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EXHIBIT 4.1(b)
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement"), dated as of February
[ ], 1998, among The Bank of New York, a New York banking corporation, as
escrow agent (in such capacity, "Escrow Agent"), The Bank of New York, as
Trustee (in such capacity, "Trustee") under the Indenture (as defined herein),
and Global TeleSystems Group, Inc., a Delaware corporation ("Company").
R E C I T A L S :
A. Pursuant to the Indenture, dated as of February [ ],
1998 (the "Indenture"), between Company and Trustee, Company is issuing
$100,000,000 principal amount of its [ ]% Senior Notes due 2005 (the
"Securities").
B. As security for its obligations under the Securities
and the Indenture, Company hereby grants to Escrow Agent, for the benefit of
Trustee, any predecessor Trustee under the Indenture and the holders of the
Securities, a security interest in and lien upon the Escrow Account (as defined
herein).
C. The parties have entered into this Agreement in order
to set forth the conditions upon which, and the manner in which, funds will be
disbursed from the Escrow Account and released from the security interest and
lien described above.
A G R E E M E N T :
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINED TERMS. All terms used but not defined herein
shall have the meanings ascribed to them in the Indenture. In addition to any
other defined terms used herein, the following terms shall constitute defined
terms for purposes of this Agreement and shall have the meanings set forth
below:
"AFFILIATE" of any specified person means any other person
which, directly or indirectly, controls, is controlled by or is under common
control with such specified person. For the purposes of this definition,
"control" when used with respect to any person means the power to direct the
management
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and policies of such person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise and the terms
"affiliated," "controlling" and "controlled" have meanings correlative to the
foregoing.
"APPLIED" means that disbursed funds have been applied (i) to
the payment of interest on the Securities, (ii) pursuant to Section 3(c), or
(iii) pursuant to Section 6(b)(iii) hereof.
"AVAILABLE FUNDS" means, at any date, (A) the sum of (i) the
Pledged Securities and any funds or Cash Equivalents and (ii) interest earned or
dividends paid on the Pledged Securities and any funds or Cash Equivalents, less
(B) the aggregate disbursements made prior to such date pursuant to this
Agreement.
"BENEFICIARIES" see Section 2(b).
"CASH EQUIVALENTS" means:(a) U.S. dollars; (b) securities
issued or directly and fully guaranteed or insured by the U.S. government or
any agency or instrumentality thereof having maturities of not more than 12
months from the date of acquisition; (c) certificates of deposit and eurodollar
time deposits with maturities of 12 months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding 12 months and
overnight bank deposits, in each case with any commercial bank having capital
and surplus in excess of $500 million; (d) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (b) and (c) entered into with any financial institution meeting the
qualifications specified in clause (c) above; and (e) commercial paper rated
P-1, A-1 or the equivalents thereof by ▇▇▇▇▇'▇ Investors Service, Inc. or
Standard & Poor's Ratings Group, respectively, and in each case maturing within
six months after the date of acquisition.
"ESCROW ACCOUNT" shall mean the escrow account established
pursuant to Section 2.
"ESCROW ACCOUNT STATEMENT" see Section 2(f).
"ESCROW COLLATERAL" see Section 6(a).
"ESCROW FUNDS" see Section 6(c).
"GOVERNMENT SECURITIES" means direct obligations of, or
obligations guaranteed by, the United States of America for
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the payment of which obligations the full faith and credit of the United States
is pledged.
"INITIAL ESCROW AMOUNT" shall mean $[ ] million.
"interest" has, other than for purposes of Section 2(d), the
meaning set forth in the Indenture.
"INTEREST PAYMENT DATE" means [ ] and [
] of each year, commencing on [ ], 1998 until the Securities are
paid in full.
"PAYMENT NOTICE AND DISBURSEMENT REQUEST" means a notice sent
by Company to Escrow Agent requesting a disbursement of funds from the Escrow
Account, in substantially the form of Exhibit A hereto. Each Payment Notice
and Disbursement Request shall be signed by an officer of Company.
"PLEDGED SECURITIES" means the Government Securities, as more
fully described on Schedule I attached hereto, purchased by Escrow Agent with a
portion of the net proceeds from the offering of the Notes and deposited into
the Escrow Account. The scheduled payments of principal and interest on the
Pledged Securities will be sufficient to provide for the payment in full of the
interest due on the Notes on the first four scheduled Interest Payment Dates
commencing [ ], 1998 and ending [ ], 1999.
"SECURED OBLIGATIONS" see Section 6(a).
2. ESCROW ACCOUNT; ESCROW AGENT.
(a) Appointment of Escrow Agent. Company and Trustee
hereby appoint Escrow Agent, and Escrow Agent hereby accepts appointment, as
escrow agent, under the terms and conditions of this Agreement.
(b) Establishment of Escrow Account.
(i) On the Issue Date, Escrow Agent shall establish an escrow
account entitled the "Escrow Account pledged by Global TeleSystems Group, Inc.
to The Bank of New York, as Trustee" (the "Escrow Account") at its office
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The Escrow Account
shall be a "securities account" as such term is defined in Section 8-501(a) of
the 1994 Official Text of Article 8 of the Uniform Commercial Code with
conforming amendments to Article 9 (the "Revised UCC"). All funds, including
the Initial Escrow
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Securities and any Cash Equivalents accepted by Escrow Agent
pursuant to this Agreement shall be held for the exclusive benefit of Trustee,
any predecessor Trustee under the Indenture and holders of the Securities, as
secured parties hereunder (collectively, the "Beneficiaries"). All such funds
shall be held in the Escrow Account until disbursed or paid in accordance with
the terms hereof. The Escrow Account and all funds held therein, including the
Initial Escrow Amount, the Pledged Securities and any Cash Equivalents held by
Escrow Agent shall be under the sole dominion and control of Escrow Agent for
the benefit of the Beneficiaries.
(ii) On the Issue Date, Company shall deliver, or cause the
delivery of, the Initial Escrow Amount to Escrow Agent for deposit into the
Escrow Account against Escrow Agent's written acknowledgment and receipt of the
Initial Escrow Amount. The Escrow Agent shall purchase, or cause to be
purchased, the Pledged Securities, with all or a portion of the Initial Escrow
Amount. The Pledged Securities shall be held by Escrow Agent and deposited
into the Escrow Account for the exclusive benefit of the Beneficiaries. All
payments of interest and principal on the Pledged Securities shall be deposited
into the Escrow Account to be paid or disbursed in accordance with the terms
hereof or, to the extent permitted by Section 2(d) hereof, reinvested in Cash
Equivalents.
(c) Escrow Agent Compensation. Company shall pay to
Escrow Agent such compensation for services to be performed by it under this
Agreement as Company and Escrow Agent may agree in writing from time to time.
Escrow Agent shall be paid any compensation owed to it directly by Company and
shall not disburse from the Escrow Account any such amounts nor shall Escrow
Agent have any interest in the Escrow Account with respect to such amounts.
Company shall reimburse Escrow Agent upon request for all
reasonable expenses, disbursements, and advances incurred or made by Escrow
Agent in implementing any of the provisions of this Agreement, including
compensation and the reasonable expenses and disbursements of its counsel.
Escrow Agent shall be paid any such expenses owed to it directly by Company and
shall not disburse from the Escrow Account any such amounts nor shall Escrow
Agent have any interest in the Escrow Account with respect to such amounts.
(d) Investment of Funds in Escrow Account. Any funds on
deposit in the Escrow Account which are not invested
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may be reinvested, at the Company's option, only upon the following terms and
conditions:
(i) Acceptable Investments. All funds deposited
or held in the Escrow Account at any time shall be invested by Escrow
Agent in Cash Equivalents in accordance with Company's written
instructions from time to time to Escrow Agent; provided, however,
that (1) Company shall only designate investment of funds in Cash
Equivalents maturing in an amount sufficient to and/or generating
interest income sufficient to, when added to the balance of funds
held in the Escrow Account, provide for the payment of interest on
the outstanding Securities on each Interest Payment Date beginning on
and including [ ], 1998 and through and including the
Interest Payment Date on [ ], 1999 and (2) any such
written instruction shall specify the particular investment to be
made, shall state that such investment is authorized to be made
hereby and in particular satisfies the requirements of the preceding
clause (1) of this proviso, shall contain the certification referred
to in Section 2(d)(ii), if required, and shall be executed by an
Officer of Company. Escrow Agent shall have no responsibility for
determining whether funds held in the Escrow Account shall have been
invested in such a manner so as to comply with the requirements of
this clause (i). All Cash Equivalents shall be assigned to and held
in the possession of, or, in the case of Cash Equivalents maintained
in book entry form with the Federal Reserve Bank (i.e., TRADES),
transferred to a book entry account in the name of Escrow Agent for
the benefit of the Beneficiaries, with such guarantees as are
customary, except that Cash Equivalents maintained in book entry form
with the Federal Reserve Bank shall be transferred to a book entry
account in the name of Escrow Agent at the Federal Reserve Bank that
includes only Cash Equivalents held by Escrow Agent for its customers
and segregated by separate recordation in the books and records of
Escrow Agent. Escrow Agent shall not be liable for losses on any
investments made by it pursuant to and in compliance with such
written instructions. In the absence of instructions from Company
that meet the requirements of this Section 2(d)(i), Escrow Agent
shall have no obligation to invest funds held in the Escrow Account.
(ii) Security Interest in Investments. No
investment of funds in the Escrow Account shall be made unless the
Company has certified to Escrow Agent and Trustee that,
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upon such investment, Escrow Agent will have a first priority
perfected security interest in the applicable investment. If a
certificate as to a class of investments has been provided to Escrow
Agent, a certificate need not be issued with respect to individual
investments in securities in that class if the certificate applicable
to the class remains accurate with respect to such individual
investments, which continued accuracy Escrow Agent may conclusively
assume. On the date of this Agreement, and on each anniversary
thereof (upon receipt of written notice from Escrow Agent), until the
date upon which the balance of the Available Funds shall have been
reduced to zero, each of Trustee and Escrow Agent shall receive an
Opinion of Counsel to Company, dated each such date as applicable,
which opinion shall meet the requirements of Section 314(b) of the
United States Trust Indenture Act of 1939, as amended (the "TIA") and
shall comply with Section 11.02 of the Indenture.
(iii) Interest and Dividends. All interest earned
and dividends paid on the Pledged Securities or any funds invested in
Cash Equivalents shall be deposited in the Escrow Account as
additional Escrow Collateral for the exclusive benefit of the
Beneficiaries and, if not required to be disbursed in accordance with
the terms hereof, subject to subsections 6(b)(iii), 6(e) and 6(f),
shall be reinvested in accordance with the terms hereof at Company's
written instruction unless a Default or Event of Default has occurred
or Trustee has notified Escrow Agent that it should only take
direction from Trustee or should no longer take direction from
Company.
(iv) Limitation on Escrow Agent's
Responsibilities. Escrow Agent's sole responsibilities under this
Section 2 shall be (A) to retain possession of certificated Cash
Equivalents (except, however, that Escrow Agent may surrender
possession to the issuer of any such Cash Equivalent for the purposes
of effecting assignment, crediting interest, or reinvesting such
security or reducing such security to cash) and to be the registered
or designated owner of the Pledged Securities and any Cash
Equivalents which are not certificated, (B) to follow Company's
written instructions given in accordance with Section 2(d)(i), (C) to
invest and reinvest funds pursuant to this Section 2(d) and (D) to
use reasonable efforts to reduce to cash such Cash Equivalents as may
be required to fund any disbursement or payment in accordance with
Section 3. In connection with clause (A) above, Escrow
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Agent will maintain continuous possession in the jurisdiction of its
principal place of business of certificated Cash Equivalents and cash
included in the Escrow Collateral and will cause the Pledged
Securities and any uncertificated Cash Equivalents to be registered
in the book-entry system of, and transferred to an account of Escrow
Agent or a sub-agent of Escrow Agent at, any Federal Reserve Bank.
Except as provided in Section 6, Escrow Agent shall have no other
responsibilities with respect to perfecting or maintaining the
perfection of the security interest in the Escrow Collateral and
shall not be required to file any instrument, document or notice in
any public office at any time or times. In connection with clause
(D) above and subject to the following sentence, Escrow Agent shall
not be required to reduce to cash any Cash Equivalents to fund any
disbursement or payment in accordance with Section 3 in the absence
of written instructions signed by an Officer of Company specifying
the particular investment to liquidate. If no such written
instructions are received, Escrow Agent may liquidate those Cash
Equivalents having the lowest interest rate per annum or if none such
exist, those having the nearest maturity.
(e) Substitution of Escrow Agent. Escrow Agent may
resign by giving no less than 15 Business Days prior written notice to Company
and Trustee. Such resignation shall take effect upon the later to occur of (i)
delivery of all funds, the Pledged Securities and any Cash Equivalents
maintained by Escrow Agent hereunder and copies of all books, records, plans
and other documents in Escrow Agent's possession relating to such funds, the
Pledged Securities or any Cash Equivalents or this Agreement to a successor
escrow agent mutually approved by Company and Trustee (which approvals shall
not be unreasonably withheld or delayed) and the taking of such other steps as
may be necessary to give the successor escrow agent a first priority security
interest in the Pledged Securities and (ii) Company, Trustee and such successor
escrow agent entering into this Agreement or any written successor agreement no
less favorable to the interests of the holders of the Securities and Trustee
than this Agreement; and Escrow Agent shall thereupon be discharged of all
obligations under this Agreement and shall have no further duties, obligations
or responsibilities in connection herewith, except as set forth in Section 4.
If a successor escrow agent has not been appointed or has not accepted such
appointment within 20 Business Days after notice of resignation is given to
Company, Escrow Agent may at the sole cost of Company apply to a court
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of competent jurisdiction for the appointment of a successor escrow agent.
(f) Escrow Account Statement. At least 30 days prior to
each Interest Payment Date, Escrow Agent shall deliver to Company and Trustee a
statement setting forth with reasonable particularity the balance of funds then
in the Escrow Account and the manner in which such funds are invested ("Escrow
Account Statement"). The parties hereto irrevocably instruct Escrow Agent that
on the first date upon which the balance in the Escrow Account (including the
holdings of all Cash Equivalents) is reduced to zero, Escrow Agent shall
deliver to Company and to Trustee a notice that the balance in the Escrow
Account has been reduced to zero.
3. DISBURSEMENTS.
(a) Payment Notice and Disbursement Request;
Disbursements. Up to five business days prior to an Interest Payment Date,
Company may submit to Escrow Agent, with a copy to Trustee a completed Payment
Notice and Disbursement Request substantially in the form of Exhibit A hereto.
Escrow Agent's disbursement pursuant to any Payment Notice and
Disbursement Request shall be subject to the satisfaction of the applicable
conditions set forth in Section 3(b). Provided such Payment Notice and
Disbursement Request is not rejected by it, Escrow Agent, as soon as reasonably
practicable on the Interest Payment Date, but in no event later than 12:00 Noon
(New York City time) on the Interest Payment Date, shall disburse the funds
requested in such Payment Notice and Disbursement Request by wire or book-entry
transfer of immediately available funds to the account of Trustee for the
benefit of the Beneficiaries. Escrow Agent shall notify Trustee as soon as
reasonably possible (but not later than two (2) Business Days from the date of
receipt of the Payment Notice and Disbursement Request) if any Payment Notice
and Disbursement Request is rejected and the reason(s) therefor. In the event
such rejection is based upon nonsatisfaction of the condition in Section
3(b)(I), Company shall thereupon resubmit the Payment Notice and Disbursement
Request with appropriate changes.
(b) Conditions Precedent to Disbursement. Escrow Agent's
payment of any disbursement shall be made only if: (I) Company shall have
submitted, in accordance with the provisions of Section 3(a), a completed
Payment Notice and Disbursement Request to Escrow Agent substantially in the
form of Exhibit A with blanks appropriately filled in, and (II) Escrow Agent
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shall not have received any notice from Trustee that as a result of an Event of
Default the indebtedness represented by the Securities has been accelerated and
has become due and payable (in which event Escrow Agent shall apply all
Available Funds as required by Section 6(b)(iii)).
(c) Company Payments. If Company makes any interest
payment or portion of an interest payment on the Securities from a source of
funds other than the Escrow Account ("Company Funds"), Company may, after
payment in full of such interest payment, direct Escrow Agent to release to
Company or at the direction of Company an amount of funds from the Escrow
Account less than or equal to the amount of Company Funds so expended. Upon
receipt of a request from Company (including the certificate described in the
following sentence), Escrow Agent will pay over to Company the requested
amount. Concurrently with any release of funds to Company pursuant to this
Section 3(c), Company will deliver to Escrow Agent a certificate signed by an
authorized signatory of Company stating that such release has been duly
authorized by all necessary corporate action, and does not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the Articles of Incorporation of Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon Company or result in
the creation or imposition of any Lien on any assets of Company.
(d) If at any time the principal of and interest on the
Escrow Collateral exceeds 100% of the amount sufficient, in the written opinion
of a nationally recognized firm of independent accountants selected by Company
and delivered to Escrow Agent and Trustee, to provide for payment in full of
the interest on outstanding Securities on each Interest Payment Date beginning
on and including [ ], 1998 and through and including the Interest
Payment Date on [ ], 1999 (or, in the event one or more interest
payments have been made thereon, an amount sufficient to provide for the
payment in full of any and all interest payments on the Securities then
remaining, up to and including the fourth scheduled interest payment), Company
may direct Escrow Agent and Trustee to release any such overfunded amount to
Company or to such other party as Company may direct. Upon receipt of written
instructions executed by Company in the form of an Officers' Certificate,
Trustee shall pay, or shall cause the payment, over to Company or Company's
designee, as the case may be, any such overfunded amount.
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4. ESCROW AGENT.
(a) Limitation of Escrow Agent's Liability;
Responsibilities of Escrow Agent. Escrow Agent's responsibility and liability
under this Agreement shall be limited as follows: (i) Escrow Agent does not
represent, warrant or guaranty to the holders of the Securities from time to
time the performance of Company; (ii) Escrow Agent shall have no responsibility
to Company or the holders of the Securities or Trustee from time to time as a
consequence of performance or non-performance by Escrow Agent hereunder, except
for any bad faith, gross negligence or willful misconduct of Escrow Agent;
(iii) Company shall remain solely responsible for all aspects of Company's
business and conduct; and (iv) Escrow Agent is not obligated to supervise,
inspect or inform Company or any third party of any matter referred to above.
In no event shall Escrow Agent be liable (A) for acting in accordance with or
relying upon any instruction, notice, demand, certificate or document from
Company or any entity acting on behalf of Company, (B) for any consequential,
punitive or special damages, (C) for the acts or omissions of its nominees,
correspondents, designees, subagents or subcustodians or (D) for an amount in
excess of the value of the Escrow Account, valued as of the date of deposit.
No implied covenants or obligations shall be inferred from
this Agreement against Escrow Agent, nor shall Escrow Agent be bound by the
provisions of any agreement beyond the specific terms hereof. Specifically and
without limiting the foregoing, Escrow Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the terms hereof, of any funds, the Pledged
Securities or Cash Equivalents held by it hereunder, including without
limitation any liability for any delay not resulting from gross negligence or
willful misconduct in such investment, reinvestment or liquidation, or for any
loss of principal or income incident to any such delay.
Escrow Agent shall be entitled to rely upon any judicial or
administrative order or judgment, upon any opinion of counsel or upon any
certification, instruction, notice, or other writing delivered to it by Company
or Trustee in compliance with the provisions of this Agreement without being
required to determine the authenticity or the correctness of any fact stated
therein or the propriety or validity of service thereof. Escrow Agent may act
in reliance upon any instrument comporting with the provisions of this
Agreement or signature believed by it to be genuine and may assume that any
person purporting to give notice or receipt or advice or make any
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statement or execute any document in connection with the provisions hereof has
been duly authorized to do so.
At any time Escrow Agent may request in writing an instruction
in writing from Company (other than any disbursement pursuant to Section
6(b)(iii)), and may at its own option include in such request the course of
action it proposes to take and the date on which it proposes to act, regarding
any matter arising in connection with its duties and obligations hereunder;
provided, however, that Escrow Agent shall state in such request that it
believes in good faith that such proposed course of action is consistent with
another identified provision of this Agreement. Escrow Agent shall not be
liable to Company for acting without Company's consent in accordance with such
a proposal on or after the date specified therein if (i) the specified date is
at least four Business Days after Company receives Escrow Agent's request for
instructions and its proposed course of action, and (ii) prior to so acting,
Escrow Agent has not received the written instructions requested from Company.
At the expense of Company, Escrow Agent may act pursuant to
the advice of counsel chosen by it with respect to any matter relating to this
Agreement and (subject to clause (ii) of the first paragraph of this Section
4(a)) shall not be liable for any action taken or omitted in accordance with
such advice.
Escrow Agent shall not be called upon to advise any party as
to selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
In the event of any ambiguity in the provisions of this
Agreement with respect to any funds, securities or property deposited
hereunder, Escrow Agent shall be entitled to refuse to comply with any and all
claims, demands or instructions with respect to such funds, securities or
property, and Escrow Agent shall not be or become liable for its failure or
refusal to comply with conflicting claims, demands or instructions. Escrow
Agent shall be entitled to refuse to act until either any conflicting or
adverse claims or demands shall have been finally determined by a court of
competent jurisdiction or settled by agreement between the conflicting
claimants as evidenced in a writing, satisfactory to Escrow Agent, or Escrow
Agent shall have received security or an indemnity satisfactory to Escrow Agent
sufficient to save Escrow Agent harmless from and against any and all loss,
liability or expense which Escrow
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Agent may incur by reason of its acting. Escrow Agent may in addition elect in
its sole option to commence an interpleader action or seek other judicial
relief or orders as Escrow Agent may deem necessary. The costs and expenses
(including reasonable attorney's fees and expenses) incurred in connection with
such proceedings shall be paid by, and shall be deemed an obligation of
Company.
No provision of this Agreement shall require Escrow Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder.
Escrow Agent shall not incur any liability for not performing
any act or fulfilling any duty, obligation or responsibility hereunder by
reason of any occurrence beyond the control of Escrow Agent (including but not
limited to any act or provision of any present or future law or regulation or
governmental authority, any act of God or war, or the unavailability of the
Federal Reserve Bank wire or telex or other wire or communication facility).
5. INDEMNITY. Company shall indemnify, hold harmless
and defend Trustee and Escrow Agent and their respective directors, officers,
agents, employees and controlling persons, from and against any and all claims,
actions, obligations, liabilities and expenses, including reasonable defense
costs, reasonable investigative fees and costs, reasonable legal fees, and
claims for damages, arising from Trustee's or Escrow Agent's performance or
non- performance, or in connection with Escrow Agent's acceptance of
appointment as Escrow Agent under this Agreement, except to the extent that
such liability, expense or claim is solely and directly attributable to the bad
faith, gross negligence or willful misconduct of any of the foregoing persons.
To the extent that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, Company shall contribute the maximum portion which it
is permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all indemnified liabilities incurred by any of the persons
indemnified hereunder. The provisions of this Section 5 shall survive any
termination, satisfaction or discharge of this Agreement as well as the
resignation or removal of Escrow Agent.
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6. GRANT OF SECURITY INTEREST;
INSTRUCTIONS TO ESCROW AGENT.
(a) Company hereby irrevocably grants a first priority
security interest in and lien on, and pledges, assigns, transfers and sets over
to Escrow Agent for the ratable benefit of the Beneficiaries, all of Company's
right, title and interest in the Escrow Account, and all property now or
hereafter placed or deposited in, or delivered to Escrow Agent for placement or
deposit in, the Escrow Account, including, without limitation, the Pledged
Securities, all funds held therein, all Cash Equivalents held by (or otherwise
maintained in the name of) Escrow Agent pursuant to Section 2, and all proceeds
thereof as well as all rights of Company under this Agreement (collectively,
the "Escrow Collateral"), in order to secure all obligations and indebtedness
of Company under the Indenture, the Securities and any other obligation, now or
hereafter arising, of every kind and nature, owed by Company under the
Indenture or the Securities to the holders of the Securities or to Trustee or
any predecessor Trustee (the "Secured Obligations"). Escrow Agent hereby
acknowledges Trustee's security interest and lien as set forth above. Company
shall take all actions necessary on its part to insure the continuance of a
first priority security interest in the Escrow Collateral in favor of Trustee
in order to secure all such obligations and indebtedness.
(b) Company and Trustee hereby irrevocably instruct
Escrow Agent to, and Escrow Agent shall:
(i) (A) maintain sole dominion and control over the Pledged
Securities, funds and any Cash Equivalents in the Escrow Account for the
benefit of Trustee to the extent specifically required herein, (B) maintain, or
cause its agent within the jurisdiction of its principal place of business to
maintain, possession of all certificated Cash Equivalents purchased hereunder
that are physically possessed by Escrow Agent in order for Trustee to enjoy a
continuous perfected first priority security interest therein under the law of
the State of New York (Company hereby agreeing that in the event any
certificated Cash Equivalents are in the possession of Company or a third
party, Company shall deliver all such certificates to Escrow Agent), (C) take
all steps specified by Company pursuant to paragraph (a) of this Section 6 to
cause Escrow Agent to enjoy a continuous perfected first priority security
interest under any applicable Federal and State of New York law in all Cash
Equivalents purchased hereunder that are not certificated and (D) maintain the
Escrow Collateral free and clear of all
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liens, security interests, safekeeping or other charges, demands and claims
against Escrow Agent of any nature now or hereafter existing in favor of anyone
other than Trustee;
(ii) promptly notify Trustee if Escrow Agent receives written
notice that any Person other than Escrow Agent has a lien or security interest
upon any portion of the Escrow Collateral; and
(iii) in addition to disbursing amounts held in escrow
pursuant to any Payment Notice and Disbursement Request given to it pursuant to
Section 3, upon receipt of written notice from Trustee of the acceleration of
the maturity of the Securities, and direction from Trustee to disburse all
Available Funds to Trustee, as promptly as practicable, disburse all funds held
in the Escrow Account to Trustee and transfer title to all Cash Equivalents
held by Escrow Agent hereunder to Trustee. In addition, upon an Event of
Default (as defined in the Indenture) and for so long as such Event of Default
continues, Trustee may, and Escrow Agent shall on behalf of Trustee when
instructed by Trustee, exercise in respect of the Escrow Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party under the UCC
or other applicable law, and Trustee may, and Escrow Agent shall on behalf of
Trustee when instructed by Trustee, also upon obtaining possession of the
Escrow Collateral as set forth herein, without notice to Company except as
specified below, sell the Escrow Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's board or at any of
Trustee's offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as Trustee may deem commercially reasonable. Company
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable to the seller than if such sale were a public sale.
Company agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days' notice to Company of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
commercially reasonable notification. Trustee shall not be obligated to make
any sale regardless of notice of sale having been given. Trustee may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. At any time during which this
Agreement shall not have been terminated in accordance with its terms, any
Beneficiary or any of their respective affiliates may be the purchaser of any
or all of the Escrow Collateral at
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any such sale and shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Escrow Collateral sold at such sale, to use and apply any of the Secured
Obligations owed to such Person as a credit on account of the purchase price of
any Escrow Collateral payable by such Person at such sale. Each purchaser at
any such sale shall acquire the property sold absolutely free from any claim or
right on the part of Company, and Company hereby waives, to the fullest extent
permitted by law, all rights of redemption, stay and/or appraisal which it now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Escrow Agent shall not be obligated to make any
sale of Escrow Collateral regardless of notice of sale having been given.
Escrow Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Company hereby waives, to the fullest extent permitted by law, any claims
against Escrow Agent arising by reason of the fact that the price at which any
Escrow Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Escrow Agent
accepts the first offer received and does not offer such Escrow Collateral to
more than one offeree.
The lien and security interest provided for by this Section 6
shall automatically terminate and cease as to, and shall not extend or apply
to, and Trustee and Escrow Agent shall have no security interest in, any funds
disbursed by Escrow Agent whether for payment of interest or to Company
pursuant to this Agreement to the extent not inconsistent with the terms
hereof. Notwithstanding any other provision contained in this Agreement,
Escrow Agent shall act solely as Trustee's agent in connection with its duties
under this Section 6 or any other duties herein relating to the Escrow Account
or the Pledged Securities or any funds or Cash Equivalents held thereunder.
Escrow Agent shall not have any right to receive compensation from Trustee and
shall have no authority to obligate Trustee or to compromise or pledge its
security interest hereunder. Accordingly, Escrow Agent is hereby directed to
cooperate with Trustee in the exercise of its rights in the Escrow Collateral
provided for herein.
(c) Any money and Cash Equivalents collected by Trustee
pursuant to Section 6(b)(iii) shall be applied as provided in Section 4.22 of
the Indenture. Any surplus of such cash or cash proceeds held by Trustee and
remaining after indefeasible payment in full of all the obligations under the
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Indenture (the "Escrow Funds") shall be paid over to Company upon Company
request or as a court of competent jurisdiction may direct.
(d) Company hereby waives, to the fullest extent
permitted by applicable law, notice or judicial hearing in connection with
Escrow Agent's taking possession or Escrow Agent's disposition of any of the
Escrow Collateral, including, without limitation, any and all prior notice and
hearing for any prejudgment remedy or remedies and any such right which Company
would otherwise have under law, and Company hereby further waives, to the full
extent permitted by applicable law: (i) all damages occasioned by such taking
of possession; (ii) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of Escrow Agent's
rights hereunder; and (iii) all rights of redemption, appraisal, valuation,
stay, extension or moratorium now or hereafter in force under any applicable
law. To the fullest extent permitted by law, any sale of, or the grant of
options to purchase, or any other realization upon, any Escrow Collateral shall
operate to divest all right, title, interest, claim and demand, either at law
or in equity, of Company therein and thereto, and shall be a perpetual bar both
at law and in equity against Company and against any and all Persons claiming
or attempting to claim the Escrow Collateral so sold, optioned or realized
upon, or any part thereof, from, through or under Company.
(e) Notwithstanding any other provision of this Agreement
to the contrary, if, after giving effect to any sale, transfer or other
disposition of any or all of the Escrow Collateral pursuant hereto and after
the application of the proceeds hereunder, any Secured Obligations remain
unpaid or unsatisfied, Company shall remain liable for the unpaid and
unsatisfied amount of such Secured Obligations for which Company is otherwise
liable pursuant to the Indenture or otherwise.
(f) Company will execute and deliver or cause to be
executed and delivered, or use its best efforts to procure, all stock powers,
proxies, assignments, instruments and other documents, deliver any instruments
to Trustee and take any other actions that are necessary or desirable to
perfect, continue the perfection of, or protect the first priority of Trustee's
security interest in and to the Escrow Collateral
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to protect the Escrow Collateral against the rights, claims, or interests of
third persons or to effect the purposes of this Agreement. Company also hereby
authorizes Trustee to file any financing or continuation statements with
respect to the Escrow Collateral without the signature of Company (to the
extent permitted by applicable law). Company will pay all reasonable costs
incurred in connection with any of the foregoing. It being understood that
Trustee has no duty to determine whether to file or record any document or
instrument relating to Escrow Collateral.
(g) Company hereby appoints Trustee as its
attorney-in-fact with full power of substitution to do any act which Company is
obligated hereto to do, and Trustee may, but shall not be obligated to,
exercise such rights as Company might exercise with respect to the Escrow
Collateral and take any action in Company's name to protect Trustee's security
interest hereunder.
(h) If at any time Escrow Agent shall receive an
"entitlement order" (within the meaning of Section 8-102(a)(8) of the Revised
UCC) issued by Trustee and relating to the Escrow Account, Escrow Agent shall
comply with such entitlement order without further consent by Company or any
other person.
7. TERMINATION. This Agreement and the security interest
in the Escrow Collateral evidenced by this Agreement shall terminate
automatically and be of no further force or effect upon the payment in full in
cash of all interest (including any Additional Amounts) due through the Interest
Payment Date occurring on [ ], 1999 and the Escrow Collateral
shall promptly be paid over and transferred to the Company; provided, however,
that the obligations of Company under Section 2(c) and Section 5 (and any
existing claims thereunder) shall survive termination of this Agreement and the
resignation of Escrow Agent. At such time, Escrow Agent shall, pursuant to a
certificate of an officer of Company, reassign and redeliver to the Company all
of the Escrow Collateral hereunder that has not been sold, disposed of, retained
or applied by Escrow Agent in accordance with the terms of this Agreement and
the Indenture. Such reassignment and delivery shall be without warranty by or
recourse to Escrow Agent in its capacity as such, except as to the absence of
any liens on the Escrow Collateral created by or arising through Escrow Agent,
and shall be at the sole expense of Company.
8. REPRESENTATIONS AND WARRANTIES.
Company hereby represents and warrants that:
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(a) The execution, delivery and performance by Company of
this Agreement are within Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene,
or constitute a default under, any provision of applicable law or
regulation or of the Articles of Incorporation of Company or of any
agreement, judgment, injunction, order, decree or other instrument
binding upon Company or result in the creation or imposition of any
Lien on any assets of Company, except for the security interests
granted under this Agreement.
(b) Company is the beneficial owner of the Escrow
Collateral, free and clear of any Lien or claims of any person or
entity (except for the security interest granted under this
Agreement). No financing statement covering the Escrow Collateral is
on file in any public office other than the financing statements, if
any, filed pursuant to this Agreement.
(c) This Agreement has been duly executed and delivered
by Company and assuming the due authorization and valid execution and
delivery of this Agreement by Trustee and Escrow Agent and
enforceability of this Agreement against Escrow Agent and Trustee in
accordance with its terms, constitutes a valid and binding obligation
of Company, enforceable against Company in accordance with its terms,
except as such enforceability may be limited by (i) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally, (ii) general
principles of equity and commercial reasonableness, or (iii) with
respect to the exculpation provisions and rights to indemnification
hereunder, U.S. federal and state securities laws and public policy
considerations and (iv) the waiver of rights and defenses contained in
Sections 15(j) and 15(o).
(d) Upon the delivery to Escrow Agent of the certificates
or instruments, if any, representing the Escrow Collateral and the
filing of financing statements, if any, required by the Uniform
Commercial Code (the "UCC"), and the transfer and pledge to Escrow
Agent of the Escrow Collateral and the acquisition by Escrow Agent of
a security entitlement thereto in accordance with Section 6 the pledge
of the Escrow Collateral pursuant to this Agreement creates a valid
and perfected first priority security interest in and to the Escrow
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Collateral, securing the payment of the Secured Obligations for the
benefit of the Beneficiaries, enforceable as such against all
creditors of the Company and any persons purporting to purchase any of
the Escrow Collateral from Company other than as permitted by the
Indenture.
(e) No consent of any other person and no consent,
authorization, approval, or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required
either (i) for the pledge by Company of the Escrow Collateral pursuant
to this Agreement or for the execution, delivery or performance of
this Agreement by Company (except for any filings necessary to perfect
Liens on the Escrow Collateral) or (ii) for the exercise by Trustee of
the rights provided for in this Agreement or the remedies in respect
of the Escrow Collateral pursuant to this Agreement, except, in each
case, as may be required in connection with such disposition by laws
affecting the offering and sale of securities.
(f) No litigation, investigation or proceeding of or
before any arbitrator or governmental authority is pending or, to the
knowledge of Company, threatened by or against Company with respect to
this Agreement or any of the transactions contemplated hereby.
(g) The pledge of the Escrow Collateral pursuant to this
Agreement is not prohibited by any applicable law or governmental
regulation, release, interpretation or opinion of the Board of
Governors of the Federal Reserve System or other regulatory agency
(including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System).
9. COVENANTS.
Company covenants and agrees with the Beneficiaries from and
after the date of this Agreement until the earlier of payment in full in cash
of (A) all interest due through the Interest Payment Date occurring on [
], 1999 or (B) all obligations due and owing under the Indenture and the
Securities in the event such obligations become due and payable prior to the
payment of the first four scheduled interest payments on the Securities:
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(a) Company agrees that it will not (i) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Escrow Collateral or (ii) create or permit to exist any Lien upon or
with respect to any of the Escrow Collateral (except for the lien
created pursuant to this Agreement) and at all times will be the sole
beneficial owner of the Escrow Collateral.
(b) Company agrees that it will not (i) enter into any
agreement or understanding that purports to or may restrict or inhibit
Trustee's rights or remedies hereunder, including, without limitation,
Trustee's right to sell or otherwise dispose of the Escrow Collateral
or (ii) fail to pay or discharge any tax, assessment or levy of any
nature not later than five days prior to the date of any proposed sale
under any judgment, writ or warrant of attachment with regard to the
Escrow Collateral.
10. POWER OF ATTORNEY.
In addition to all of the powers granted to Trustee pursuant
to Article 7 of the Indenture, Company hereby appoints and constitutes Trustee
as Company's attorney-in-fact 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: (i) collection of proceeds of
any Escrow Collateral; (ii) conveyance of any item of Escrow Collateral to any
purchaser thereof; (iii) giving of any notices or recording of any Liens under
Section 6; (iv) making of any payments or taking any acts under Section 11; and
(v) paying or discharging taxes or Liens levied or placed upon the Escrow
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by Trustee in its sole discretion, and such
payments made by Trustee to become the obligations of Company to Trustee, due
and payable immediately upon demand. Trustee's authority hereunder shall
include, without limitation, the authority to endorse and negotiate any checks
or instruments representing proceeds of Escrow Collateral in the name of
Company, execute and give receipt for any certificate of ownership or any
document constituting Escrow Collateral, transfer title to any item of Escrow
Collateral, sign Company's name on all financing statements (to the extent
permitted by applicable law) or any other documents deemed necessary or
appropriate by Trustee to preserve, protect or perfect this security interest
in the Escrow Collateral and to file the same, prepare, file and sign Company's
name on any
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notice of Lien, to take any other actions arising from or incident to the
powers granted to Trustee in this Agreement. This power of attorney is coupled
with an interest and is irrevocable by Company.
11. TRUSTEE MAY PERFORM.
If Company fails to perform any agreement contained herein,
Trustee may itself perform, but shall not be obligated to, or cause performance
of, such agreement, and the reasonable expenses of Trustee incurred in
connection therewith shall be payable by Company under Section 13 hereof.
12. NO ASSUMPTION OF DUTIES; REASONABLE CARE.
The rights and powers granted to Trustee hereunder are being
granted in order to preserve and protect Trustee's and the Holders' of
Securities security interest in and to the Escrow Collateral granted hereby and
shall not be interpreted to, and shall not, impose any duties on Trustee in
connection therewith other than those imposed under applicable law. Except as
provided by applicable law or by the Indenture, Trustee shall be deemed to have
exercised reasonable care in the custody and preservation of the Escrow
Collateral in its possession if the Escrow Collateral is accorded treatment
substantially equal to that which Trustee accords similar property in similar
situations, it being understood that Trustee shall not have any responsibility
for (i) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Escrow
Collateral, whether or not Trustee has or is deemed to have knowledge of such
matters or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Escrow Collateral; provided, however, that nothing
contained in this Agreement shall relieve Trustee of any responsibilities as a
securities intermediary under applicable law.
13. EXPENSES.
Company will upon demand pay to Trustee the amount of any and
all reasonable expenses, including, without limitation, the reasonable fees,
expenses and disbursements of its counsel, experts and agents retained by
Trustee that Trustee may incur in connection with (i) the administration of
this Agreement, (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Escrow Collateral, (iii) the
exercise or enforcement of any of the rights of the
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Beneficiaries hereunder, or (iv) the failure by Company to perform or observe
any of the provisions hereof.
14. SECURITY INTEREST ABSOLUTE.
All rights of the Beneficiaries and security interests
hereunder, and all obligations of Company 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 bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar event
of Company or any of its Subsidiaries;
(d) any exercise or non-exercise, or any waiver of any
right, remedy, power or privilege under or in respect of this
Agreement or the Indenture except as specifically set forth in a
waiver granted pursuant to the provisions of Section 15(a) hereof;
(e) any exchange, surrender, release or non-perfection of
any Liens on any other Escrow Collateral for all or any of the Secured
Obligations; or
(f) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to,
or a discharge of, Company in respect of the Secured Obligations or of
this Agreement.
15. MISCELLANEOUS.
(a) Waiver. Any party hereto may specifically waive any
breach of this Agreement by any other party, but no such waiver shall be deemed
to have been given unless such waiver is in writing, signed by the waiving
party and specifically designating the breach waived, nor shall any such waiver
constitute a continuing waiver of similar or other breaches.
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(b) Invalidity. If for any reason whatsoever any one or
more of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid in a particular case or in all cases,
such circumstances shall not have the effect of rendering any of the other
provisions of this Agreement inoperative, unenforceable or invalid, and the
inoperative, unenforceable or invalid provision shall be construed as if it
were written so as to effectuate, to the maximum extent possible, the parties'
intent.
(c) Assignment. This Agreement is personal to the
parties hereto, and the rights and duties of any party hereunder shall not be
assignable except with the prior written consent of the other parties.
Notwithstanding the foregoing, this Agreement shall inure to and be binding
upon the parties and their successors and permitted assigns.
(d) Benefit. The parties hereto and their successors and
permitted assigns, but no others, shall be bound hereby and entitled to the
benefits hereof; provided, however, that the Beneficiaries (including holders
of the Securities) and their assigns shall be entitled to the benefits hereof
and to enforce this Agreement.
(e) Time. Time is of the essence with respect to each
provision of this Agreement.
(f) Entire Agreement; Amendments. This Agreement and the
Indenture contain the entire agreement among the parties with respect to the
subject matter hereof and supersede any and all prior agreements,
understandings and commitments, whether oral or written. Any amendment or
waiver of any provision of this Agreement and any consent to any departure by
Company from any provision of this Agreement shall be effective only if made or
duly given in compliance with all of the terms and provisions of the Indenture,
and none of Escrow Agent, Trustee or any Holder of Securities shall be deemed,
by any act, delay, indulgence, omission or otherwise, to have waived any right
or remedy hereunder or to have acquiesced in any Default or Event of Default or
in any breach of any of the terms and conditions hereof. Failure of Escrow
Agent, Trustee or any Holder of Securities to exercise, or delay in exercising,
any right, power or privilege hereunder shall not operate as a waiver thereof.
No single or partial exercise of any right, power or privilege hereunder shall
not operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or
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privilege. A waiver by Escrow Agent, Trustee or any Holder of Securities of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy that Escrow Agent, Trustee or such Holder of
Securities would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
(g) Notices. All notices and other communications
required or permitted to be given or made under this Agreement shall be in
writing and shall be deemed to have been duly given and received when actually
received, including: (a) on the day of hand delivery; (b) three business days
following the day sent, when sent by United States certified mail, postage and
certification fee prepaid, return receipt requested, addressed as set forth
below; (c) when transmitted by telecopy with verbal confirmation of receipt by
the telecopy operator to the telecopy number set forth below; or (d) one
business day following the day timely delivered to a next-day air courier
addressed as set forth below:
To Escrow Agent:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
To Trustee:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
To Company:
Global Telesystems Group, Inc.
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▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section.
(h) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
(i) Captions. Captions in this Agreement are for
convenience only and shall not be considered or referred to in resolving
questions of interpretation of this Agreement.
(j) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL; WAIVER OF DAMAGES.
(i) THIS 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 COMPANY, ESCROW AGENT, TRUSTEE AND THE HOLDERS OF SECURITIES IN
CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY
OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW
YORK.
(ii) COMPANY AGREES THAT TRUSTEE SHALL, IN ITS CAPACITY AS
TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF SECURITIES, HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST COMPANY OR
ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND
HAVING PERSONAL OR IN REM JURISDICTION OVER COMPANY OR ITS PROPERTY, AS THE
CASE MAY BE) TO ENABLE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF TRUSTEE. COMPANY AGREES THAT
IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS IN ANY PROCEEDING
BROUGHT BY TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF TRUSTEE,
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EXCEPT FOR SUCH COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN
ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. COMPANY
WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH
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.
(iii) COMPANY, ESCROW AGENT AND TRUSTEE EACH WAIVE ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
(iv) COMPANY AGREES THAT NONE OF ESCROW AGENT, TRUSTEE OR
ANY HOLDER OF SECURITIES SHALL HAVE ANY LIABILITY TO COMPANY (WHETHER SOUNDING
IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY COMPANY IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED
AND THE RELATIONSHIP ESTABLISHED BY THIS 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 ESCROW AGENT, TRUSTEE OR
SUCH HOLDER OF SECURITIES, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT
OF ACTS OR OMISSIONS ON THE PART OF ESCROW AGENT, TRUSTEE OR SUCH HOLDER OF
SECURITIES, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.
(v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, COMPANY WAIVES ALL RIGHTS OF NOTICE AND
HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE TRUSTEE OR ANY HOLDER OF
SECURITIES OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO
REPOSSESS THE ESCROW COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR
LEVY UPON THE ESCROW COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, COMPANY WAIVES THE POSTING OF ANY
BOND OTHERWISE REQUIRED OF ESCROW AGENT, TRUSTEE OR ANY HOLDER OF SECURITIES IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON THE ESCROW COLLATERAL OR OTHER SECURITY FOR THE
SECURED OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF ESCROW AGENT, TRUSTEE OR ANY HOLDER OF SECURITIES, OR TO ENFORCE BY
SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION, THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN COMPANY
ON
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THE ONE HAND AND ESCROW AGENT, TRUSTEE AND/OR THE HOLDERS OF SECURITIES ON THE
OTHER HAND.
(k) No Adverse Interpretation of Other Agreements. This
Agreement may not be used to interpret another pledge, security or debt
agreement of Company or any subsidiary thereof. No such pledge, security or
debt agreement may be used to interpret this Agreement.
(l) Benefits of Agreement. Nothing in this Agreement,
express or implied, shall give to any person, other than the parties hereto and
their successors hereunder, and the Holders of Securities, any benefit or any
legal or equitable right, remedy or claim under this Agreement.
(m) Interpretation of Agreement. All terms not defined
herein or in the Indenture shall have the meaning set forth in the applicable
Uniform Commercial Code, except where the context otherwise requires. To the
extent a term or provision of this 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 Agreement shall not be relevant to determine the meaning of this
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.
(n) Survival of Provisions. All representations, warranties
and covenants of Company contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the termination of
this Agreement.
(o) Waivers. Company 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.
(p) Judgment Currency. The Company hereby agrees to indemnify
each of Escrow Agent and the Trustee, their directors, their officers and each
person, if any, who controls Escrow Agent or the Trustee, as the case may be,
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any loss incurred by such person as a result of any
28
-29-
judgment or order being given or made against the Company for any U.S. dollar
amount due under this Agreement and such judgment or order being expressed and
paid in a currency (the "Judgment Currency") other than United States dollars
and as a result of any variation as between (i) the rate of exchange at which
the United States dollar amount is converted into the Judgment Currency for the
purpose of such judgment or order and (ii) the spot rate of exchange in The
City of New York at which such party on the date of payment of such judgment or
order is able to purchase United States dollars with the amount of the Judgment
Currency actually received by such party. The foregoing indemnity shall
continue in full force and effect notwithstanding any such judgment or order as
aforesaid. The term "spot rate of exchange" shall include any premiums and
costs of exchange payable in connection with the purchase of, or conversion
into, United States dollars.
[Signature Page Follows]
29
IN WITNESS WHEREOF, the parties have executed and delivered
this Escrow Agreement as of the day first above written.
THE BANK OF NEW YORK,
as Escrow Agent
By:
---------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By:
---------------------------
Name:
Title:
GLOBAL TELESYSTEMS GROUP, INC.
By:
---------------------------
Name:
Title:
30
EXHIBIT A
Form of Payment Notice and Disbursement Request
[Letterhead of Company]
[Date]
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Trustee Administration
Re: Disbursement Request No. ____
[indicate whether revised]
Ladies and Gentlemen:
We refer to the Escrow Agreement, dated as of [
], 1998 (the "Escrow Agreement") among you (the "Escrow Agent"), the
undersigned as Trustee, and GLOBAL TELESYSTEMS GROUP, INC., a Delaware
corporation ("Company"). Capitalized terms used herein shall have the meaning
given in the Escrow Agreement.
This letter constitutes a Payment Notice and Disbursement
Request under the Escrow Agreement.
[choose one of the following, as applicable]
[The undersigned hereby notifies you that a scheduled interest
payment in the amount of $__________ is due and payable on ____________, ____
and requests a disbursement of funds contained in the Escrow Account in such
amount to Trustee.]
[The undersigned hereby notifies you and certifies you that
the release $__________ of funds in the Escrow Account to Company (to an
account designated by Company in writing), is currently permitted to be
released in accordance with Section 3(c) of the Escrow Agreement and such
amount shall be so remitted to Company.]
[The undersigned hereby notifies you that the Escrow Agreement
has been terminated in accordance with Section 7 thereof and requests that you
release the Escrow Account to Company.]
31
2
[The undersigned hereby notifies you that there has been an
acceleration of the maturity of the Securities. Accordingly, you are hereby
requested to disburse all remaining funds contained in the Escrow Account to
Trustee such that the balance in the Escrow Account is reduced to zero.]
In connection with the requested disbursement, the undersigned
hereby notifies you that:
1. [The Securities have not, as a result of an Event of
Default (as defined in the Indenture), been accelerated and
become due and payable.]
2. All prior disbursements from the Escrow Account have
been Applied.
3. [add wire instructions]
Escrow Agent is entitled to rely on the foregoing in
disbursing funds relating to this Payment Notice and Disbursement Request.
By:
-------------------------
Name:
Title:
32
Schedule A
[Schedule of Pledged Securities]
