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COLLATERAL PLEDGE AND
SECURITY AGREEMENT
Dated as of May 21, 1998
from
STARTEC GLOBAL COMMUNICATIONS CORPORATION,
Pledgor
to
FIRST UNION NATIONAL BANK,
Trustee
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TABLE OF CONTENTS
Section Page
------- ----
SECTION 1. Definitions; Appointment; Deposit and Investment................... 2
1.1 Definitions........................................................ 2
1.2 Appointment of the Trustee......................................... 6
1.3 Pledge and Grant of Security Interest.............................. 6
SECTION 2. Delivery of Collateral; Establishment of Collateral Accounts....... 7
SECTION 3. Delivery of the Pledged Securities................................. 8
SECTION 4. Delivery of Collateral Other than U.S. Government Obligations...... 9
SECTION 5. Investing of Amounts in the Collateral Accounts.................... 10
SECTION 6. Disbursements...................................................... 10
SECTION 7. Representations and Warranties..................................... 13
SECTION 8. Further Assurances................................................. 14
SECTION 9. Covenants.......................................................... 15
SECTION 10. Power of Attorney.................................................. 15
SECTION 11. No Assumption of Duties; Reasonable Care........................... 16
SECTION 12. Indemnity.......................................................... 16
SECTION 13. Remedies upon Event of Default..................................... 17
SECTION 14. Expenses........................................................... 17
SECTION 15. Security Interest Absolute......................................... 18
SECTION 16. Startec Securities Intermediary's Representations,
Warranties and Covenants........................................... 18
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Section Page
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SECTION 17. Miscellaneous Provisions........................................... 19
17.1 Notices............................................................ 20
17.2 Severability....................................................... 20
17.3 Headings........................................................... 20
17.4 Counterpart Originals.............................................. 21
17.5 Benefits of Pledge Agreement....................................... 21
17.6 Amendments, Waivers and Consents................................... 21
17.7 Interpretation of Agreement........................................ 21
17.8 Continuing Security Interest; Termination.......................... 21
17.9 Survival Provisions................................................ 22
17.10 Waivers............................................................ 22
17.11 Authority of the Trustee........................................... 22
17.12 Final Expression................................................... 23
17.13 Rights of Holders of the Notes..................................... 23
17.14 GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF DAMAGES.................................................. 23
17.15 Effectiveness...................................................... 25
SCHEDULE I PLEDGED SECURITIES................................................. 1
EXHIBIT A FIRST UNION NATIONAL BANK OFFICER'S CERTIFICATE.................... 1
EXHIBIT B [Attach Report from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP]........................... 1
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This Collateral Pledge and Security Agreement (this "Pledge
Agreement") is made and entered into as of May 21, 1998 by Startec Global
Communications Corporation, a Maryland corporation (the "Pledgor"), having its
principal offices at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, in favor
of First Union National Bank (the "Trustee") having its principal corporate
trust office at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Department, as 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 and the Initial Purchasers (as defined in
the Purchase Agreement) are parties to a Purchase Agreement, dated as of May 21,
1998 (the "Purchase Agreement"), pursuant to which the Pledgor will issue and
sell to the Initial Purchasers 160,000 units (the "Units") consisting of
$160,000,000 in aggregate principal amount of the Pledgor's 12% Senior Notes due
2008 (the "Notes") and warrants (the "Warrants") to purchase shares of the
Company's common stock (the "Common Stock");
WHEREAS, the Pledgor 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 issuing and selling the Notes to the Initial Purchaser
on the date hereof;
WHEREAS, pursuant to the Indenture, the Pledgor is required,
on the Closing Date (as defined in the Purchase Agreement), to purchase, or
cause the purchase of, and pledge to the Trustee for the benefit of the Holders
of the Notes U.S. Government Obligations (as defined in the Indenture) in an
amount that will be sufficient upon receipt of scheduled interest and principal
payments of such securities, in the opinion of a nationally-recognized firm of
independent public accountants selected by the Pledgor (the "Accounting Firm")
to provide for payment in full of the first six scheduled interest payments due
on the Notes to secure the Pledgor's obligation to provide for payment in full
of the first six scheduled interest payments due on the Notes (such obligation,
together with the obligation to repay the principal, premium, Liquidated Damages
(as defined in the Registration Rights Agreement), if any, and interest on the
Notes in the event that the Notes become due and payable prior to such time as
the first six scheduled interest payments thereon shall have been paid in full,
being collectively referred to herein as (the "Obligations");
WHEREAS, the Pledgor has opened a securities account (the
"Pledge Account") with First Union National Bank, as Securities Intermediary
(the "Startec Securities Intermediary"), at its office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Account No. 8076000146 (designated "Pledge Account pledged by Startec
Global Communications Corporation to First Union National Bank as Trustee and
Sole Entitlement Holder"), 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;
WHEREAS, the Pledgor has opened a non-interest bearing cash
collateral account (the "Cash Collateral Account") with the Startec Securities
Intermediary, at its office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, Account No.
8076000137 (designated "Cash Collateral Account pledged by Startec Global
Communications Corporation to First Union National Bank, as Trustee"), 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;
WHEREAS, pursuant to the Purchase Agreement it is a condition
precedent to the purchase of the Units by the Initial Purchasers that the
Pledgor apply certain of the proceeds of the offering of the Units to purchase
the Pledged Securities (as defined below) and to deposit such Pledged Securities
into the Pledge Account to be held therein under the sole dominion and control
of the Trustee and subject to the terms of this Pledge Agreement;
WHEREAS, to secure the Obligations of the Pledgor, the Pledgor
has agreed to execute and deliver this Pledge Agreement and pledge to the
Trustee, for its benefit and the ratable benefit of the Holders of the Notes,
the Pledged Securities and the related Collateral in order to secure the payment
by the Pledgor of all the Obligations.
All capitalized terms used herein but not defined herein shall
have the meanings assigned to such terms in the Indenture.
NOW, THEREFORE, in consideration of the premises herein
contained, and in order to induce the Holders of the Notes to purchase the Notes
(as a part of the purchase of the Units), the Pledgor and the Trustee hereby
agree, for the benefit of the Trustee and for the ratable benefit of the Holders
of the Notes, as follows:
SECTION 1. Definitions; Appointment; Deposit and Investment.
1.1 Definitions.
(a) Unless otherwise defined in this Pledge Agreement, terms
defined or referenced in the Indenture are used in this Pledge Agreement as such
terms are defined or referenced therein.
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(b) Unless otherwise defined in the Indenture or in this
Pledge Agreement, terms defined in Article 8 or 9 of the Uniform Commercial Code
in effect in the State of New York from time to time and/or in Section 357.2 of
the Treasury Regulations (as defined in Section 1.1(c)) are used in this Pledge
Agreement as such terms are defined in such Article 8 or 9 and/or such Section
357.2. Such terms shall include, but not be limited to, "book-entry security,"
"certificated security", "entitlement holder", "CUBES", "entitlement order",
"financial asset", "instrument", "participant's securities account", "proceeds",
"securities account" "securities intermediary", "security", "security
entitlement" and "STRIPS".
(c) In this Pledge Agreement the following terms have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Adverse Claim" has the meaning specified in UCC ss.
8-102(a)(1).
"Cash Collateral Account" has the meaning specified in the
recitals hereto:
"Cash Equivalents" means any of the following, to the extent
owned by the Pledgor free and clear of all liens other than liens created
hereunder: (a) U.S. Government Obligations, (b) insured certificates of deposit
of, or time deposits with, any commercial bank that (i) is a member of the
Federal Reserve System, (ii) issues (or the parent of which issues) commercial
paper rated as described in clause (c), (iii) is organized under the laws of the
United States of America or any state thereof and (iv) has combined capital and
surplus of at least $500 million, (c) commercial paper in an aggregate amount of
no more than $5 million per issuer outstanding at any time, issued by any
corporation organized under the laws of any state of the United States of
America and rated at least "Prime-1"(or the then equivalent grade) by ▇▇▇▇▇'▇
Investors Service, Inc. or "A-1" (or the then equivalent grade) by Standard &
Poor's Ratings Group, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or (d)
overnight repurchase agreements (including overnight repurchase agreements
between the Trustee and the Startec Securities Intermediary) secured by U.S.
Government Obligations.
"Certificated Security" has the meaning specified in Section
8-103(a)(4) of the UCC.
"CFR" means U.S. Code of Federal Regulations.
"Collateral" has the meaning specified in Section 1.3.
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"Collateral Accounts" means the Pledge Account and the Cash
Collateral Account.
"Deposit Account" has the meaning specified in Section
9-105(e) of the UCC.
"Entitlement Holder" has the meaning specified in UCC ss.
8-102(a)(7).
"Entitlement Order" has the meaning specified in UCC ss.
8-102(a)(8).
"Startec Securities Intermediary" has the meaning specified in
the recitals hereto.
"Financial Asset" has the meaning specified in UCC ss.
8-102(a)(9).
"FRBR" means Federal Reserve Bank of Richmond.
"FRBR Account" means the participant's securities account
maintained in the name of the Startec Securities Intermediary by the FRB.
"FRBR Member": any Person that is eligible to maintain (and
that maintains) with the FRBR one or more FRBR Member Securities Accounts in
such Person's name.
"FRBR Member Securities Account": in respect of any Person, an
account in the name of such Person at the FRBR, to which account U.S. Government
Obligations held for such Person are or may be credited.
"General Intangibles" has the meaning specified in Section
9-106 of the UCC.
"Instruments" has the meaning specified in Section 9-105 of
the UCC.
"Investment Property" has the meaning specified in UCC ss.
9-115(1)(f).
"Lien" any lien, mortgage, security interest, charge, Adverse
Claim or encumbrance of any kind, including the rights of a vendor, lessor, or
similar party under any conditional sale agreement or other title retention
agreement or lease substantially equivalent thereto.
"Money" has the meaning specified in Section 1-201(24) of the
UCC.
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"Pledgor" has the meaning specified has the meaning specified
in the recital of the parties hereto.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(l) of the UCC and, in any event, shall include without limitation, all
interest, dividends or other earnings, income or distributions from or in
respect of, or from or in respect of investments or reinvestments of, the cash
and Cash Equivalents and Investment Property from time to time on deposit in the
Collateral Accounts, all collections and distributions with respect to the U.S.
Government Obligations and all other proceeds of Collateral.
"Securities Account" has the meaning specified in UCC ss.
8-501(a).
"Securities Control" shall mean "control" as defined in UCC
ss. 9-115(1)(e).
"Securities Intermediary": a Person that is a "securities
intermediary" (as defined in UCC ss. 8-102(a)(14)) and, in respect of any
book-entry security, a "securities intermediary" (as defined in 31 C.F.R. ss.
357.2 or, as applicable to such book-entry security, the corresponding Federal
book-entry regulations).
"Security" has the meaning specified in Section 8-102(a)(15)
of the UCC.
"Security Certificate" has the meaning specified in Section
8-102(a)(16) of the UCC.
"Security Entitlement" as defined in UCC ss. 8-102(a)(17) or,
in respect of any book-entry security, as defined in 31 C.F.R. ss. 357.2 (or, as
applicable to such book-entry security, the corresponding Federal book-entry
regulations).
"Settlement Date" means, as to any U.S. Government
Obligations, the date on which the purchase of such U.S. Government Obligations
shall have been settled.
"Termination Date" means the earlier of (a) the date of the
payment in full in cash of each of the first six scheduled interest payments due
on the Notes under the terms of the Indenture and (b) the date of the payment in
full of all obligations due and owing under this Pledge Agreement, the Indenture
and the Notes, in the event such obligations become due and payable prior to the
payment of the first six scheduled interest payments on the Notes.
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"Treasury Regulations" means (a) the regulations contained in
31 CFR Part 357 (including, without limitation, Section 357.2, Section 357.10
through Section 357.14 and Section 357.41 through Section 357.44 of 31 CFR) and
(b) to the extent substantially identical to the regulations referred to in
clause (a) above (as in effect from time to time) the regulations governing
other U.S. Government Obligations.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Pledge Agreement or any successor thereto appointed in
accordance with the provisions of the TIA.
"UCC" means, unless otherwise specified herein, the Uniform
Commercial Code as in effect in New York State.
"Uncertificated Security" has the meaning specified in Section
8-102(a)(18) of the UCC.
"U.S. Government Obligations" means Securities (including,
without limitation, United States Treasury Securities, including Treasury bills,
Treasury notes, Treasury bonds, STRIPS and CUBES) and the Security Entitlements
in, and Financial Assets based on, such Securities maintained in the form of
entries in the commercial book-entry system of the FRBR and held for the related
Entitlement Holder by a FRBR Member pursuant to the Treasury Regulations.
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. As security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, the Pledgor hereby
grants to the Trustee for its benefit and for the ratable benefit of the Holders
of the Notes, a lien on and security interest in all of the Pledgor's right,
title and interest in, to and under the following property (whether
characterized as Certificated Securities or Uncertificated Securities, Financial
Assets, Security Entitlements, Deposit Accounts, banks accounts, Securities
Accounts, Money, Proceeds, Investment Property, General Intangibles or
otherwise): (a) the U.S. Government Obligations identified by CUSIP No. in
Schedule I to this Pledge Agreement (the "Pledged Securities"), the scheduled
payments of principal and interest of which will be sufficient to provide for
payment in full of the first six scheduled interest payments due on the Notes,
(b) any and all applicable Security Entitlements to the Pledged Securities, (c)
the Pledge Account, all funds held therein and all certificates and instruments,
if any, from time to time representing or
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evidencing the Pledge Account, (d) all Collateral Investments (as hereinafter
defined) and all certificates and instruments, if any, representing or
evidencing the Collateral Investments, and any and all Security Entitlements to
the Collateral Investments, and any and all related Securities Accounts in which
any Security Entitlements to the Collateral Investments is carried, (e) the Cash
Collateral Account, (f) all notes, certificates of deposit, Deposit Accounts,
checks and other instruments, if any, from time to time hereafter delivered to
or otherwise possessed by the Trustee for or on behalf of the Pledgor in
substitution for or in addition to any or all of the then existing Collateral,
(g) all interest, dividends, cash, instruments and other property, if any, from
time to time received by the Trustee, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Collateral and (h)
except as otherwise provided herein, all proceeds of any and all of the
foregoing Collateral (including, without limitation, proceeds that constitute
property of the types described in clauses (a) - (g) of this Section 1.3) (such
property being collectively referred to herein as the "Collateral").
SECTION 2. Delivery of Collateral; Establishment of Collateral
Accounts. (a) The Trustee has established with the Startec Securities
Intermediary, and at all times until the Termination Date, the Pledgor shall
maintain with the Startec Securities Intermediary, each of the Cash Collateral
Account and the Pledge Account. The following provisions shall apply to the
establishment and maintenance of each such Collateral Account:
(i) The Trustee shall cause each Collateral Account to be, and
each Collateral Account shall be, separate from all other accounts
maintained by the Trustee.
(ii) The Trustee shall, in accordance with all applicable
laws, have sole dominion and control (including, without limitation,
Securities Control) over each Collateral Account, and it shall be a
term and condition of each Collateral Account and the Pledgor
irrevocably instructs the Trustee, notwithstanding any other term or
condition to the contrary in any other agreement, that no Collateral
shall be released to or for the account of, or withdrawn by or for the
account of, the Pledgor or any other Person except as expressly
provided in this Pledge Agreement.
(iii) The Trustee shall, in accordance with and subject to all
applicable laws, be the sole Entitlement Holder of, and have the power
to originate Entitlement Orders with respect to, the Pledge Account and
all U.S. Government Obligations, Securities, Security Entitlements and
other Financial Assets held therein, and it shall be a term and
condition of the Pledge Account
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that the Trustee shall have the right to issue such Entitlement Orders
with respect to the Pledge Account and such Securities, Security
Entitlements and other Financial Assets without further consent of the
Pledgor, and that no Collateral shall be released to or for the account
of, or withdrawn by or for the account of, the Pledgor or any other
Person except as expressly provided in this Pledge Agreement.
(b) On the Closing Date, the Pledgor shall transfer, or cause
to be transferred, to the Trustee an amount equal to $52,900,000 by depositing
all such proceeds into the Cash Collateral Account.
(c) As soon as possible after receipt of the amount referred
to in Section 2(b), (i) the Trustee shall apply such amount to purchase the U.S.
Government Obligations (in the name of the Trustee) listed on Schedule I hereto,
and cause the Startec Securities Intermediary to credit such U.S. Government
Obligations to the Pledge Account as Collateral hereunder; and (ii) the Trustee
shall ensure that, on the Settlement Date, the FRBR credits in the FRBR Account
those U.S. Government Obligations being settled on such date.
(d) The Trustee will, from time to time, reinvest the proceeds
of Collateral that may mature or be sold in such Collateral Investments (in the
name of the Trustee) as it may be directed in writing by the Pledgor, and cause
such Collateral Investments to be credited to the Pledge Account as Collateral
hereunder. Such proceeds that are not so reinvested in Collateral Investments
shall be deposited and held in the Cash Collateral Account.
SECTION 3. Delivery of the Pledged Securities. (a) The Pledged
Securities shall be pledged and delivered to the Pledge Account and the Trustee
and the Trustee shall become the Entitlement Holder of a Security Entitlement to
the Pledged Securities through action by the Startec Securities Intermediary, as
confirmed (in writing or electronically or otherwise in accordance with standard
industry practice) to the Trustee by the Startec Securities Intermediary (i)
indicating by book-entry that the Pledged Securities and all Security
Entitlements thereto have been credited to the Pledge Account, or (ii) acquiring
the Pledged Securities and all Security Entitlements thereto for the Trustee and
accepting the same for credit to the Pledge Account.
(b) Prior to or concurrently with the execution and delivery
hereof and prior to the transfer to the Trustee of the Pledged Securities (or
acquisition by the Trustee of any Security Entitlement thereto), as provided in
subsection (a) of this Section 3, the Trustee and the Startec Securities
Intermediary shall establish the Pledge Account on the books of the Startec
Securities Intermediary as a Securities Account
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segregated from all other custodial or collateral accounts such account to be
maintained either (i) directly at its offices located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or (ii) through a "Securities Account" maintained by the
Startec Securities Intermediary at the FRBR, as Securities Intermediary. Upon
transfer of the Pledged Securities to the Trustee (or the Trustee's acquisition
of a Security Entitlements thereto), as confirmed to the Startec Securities
Intermediary by FRBR or another Securities Intermediary, the Startec Securities
Intermediary shall make appropriate book entries indicating that the Pledged
Securities and/or such Security Entitlement have been credited to and are held
in the Pledge Account. Subject to the other terms and conditions of this Pledge
Agreement, all funds or other property held by the Trustee pursuant to this
Pledge Agreement shall be held in the Pledge Account or the Cash Collateral
Account subject (except as expressly provided in Section 6 hereof) to the
exclusive dominion and control (including, without limitation, Securities
Control) of the Trustee and exclusively for the benefit of the Trustee and for
the ratable benefit of the Holders of the Notes and segregated from all other
funds or other property otherwise held by the Trustee.
(c) All Collateral shall be retained in the Pledge Account or
the Cash Collateral Account pending disbursement pursuant to the terms hereof.
(d) Concurrently with the execution and delivery of this
Pledge Agreement, the Trustee is delivering to the Pledgor and the Initial
Purchasers a duly executed certificate, in the form of Exhibit A hereto, of an
officer of the Trustee, confirming the Trustee's establishment and maintenance
of the Pledge Account with the Startec Securities Intermediary and its receipt
and holding of the Pledge Securities or a Security Entitlement thereto and the
crediting of the Pledged Securities or such Security Entitlement to the Pledge
Account, all in accordance with this Pledge Agreement.
(e) Concurrently with the execution and delivery of this
Pledge Agreement, the Pledgor is delivering to the Trustee an opinion of the
Accounting Firm substantially in the form of Exhibit B hereto.
(f) Concurrently with the execution and delivery of this
Pledge Agreement, the Pledgor is delivering to the Trustee financing statements
in form acceptable for filing under the UCC of the State of New York, the State
of Maryland, and the Commonwealth of Virginia, covering the Collateral described
in this Pledge Agreement.
SECTION 4. Delivery of Collateral Other than U.S. Government
Obligations. (a) Collateral consisting of cash will be deemed to be delivered to
the Trustee (such that the Trustee will have an enforceable lien and security
interest
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thereon and therein), when it has been (and for so long as it shall remain)
deposited in or credited to the Cash Collateral Account.
(b) Collateral consisting of Cash Equivalents (other than U.S.
Government Obligations) will be deemed to be delivered to the Trustee (such that
the Trustee will have an enforceable lien and security interest thereon and
therein), when they have been (and for so long as they shall remain) deposited
in or credited to either Collateral Account.
(c) Collateral consisting of Securities (other than U.S.
Government Obligations) will be deemed delivered to the Trustee when the Startec
Securities Intermediary (A) shall indicate by book entry that such Securities
have been credited to the Pledge Account or (B) shall receive such Security (or
a Financial Asset based on such Security) for the Trustee, from or at the
direction of the Pledgor, and shall accept such Security (or such Financial
Asset) for credit to such Collateral Account;
(d) Collateral consisting of Securities and represented or
evidenced by certificates or instruments will be deemed delivered to the Trustee
when all such certificates or instruments representing or evidencing the
Collateral, including, without limitation, amounts invested as provided in
Section 5, shall be delivered to the Startec Securities Intermediary and held by
or on behalf of the Trustee pursuant hereto and shall be in registered form and
specially indorsed to the Trustee by an effective indorsement, all in form and
substance sufficient to convey a valid security interest in such Collateral to
the Trustee or shall be credited to the Pledge Account.
SECTION 5. Investing of Amounts in the Collateral Accounts. If
at any time, any amounts shall exist in the Collateral Accounts uninvested, and
if directed in writing by the Pledgor, the Trustee will, subject to the
provisions of Section 6 and Section 13, (a) invest such amounts on deposit in
the Collateral Accounts 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 in
the name of the Trustee, as the Pledgor may select and the Trustee may approve
(the Cash Equivalents referred to in clauses (a) and (b) above, together with
the Pledged Securities, being collectively referred to herein as Collateral
Investments"); provided, however, that the amount in cash and Pledged Securities
on deposit in the Collateral Accounts, collectively, at any time during the term
of this Pledge Agreement, must be sufficient to provide for the payment in full
of the remaining interest payments at such time on the Notes up to and including
the sixth scheduled interest payment. Except as otherwise provided in Sections
11 and 12, the
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Trustee shall not be liable for any loss in the investment or reinvestment of
amounts held in the Collateral Accounts.
SECTION 6. Disbursements. The Trustee shall hold the
Collateral in the Collateral Accounts and release the same, or a portion
thereof, only as follows:
(a) At least one Business Day prior to the due date of any of
the first six scheduled interest payments on the Notes, the Pledgor may,
pursuant to written instructions executed by the Pledgor (an "Issuer Order"),
direct the Trustee to release from the Collateral Accounts and pay to the
Holders of the Notes proceeds sufficient to provide for payment in full of such
interest then due on the Notes; provided, however, that in the event Collateral
is required to be liquidated, the Pledgor will give the Trustee at least three
Business Days' notice. Upon receipt of an Issuer Order, the Trustee will take
any action necessary to provide for the payment of the interest on the Notes to
the Holders of the Notes in accordance with the payment provisions of the
Indenture from (and to the extent of) proceeds of the Collateral in the
Collateral Accounts. Nothing in this Section 6 shall affect the Trustee's rights
to apply the Collateral to the payments of amounts due on the Notes upon
acceleration thereof.
(b) If the Pledgor makes any interest payment or portion of an
interest payment for which the Collateral is security from a source of funds
other than the Collateral Accounts ("Pledgor Funds"), the Pledgor may, after
payment in full of such interest payment, direct the Trustee by Issuer Order to
release to the Pledgor or to another party at the direction of the Pledgor (the
"Pledgor's Designee") proceeds from the Collateral Accounts in an amount less
than or equal to the amount of Pledgor Funds applied to such interest payment.
Upon receipt of such Issuer Order by the Trustee, the Trustee shall pay over to
the Pledgor or the Pledgor's Designee, as the case may be, the requested amount
from proceeds in the Collateral Accounts. Concurrently with any release of funds
to the Pledgor pursuant to this Section 6(b), the Pledgor shall deliver to the
Trustee a certificate signed by an officer of the Pledgor stating that the
Pledgor has made the interest payment from a source of funds other than the
Pledge Account, and that such release has been duly authorized by the Pledgor
and will not violate any provision of applicable law or Certificate of
Incorporation or the By-laws of the Pledgor or any material agreement or
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
interest granted under the Pledge Agreement.
(c) At least one Business Day prior to the due date of any of
the first six scheduled interest payments on the Notes, the Pledgor covenants to
give the Trustee
11
(by Issuer Order) notice as to whether payment of interest will be made pursuant
to Section 6(a) or 6(b) and as to the respective amounts of interest that will
be paid pursuant to Section 6(a) or 6(b); provided, however, that, in the event
Collateral is required to be liquidated, the Pledgor will give the Trustee at
least three Business Days' notice. If no such notice is given, the Trustee will,
subject to Section 6(d), act pursuant to Section 6(a) as if it had received an
Issuer Order pursuant thereto for the payment in full of the interest then due.
(d) The Trustee shall not be required to liquidate any
Collateral Investments in order to make any scheduled payment of interest or any
release hereunder unless instructed to do so by Issuer Order or pursuant to
Section 13 hereof.
(e) Upon the Termination Date, the security interest in the
Collateral evidenced by this Pledge Agreement will automatically terminate and
be of no further force and effect, and the Collateral, upon receipt by the
Trustee of an Issuer Order, shall promptly be paid over and transferred to the
Pledgor.
(f) In the event that the Collateral held in the Pledge
Account exceeds 100% of the amount sufficient, in the written opinion of the
Accounting Firm, to provide for payment in full of the first six scheduled
interest payments due on the Notes (or, in the event an interest payment or
payments have been made, an amount sufficient to provide for payment in full of
all interest payments remaining, up to and including the sixth scheduled
interest payment), the Trustee shall release to the Pledgor, at the Pledgor's
written request, accompanied by a written opinion of the Accounting Firm, any
such excess Collateral.
(g) Upon the release of any Collateral from the Pledge
Account, in accordance with the terms of this Pledge Agreement, the security
interest evidenced by this Pledge Agreement in such released Collateral will
automatically terminate and be of no further force and effect.
(h) Nothing contained in Section 1, this Section 6, Section
13, or any other provision of this Pledge Agreement shall (i) afford the Pledgor
any right to issue Entitlement Orders with respect to any Security Entitlement
to the Pledge Securities or 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 the 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 (including, without
12
limitation, Securities Control) (except as expressly provided in this Section 6)
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 of
the Notes and not as a Securities Intermediary for the Pledgor.
SECTION 7. Representations and Warranties. The Pledgor hereby
represents and warrants, as of the date hereof, 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 violate any provision of applicable law or the
Articles of Incorporation or By-laws of the Pledgor or any material
agreement or 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 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.
(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 and the provisions of the TIA,)
constitutes a valid and binding agreement of the Pledgor, enforceable
against the Pledgor in accordance with its terms, except as (i) may be
limited by bankruptcy, insolvency, fraudulent
13
conveyance, preference, reorganization, moratorium or similar laws now
or hereafter in effect relating to or affecting the rights or remedies
of creditors 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, (iii) the exculpation provisions and rights to indemnification
hereunder may be limited by U.S. federal and state securities laws and
public policy considerations and (iv) the waiver of rights and defenses
contained in Section 13(b), Section 17.11 and Section 17.15 hereof may
be limited by applicable law.
(d) Upon the delivery to the Trustee of the Collateral in
accordance with the procedures described in Section 3 and Section 4
hereof, the pledge of and grant of a security interest in the
Collateral securing the payment of the Obligations for the benefit of
the Trustee and the Holders of the Notes will constitute a valid, first
priority, perfected security interest in such Collateral (except, with
respect to Proceeds, only to the extent permitted by Section 9-306 of
the UCC), enforceable as such against all creditors of the Pledgor and
any persons purporting to purchase any of the Collateral from the
Pledgor, except in each case as enforcement may be affected by general
equitable principles (whether considered in a proceeding in equity or
at law) and other than as permitted by the Indenture.
(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 of its subsidiaries 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.
(f) The pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by law or governmental regulation
(including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System) applicable to the Pledgor.
(g) No Event of Default (as defined herein) exists.
SECTION 8. Further Assurances. The Pledgor will, promptly upon
the request by the Trustee (which request the Trustee may submit at the
direction of the Holders of a majority in aggregate 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
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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 60 days
of receipt of an invoice therefor. The Pledgor also agrees, whether or not
requested by the Trustee, to use its reasonable best efforts to perfect or
continue the perfection of, or to protect the first priority of, the Trustee's
security interest in and to the Collateral, 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 9. Covenants. The Pledgor covenants and agrees with
the Trustee and the Holders of the Notes that from and after the date of this
Pledge Agreement until the Termination Date:
(a) that it will not (i) (and will not purport to) sell or
otherwise dispose of, or grant any option or warrant with respect to,
any of the Collateral nor (ii) 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 and any Lien created by
or arising through the Trustee) and at all times will be the sole
beneficial owner of the Collateral; and
(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
Business Days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment with respect to the Collateral.
SECTION 10. Power of Attorney. In addition to all of the
powers granted to the Trustee pursuant to the Indenture, subject to the terms of
this Pledge Agreement, 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
15
Collateral; (b) conveyance of any item of Collateral to any purchaser thereof;
(c) giving of any notices or recording of any Liens under Section 3 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 reasonable discretion, and such payments
made by the Trustee to become part of the Obligations of the Pledgor to the
Trustee, due and payable immediately upon demand. The Trustee's authority under
this Section 10 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 in its reasonable discretion 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 but shall remain in effect only during the
continuance of an Event of Default.
SECTION 11. 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 of the
Notes 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 for similar
accounts, 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 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 Pledge
Agreement shall relieve the Trustee of any responsibilities as a Securities
Intermediary under applicable law.
SECTION 12. Indemnity. The Pledgor shall indemnify, hold
harmless and defend the Trustee and its directors, officers, attorneys-in-fact
and agents from and against any and all claims, actions, obligations,
liabilities and expenses, including reasonable legal fees, arising from the
Trustee's performance as Trustee under this
16
Pledge Agreement, except to the extent that such claim, action, obligation,
liability or expense arises from the bad faith, gross negligence or willful
misconduct of such indemnified person. The provisions of this Section 12 shall
survive termination of this Pledge Agreement and the resignation and removal of
the Trustee for a period of three (3) years after the Termination Date.
SECTION 13. Remedies upon Event of Default. If any Event of
Default under the Indenture or breach of the terms hereof (any such Event of
Default or breach being referred to in this Pledge Agreement as an "Event of
Default") shall have occurred and be continuing:
(a) The Trustee and the Holders of the Notes 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 then in effect in the State
of New York and the State of Maryland. 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 17.1 hereof at least ten (10) days before the time of the
sale or disposition. The Trustee or any Holder of Notes 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 13 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 13 will cause irreparable injury to the Trustee and the
Holders of the Notes, that the Trustee and the Holders of the Notes
have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 13
shall be specifically enforceable against the Pledgor, and the Pledgor
hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no
Event of Default has occurred.
17
SECTION 14. Expenses. The Pledgor will, upon demand, pay to
the 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 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 of the Notes
hereunder or (d) the failure by the Pledgor to perform or observe any of the
provisions hereof.
SECTION 15. Security Interest Absolute. All rights of the
Trustee and the Holders of the Notes 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 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 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 Obligations or of this
Pledge Agreement.
SECTION 16. Startec Securities Intermediary's Representations,
Warranties and Covenants. For the purposes of this Section 16 only, the Startec
Securities Intermediary represents and warrants that it is as of the date
hereof, and it agrees that for so long as it maintains the Collateral Accounts
and acts as the Securities Intermediary pursuant to this Pledge Agreement it
shall be a Securities Intermediary and a FRBR Member. In furtherance of the
foregoing the Startec Securities Intermediary hereby:
(a) represents and warrants that it is a corporation that in
the ordinary course of its business maintains securities accounts for
others and is acting in that capacity hereunder and with respect to the
Pledge Account;
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(b) represents and warrants that it maintains a FRBR Member
Securities Account with the FRBR;
(c) agrees that the Pledge Account shall be an account to
which Financial Assets may be credited, and the Startec Securities
Intermediary undertakes to treat the Trustee as entitled to exercise
rights that comprise (and entitled to the benefits of) such Financial
Assets, and entitled to exercise the rights of an Entitlement Holder in
the manner contemplated by the UCC;
(d) hereby represents that it has not granted, and covenants
that so long as it acts as a Securities Intermediary hereunder it shall
not grant, control (including without limitation, Securities Control)
over or with respect to any Collateral credited to any Collateral
Account from time to time to any other Person other than the Trustee.
(e) covenants that in its capacity as Startec Securities
Intermediary hereunder and with respect to the Collateral Accounts, it
shall not take any action inconsistent with, and represents and
covenants that it is not and so long as this Pledge Agreement remains
in effect will not become party to any agreement the terms of which are
inconsistent with the provisions of this Pledge Agreement;
(f) agrees that any item of property credited to the Pledge
Account shall be treated as a Financial Asset;
(g) agrees that any item of Collateral credited to any
Collateral Account shall not be subject to any security interest, Lien
or right of setoff in favor of the Startec Securities Intermediary,
except as may be expressly permitted under the Indenture (and the
Startec Securities Intermediary shall take such actions as shall be
necessary and appropriate to cause such Collateral to remain free of
any Lien or security interest of any underlying Securities Intermediary
through which the Startec Securities Intermediary holds such Collateral
or any Security Entitlement thereto);
(h) agrees, so long as it serves as Startec Securities
Intermediary pursuant to this Pledge Agreement, to maintain the
Collateral Accounts and maintain appropriate books and records in
respect thereof in accordance with its usual procedures and subject to
the terms of this Pledge Agreement; and
(i) agrees, with the other parties to this Pledge Agreement,
that the Startec Securities Intermediary's jurisdiction, for purposes
of Section 8-110(e)
19
of the UCC as it pertains to this Pledge Agreement, the Collateral
Accounts and the Security Entitlements relating thereto, shall be the
State of New York.
SECTION 17. Miscellaneous Provisions.
17.1 Notices. Any notice, approval, consent or other
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:
Startec Global Communications Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Trustee:
First Union National Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
17.2 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.
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17.3 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.
17.4 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.
17.5 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 of the Notes, any benefit
or any legal or equitable right, remedy or claim under this Pledge Agreement.
17.6 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 of Notes 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 of Notes to exercise, or delay in exercising, any right, power or
privilege hereunder shall not preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Trustee or
any Holder of Notes 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
of Notes 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.
17.7 Interpretation of Agreement. All terms not defined herein
or in the Indenture shall have the meaning set forth in the 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.
17.8 Continuing Security Interest; Termination. (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
21
force and effect until the payment in full in cash of the 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 of the Notes and
their respective successors, transferees and assigns.
(b) In addition to the provisions of Section 6(e) hereof and
subject to the provisions of Section 17.10 hereof, this Pledge Agreement shall
terminate upon the payment in full in cash of the Obligations. At such time, and
subject to Section 12, the Trustee shall, pursuant to an Issuer Order, 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.
17.9 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 Sections 14
hereof shall survive the termination of this Pledge Agreement.
17.10 Waivers. The Pledgor waives presentment and demand for
payment of any of the Obligations, protest and notice of dishonor or default
with respect to any of the Obligations, and all other notices to which the
Pledgor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
17.11 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 sufficiency hereof or of any document or security
furnished pursuant hereto. The
22
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. The Trustee shall have no duty to cause any
financing statement or continuation statement to be filed in respect of the
Collateral.
(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 of the Notes, 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 agent for the Holders of the Notes 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.
17.12 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.
17.13 Rights of Holders of the Notes. No Holder of Notes shall
have any independent rights hereunder other than those rights granted to
individual Holders of the Notes pursuant to Section 607 of the Indenture;
provided that nothing in this subsection shall limit any rights granted to the
Trustee under the Notes or the Indenture.
17.14 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
DAMAGES. (a) BOTH THIS PLEDGE AGREEMENT AND THE PLEDGE ACCOUNT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH 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 OF THE
NOTES 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. NOTWITHSTANDING THE FOREGOING, THE MATTERS IDENTIFIED IN 31
C.F.R. ▇▇.▇▇. 357.10 AND 357.11 (AS IN EFFECT ON THE DATE OF THIS PLEDGE
AGREEMENT) SHALL BE GOVERNED SOLELY BY THE LAWS SPECIFIED
23
THEREIN. REGARDLESS OF ANY PROVISION IN ANY OTHER AGREEMENT, FOR PURPOSES OF THE
UCC, NEW YORK SHALL BE DEEMED TO BE THE SECURITIES INTERMEDIARY'S JURISDICTION
AS DEFINED IN SECTIONS 9- 103(6)(d) AND 8-110(e) OF THE UCC AND THE PLEDGE
ACCOUNT (AS WELL AS ANY SECURITIES ENTITLEMENTS RELATED THERETO) SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
(b) THE PLEDGOR HEREBY APPOINTS ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ AS ITS AGENT FOR SERVICE
OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE
AGREEMENT AND FOR ACTIONS BROUGHT UNDER THE U.S. FEDERAL OR STATE SECURITIES
LAWS BROUGHT IN ANY FEDERAL OR STATE COURT LOCATED IN THE CITY OF NEW YORK (EACH
A "NEW YORK COURT"). EACH OF THE PARTIES HERETO SUBMITS TO THE JURISDICTION OF
ANY NEW YORK COURT AND TO THE COURTS OF ITS CORPORATE DOMICILE WITH RESPECT TO
ANY ACTIONS BROUGHT AGAINST IT AS DEFENDANT IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THE PLEDGOR, THE TRUSTEE AND THE HOLDERS OF THE NOTES IN
CONNECTION WITH THIS PLEDGE AGREEMENT, AND EACH OF THE PARTIES HERETO WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LAYING OF VENUE, INCLUDING ANY PLEADING OF
FORUM NON CONVENIENS, WITH RESPECT TO ANY SUCH ACTION AND WAIVES ANY RIGHT TO
WHICH IT MAY BE ENTITLED ON ACCOUNT OF PLACE OF RESIDENCE OR DOMICILE.
(c) THE PLEDGOR AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY
AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF NOTES, 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
24
CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH PROCEEDING, COULD NOT OTHERWISE
BE BROUGHT OR ASSERTED.
(d) THE PLEDGOR AGREES THAT NEITHER ANY HOLDER OF NOTES 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 OF NOTES, AS THE CASE MAY BE, THAT SUCH
LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE TRUSTEE OR SUCH
HOLDERS OF NOTES, 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
OF NOTES IN CONNECTION WITH ANY JUDICIAL PROCESS OR 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 OF NOTES, 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 OF THE NOTES, ON THE OTHER HAND.
17.15 Effectiveness. This Pledge Agreement shall become
effective upon the effectiveness of the Indenture.
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:
STARTEC GLOBAL COMMUNICATIONS
CORPORATION
By:
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
as Trustee
By:
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
as Securities Intermediary, for
purposes of Section 16 only
By:
------------------------------
Name:
Title:
26
SCHEDULE I
PLEDGED SECURITIES
Original
Description CUSIP Final Principal Cost at
of Security No(s). Maturity Amount Closing Date
----------- ------ -------- ------ ------------
U.S. Treasury ▇▇▇▇▇▇▇▇▇ 11/15/98 $8,524,000 $8,531,586
Note
U.S. Treasury ▇▇▇▇▇▇▇▇▇ 05/15/99 $8,759,000 $8,835,314
Note
U.S. Treasury ▇▇▇▇▇▇▇▇▇ 11/15/99 $9,038,000 $9,084,817
Note
U.S. Treasury ▇▇▇▇▇▇▇▇▇ 05/15/00 $9,304,000 $9,451,208
Note
U.S. Treasury ▇▇▇▇▇▇▇▇▇ 11/15/00 $9,600,000 $8,374,752
Strip
U.S. Treasury ▇▇▇▇▇▇▇▇▇ 05/15/01 $9,599,000 $8,139,472
Strip
I-1
EXHIBIT A
FIRST UNION NATIONAL BANK
OFFICER'S CERTIFICATE
Pursuant to Section 3(d) of the Collateral Pledge and Security
Agreement (the "Pledge Agreement") dated as of May 21, 1998 between Startec
Global Communications Corporation, a Maryland corporation (the "Pledgor") and
First Union National Bank, trustee (the "Trustee") for the holders of the
Pledgor's 12% Senior Notes due 2008, the undersigned officer of the Trustee, on
behalf of the Trustee, makes the following certifications to the Pledgor and the
Initial Purchasers. Capitalized terms used and not defined in this Officer's
Certificate have the meanings set forth or referred to in the Pledge Agreement.
1. Substantially contemporaneously with the execution and
delivery of this Officer's Certificate, the Trustee has established the Cash
Collateral Account and the Pledge Account with the Startec Securities
Intermediary. The Trustee is the entitlement holder with respect to the
financial assets on deposit in the Cash Collateral Account and has acquired a
security entitlement with respect to such financial assets. The Trustee will be
the entitlement holder with respect to the Pledged Securities and will acquire a
security entitlement with respect to the Pledged Securities when the Startec
Securities Intermediary indicates by book entry that the Pledged Securities have
been credited to the Pledge Account. Without limiting the generality of the
foregoing, the Pledge Account, the Cash Collateral Account, the Pledged
Securities and the other Collateral are not, and the Trustee's security
entitlement with respect to the financial assets on deposit in the Cash
Collateral Account is not, to the actual knowledge of the corporate trust
officer having responsibility for the administration of this Indenture on behalf
of the Trustee, subject to any Lien granted by or to or arising through or in
favor of any Securities Intermediary (including, without limitation, the Startec
Securities Intermediary, or the Federal Reserve Bank of Richmond).
2. The Trustee has not caused or permitted the Cash Collateral
Account or its Security Entitlement with respect to the financial assets on
deposit in the Cash Collateral Account to become subject to any Lien created by
or arising through the Trustee.
B-1
IN WITNESS WHEREOF, the undersigned officer has executed this
Officer's Certificate on behalf of First Union National Bank, Trustee this 21st
day of May, 1998.
FIRST UNION NATIONAL BANK,
Trustee
By:__________________________________
Name:
Title:
B-2
EXHIBIT B
[Attach Report from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP]
C-1
