amounts necessary to discharge the same
to be determined by the Trustee in its sole reasonable discretion, and such
payments made by the Trustee to become part of the Secured Obligations of the
Pledgor to the Trustee, due and payable immediately upon demand. The Trustee's
authority under this Section 13 shall include, without limitation, the authority
to endorse and negotiate any checks or instruments representing proceeds of
Collateral in the name of the Pledgor, execute and give receipt for any
certificate of ownership or any document constituting Collateral, transfer title
to any item of Collateral, sign the Pledgor's name on all financing statements
(to the extent permitted by applicable law) or any other documents deemed
necessary or appropriate by the Trustee to preserve, protect or perfect the
security interest in the Collateral and to file the same, prepare, file and sign
the Pledgor's name on any notice of Lien, and to take any other actions arising
from or incident to the powers granted to the Trustee in this Pledge Agreement.
This power of attorney is coupled with an interest and is irrevocable by the
Pledgor.
SECTION 14. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Trustee hereunder are being granted in order to preserve
and protect the security interest of the Trustee and the Holders in and to the
Collateral granted hereby and shall not be interpreted to, and shall not impose
any duties on the Trustee in connection therewith other than those expressly
provided herein or imposed under applicable law. Except as provided by
applicable law or by the Indenture, the Trustee shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Trustee accords similar property held by the Trustee as
collateral agent or other similar capacity, it being understood that the Trustee
in its capacity as such shall not have any responsibility for (a) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities or
other
15
matters relative to any Collateral, whether or not the Trustee has or is deemed
to have knowledge of such matters, (b) taking any necessary steps to preserve
rights against any parties with respect to any Collateral or (c) investing or
reinvesting any of the Collateral, PROVIDED, HOWEVER, that nothing contained in
this Agreement shall relieve the Trustee of any responsibilities as a securities
intermediary under applicable law. The Trustee shall have no duty (a) to see to
any recording, filing, or depositing of this Agreement, any Indenture or any
agreement referred to herein or therein or any financing statement or
continuation statement evidencing a security interest, or to see to the
maintenance of any such recording or filing or depositing or to any rerecording,
refiling or redepositing of any thereof, (b) to see to any insurance or (c) to
see to the payment or discharge of any tax assessment, or other governmental
charge or any lien or encumbrance of any kind owing with respect to, assessed or
levied against, any part of the Collateral. The Trustee makes no representations
as to the validity or sufficiency of any Collateral, the Indenture or this
Agreement. The Trustee shall not be accountable for the use or application by
the Pledgor of any of the proceeds of the Collateral Investments Account or the
Interest Account. The Trustee shall not be responsible for the legality or
validity of this Agreement or the validity, priority, perfection or sufficiency
of the Collateral.
SECTION 15. INDEMNITY. The Pledgor shall indemnify, hold harmless and
defend the Trustee and its directors, officers, agents and employees, from and
against any and all claims, actions, obligations, liabilities and expenses,
including reasonable defense costs, reasonable investigative fees and costs, and
reasonable legal fees and damages arising from the Trustee's performance as
Trustee under this Pledge Agreement, except to the extent that such claim,
action, obligation, liability or expense is directly attributable to the bad
faith, gross negligence or wilful misconduct of such indemnified person.
SECTION 16. REMEDIES UPON EVENT OF DEFAULT. If any Event of Default
under the Indenture or the Notes or default hereunder (any such Event of Default
or default being referred to in this Pledge Agreement as an "EVENT OF DEFAULT")
shall have occurred and be continuing:
(a) The Trustee and the Holders shall have, in addition to all
other rights given by law or by this Pledge Agreement or the Indenture,
all of the rights and remedies with respect to the Collateral of a
secured party under the UCC in effect in the State of New York at that
time. In addition, with respect to any Collateral that shall then be in
or shall thereafter come into the possession or custody of the Trustee,
the Trustee may sell or cause the same to be sold at any broker's board
or at public or private sale, in one or more sales or lots, at such
price or prices as the Trustee may deem best, for cash or on credit or
for future delivery, without assumption of any credit risk. The
purchaser of any or all Collateral so sold shall thereafter hold the
same absolutely, free from any claim, encumbrance or right of any kind
whatsoever created
16
by or through the Pledgor. Unless any of the Collateral threatens, in
the reasonable judgment of the Trustee, to decline speedily in value or
is or becomes of a type sold on a recognized market, the Trustee will
give the Pledgor reasonable notice of the time and place of any public
sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Collateral
conducted in conformity with reasonable commercial practices of banks,
insurance companies, commercial finance companies, or other financial
institutions disposing of property similar to the Collateral shall be
deemed to be commercially reasonable. Any requirements of reasonable
notice shall be met if such notice is mailed to the Pledgor as provided
in Section 20.1 hereof at least ten (10) days before the time of the
sale or disposition. The Trustee or any Holder may, in its own name or
in the name of a designee or nominee, buy any of the Collateral at any
public sale and, if permitted by applicable law, at any private sale.
All expenses (including court costs and reasonable attorneys' fees,
expenses and disbursements) of, or incident to, the enforcement of any
of the provisions hereof shall be recoverable from the proceeds of the
sale or other disposition of the Collateral.
(b) The Pledgor further agrees to use its reasonable best
efforts to do or cause to be done all such other acts as may be
necessary to make such sale or sales of all or any portion of the
Collateral pursuant to this Section 16 valid and binding and in
compliance with any and all other applicable requirements of law. The
Pledgor further agrees that a breach of any of the covenants contained
in this Section 16 will cause irreparable injury to the Trustee and the
Holders, that the Trustee and the Holders have no adequate remedy at
law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 16 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and
agrees not to assert any defenses against the remedy of specific
performance for the breach of any such covenants except for a defense
that no Event of Default has occurred.
(c) All cash proceeds received by the Trustee in respect of
any sale of, or other realization upon all or any part of the
Collateral may, in the discretion of the Trustee, be held by the
Trustee as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Trustee pursuant
to Section 15) in whole or in part by the Trustee against all or any
part of the Secured Obligations in such order as the Trustee shall
elect. Any surplus of such cash or cash proceeds held by the Trustee
and remaining after payment in full of all the Secured Obligations
shall be paid over to the Pledgor or to whomsoever may be lawfully
entitled to receive such surplus.
(d) All payments received by the Pledgor in respect of the
Collateral shall be received in trust for the benefit of the Trustee,
shall be segregated from other funds of
17
the Pledgor and shall be forthwith paid over to the Trustee in the same
form as so received (with any necessary indorsement).
SECTION 17. EXPENSES. The Pledgor will upon demand pay to the Trustee
the amount of any and all reasonable fees and expenses, including, without
limitation, the reasonable fees, expenses and disbursements of its counsel,
experts and agents retained by the Trustee, that the Trustee may incur in
connection with (a) the review, negotiation and administration of this Pledge
Agreement, (b) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (c) the exercise or
enforcement of any of the rights of the Trustee and the Holders hereunder or (d)
the failure by the Pledgor to perform or observe any of the provisions hereof.
SECTION 18. SECURITY INTEREST ABSOLUTE. All rights of the Trustee and
the Holders and security interests hereunder, and all obligations of the Pledgor
hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any
other amendment or waiver of or any consent to any departure from the
Indenture;
(c) any exchange, surrender, release or non-perfection of any
Liens on any other collateral for all or any of the Secured
Obligations; or
(d) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to,
or a discharge of, the Pledgor in respect of the Secured Obligations or
of this Pledge Agreement.
SECTION 19. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no Default
under the Indenture shall have occurred and be continuing, the Pledgor shall be
entitled to exercise any and all voting and other consensual rights pertaining
to the Security Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement or the Indenture and the Notes; PROVIDED,
HOWEVER, that the Pledgor shall not exercise or refrain from exercising any such
right if such action would have a material adverse effect on the value of the
Security Collateral or any part thereof; and PROVIDED FURTHER that the Pledgor
shall give the Trustee at least five days' written notice of the manner in which
it intends to exercise, or the reasons for refraining from exercising, any such
right.
18
(b) Upon the occurrence and during the continuance of a
Default under the Indenture: all rights of the Pledgor to exercise or refrain
from exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 19(a) shall, upon notice to the
Pledgor by the Trustee, cease.
(c) All dividends and interest payments that are received by
the Pledgor in respect of Security Collateral shall be received in trust for the
benefit of the Trustee, shall be segregated from other funds of the Pledgor and
shall be forthwith paid over to the Trustee as Security Collateral in the same
form as so received (with any necessary indorsement).
SECTION 20. MISCELLANEOUS PROVISIONS.
20.1. NOTICES. Any notice or communication shall be sufficiently given
if in writing and delivered in person or mailed by first class mail, commercial
courier service or telecopier communication, addressed as follows:
IF TO THE PLEDGOR:
GST Network Funding, Inc.
0000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
and
GST Telecommunications Inc.
0000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
WITH A COPY TO:
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
19
IF TO THE TRUSTEE:
United States Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Mr. Xxxxx Xxxxx
20.2. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Pledge
Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor or any subsidiary thereof. No such pledge, security or
debt agreement (other than the Indenture) may be used to interpret this Pledge
Agreement.
20.3. SEVERABILITY. The provisions of this Pledge Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Pledge Agreement in any jurisdiction.
20.4. HEADINGS. The headings in this Pledge Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
20.5. COUNTERPART ORIGINALS. This Pledge Agreement may be signed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same agreement.
20.6. BENEFITS OF PLEDGE AGREEMENT. Nothing in this Pledge Agreement,
express or implied, shall give to any person, other than the parties hereto and
their successors hereunder, and the Holders, any benefit or any legal or
equitable right, remedy or claim under this Pledge Agreement.
20.7. AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or waiver of any
provision of this Pledge Agreement and any consent to any departure by the
Pledgor from any provision of this Pledge Agreement shall be effective only if
made or duly given in compliance with all of the terms and provisions of the
Indenture, and neither the Trustee nor any Holder shall be deemed, by any act,
delay, indulgence, omission or otherwise, to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. Failure of the Trustee or any
Holder to exercise, or delay in exercising, any right, power or privilege
hereunder shall not preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A
20
waiver by the Trustee or any Holder of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy that the Trustee
or such Holder would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law.
20.8. INTERPRETATION OF AGREEMENT. All terms not defined herein or in
the Indenture shall have the meaning set forth in the applicable UCC, except
where the context otherwise requires. To the extent a term or provision of this
Pledge Agreement conflicts with the Indenture, the Indenture shall control with
respect to the subject matter of such term or provision. Acceptance of or
acquiescence in a course of performance rendered under this Pledge Agreement
shall not be relevant to determine the meaning of this Pledge Agreement even
though the accepting or acquiescing party had knowledge of the nature of the
performance and opportunity for objection.
20.9. CONTINUING SECURITY INTEREST; TERMINATION; RELEASE. (a) This
Pledge Agreement shall create a continuing security interest in and to the
Collateral and shall, unless otherwise provided in the Indenture or in this
Pledge Agreement, remain in full force and effect until the payment in full in
cash of the Secured Obligations. This Pledge Agreement shall be binding upon the
Pledgor, its transferees, successors and assigns, and shall inure, together with
the rights and remedies of the Trustee hereunder, to the benefit of the Trustee,
the Holders and their respective successors, transferees and assigns.
(b) This Pledge Agreement shall terminate upon the earlier of (i) the
payment in full in cash of the Secured Obligations and (ii) the assumption by
GST USA of all the Obligations of Funding pursuant to Section 4.23 of the
Indenture, the execution by GST USA of documentation and the taking of all other
actions necessary to provide the Trustee, for its benefit and the ratable
benefit of the Holders, with a perfected, first priority security interest
(subject only to the liens granted to the Trustee, for its benefit and the
benefit of the Holders, under this Agreement) in the Collateral, including any
collateral securing the Pledged Debt, to secure all of GST USA's obligations
under the Indenture and the Notes and the delivery by counsel to the Pledgor of
an opinion confirming the existence, perfection and priority of such security
interest. At such time, the Trustee shall, pursuant to an Issuer Order, execute
and deliver all documentation necessary or desirable to release its security
interest hereunder and under the Intercompany Security Agreement, reassign and
redeliver to the Pledgor all of the Collateral hereunder that has not been sold,
disposed of, retained or applied by the Trustee in accordance with the terms of
this Pledge Agreement and the Indenture. Such reassignment and redelivery shall
be without warranty by or recourse to the Trustee in its capacity as such,
except as to the absence of any Liens on the Collateral created by or arising
through the Trustee, and shall be at the reasonable expense of the Pledgor.
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(c) Upon any sale of Acquired Equipment to GST USA in
accordance with the terms of this Agreement, the Trustee will, at the Pledgor's
expense, execute and deliver to the Pledgor such documents as the Pledgor shall
reasonably request to evidence the release of such item of Acquired Equipment
from the assignment and security interest granted hereby; PROVIDED, HOWEVER,
that (i) at the time of such request and such release no Default shall have
occurred and be continuing, (ii) the Pledgor shall have delivered to the
Trustee, at least five Business Days prior to the date of the proposed release,
a written request for release describing the item of Acquired Equipment together
with a form of release for execution by the Trustee and a certification by the
Pledgor to the effect that the transaction is in compliance with this Agreement
and as to such other matters as the Trustee may request, which written release
shall state that the price to be paid is at least equal to the Acquired
Equipment Cost, payable in the form an Intercompany Note with a principal amount
equal to the Acquired Equipment Cost and bearing interest at a rate at least
equal to the rate of interest on the Notes, and (iii) the Pledgor shall have
pledged and delivered to the Trustee such Intercompany Note and an opinion of
counsel that such Intercompany Note is secured by a perfected first priority
security interest in such Acquired Equipment (subject only to the liens granted
to the Trustee, for its benefit and the benefit of the Holders, under this
Agreement) and an opinion of counsel that the Pledgor has granted a valid and
perfected first priority security interest in the Intercompany Note to the
Trustee for its benefit and the benefit of the Holders.
20.10. SURVIVAL PROVISIONS. All representations, warranties and
covenants of the Pledgor contained herein shall survive the execution and
delivery of this Pledge Agreement, and shall terminate only upon the termination
of this Pledge Agreement. The obligations of the Pledgor under Section 16 hereof
shall survive the termination of this Agreement.
20.11. WAIVERS. The Pledgor waives presentment and demand for payment
of any of the Secured Obligations, protest and notice of dishonor or default
with respect to any of the Secured Obligations, and all other notices to which
the Pledgor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
20.12. AUTHORITY OF THE TRUSTEE. (a) The Trustee shall have and be
entitled to exercise all powers hereunder that are specifically granted to the
Trustee by the terms hereof, together with such powers as are reasonably
incident thereto. The Trustee may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. Except as otherwise expressly provided in this
Pledge Agreement or the Indenture, neither the Trustee nor any director,
officer, employee, attorney or agent of the Trustee shall be liable to the
Pledgor for any action taken or omitted to be taken by the Trustee, in its
capacity as Trustee, hereunder, except for its own bad faith, gross negligence
or willful misconduct, and the Trustee shall not be responsible for the
validity, effectiveness or
22
sufficiency hereof or of any document or security furnished pursuant hereto. The
Trustee and its directors, officers, employees, attorneys and agents shall be
entitled to rely on any communication, instrument or document reasonably
believed by it or them to be genuine and correct and to have been signed or sent
by the proper person or persons.
(b) The Pledgor acknowledges that the rights and
responsibilities of the Trustee under this Pledge Agreement with respect to any
action taken by the Trustee or the exercise or non-exercise by the Trustee of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Pledge Agreement shall, as between
the Trustee and the Holders, be governed by the Indenture and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Trustee and the Pledgor, the Trustee shall be conclusively
presumed to be acting as trustee for the Holders with full and valid authority
so to act or refrain from acting, and the Pledgor shall not be obligated or
entitled to make any inquiry respecting such authority.
20.13. FINAL EXPRESSION. This Pledge Agreement, together with the
Indenture and any other agreement executed in connection herewith, is intended
by the parties as a final expression of this Pledge Agreement and is intended as
a complete and exclusive statement of the terms and conditions thereof.
20.14. RIGHTS OF HOLDERS. No Holder shall have any independent rights
hereunder other than those rights granted to individual Holders pursuant to
Section 6.07 of the Indenture; PROVIDED that nothing in this subsection shall
limit any rights granted to the Trustee under the Notes or the Indenture.
20.15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
WAIVER OF DAMAGES. (a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE PLEDGOR, THE TRUSTEE AND THE HOLDERS IN CONNECTION WITH THIS PLEDGE
AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) THE PLEDGOR HAS APPOINTED XXXXXX XXXXXXXX FROME &
XXXXXXXXXX LLP, 000 XXXX XXXXXX, XXX XXXX, XX 00000, ATTENTION: XXXXX X. XXXXX
AS ITS AGENT FOR SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING WITH
RESPECT TO THIS PLEDGE AGREEMENT AND FOR ACTIONS BROUGHT UNDER U.S. FEDERAL OR
STATE SECURITIES LAWS
23
BROUGHT IN ANY FEDERAL OR STATE COURT LOCATED IN THE CITY OF NEW YORK AND AGREES
TO SUBMIT TO THE JURISDICTION OF ANY SUCH COURT.
(c) THE PLEDGOR AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY
AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER, HAVE THE RIGHT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE PLEDGOR OR THE
COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND
HAVING PERSONAL OR IN REM JURISDICTION OVER THE PLEDGOR OR THE COLLATERAL, AS
THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH COLLATERAL, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE
PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS
IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE PLEDGOR WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN THE CITY OF NEW YORK
ONCE THE TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS.
(d) THE PLEDGOR AGREES THAT NEITHER ANY HOLDER NOR (EXCEPT AS
OTHERWISE PROVIDED IN THIS PLEDGE AGREEMENT OR THE INDENTURE) THE TRUSTEE IN ITS
CAPACITY AS TRUSTEE SHALL HAVE ANY LIABILITY TO THE PLEDGOR (WHETHER ARISING IN
TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE PLEDGOR IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED
AND THE RELATIONSHIP ESTABLISHED BY THIS PLEDGE AGREEMENT, OR ANY ACT, OMISSION
OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL
AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH
HOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS ON THE PART OF THE TRUSTEE OR SUCH HOLDERS, AS THE CASE MAY BE,
CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR
WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER
IN CONNECTION WITH ANY JUDICIAL PROCESS OR
24
PROCEEDING TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER PERTAINING TO THIS
PLEDGE AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT ENTERED IN FAVOR OF THE
TRUSTEE OR ANY HOLDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS PLEDGE AGREEMENT
OR ANY RELATED AGREEMENT OR DOCUMENT BETWEEN THE PLEDGOR ON THE ONE HAND AND THE
TRUSTEE AND/OR THE HOLDERS ON THE OTHER HAND.
25
IN WITNESS WHEREOF, the Pledgor, and the Trustee have each caused this
Pledge Agreement to be duly executed and delivered as of the date first above
written.
Pledgor:
GST NETWORK FUNDING, INC.
By: /S/ Xxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx Xxxxx
Title: Senior Vice President
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By: /S/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
SCHEDULE I
LOCATIONS OF ACQUIRED EQUIPMENT
California
--------------------
In accordance with Item 601 of Regulation S-K, the Registrant has not filed the
exhibits to this Agreement with the Securities and Exchange Commission. The
Registrant undertakes to supplementally provide a copy of such exhibits to the
Securities and Exchange Commission upon request.