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Exhibit 4.7
COLLATERAL PLEDGE AND
SECURITY AGREEMENT
Dated as of _______ __,_____
from
WORLD ACCESS, INC.,
Pledgor
to
FIRST UNION NATIONAL BANK,
Trustee
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TABLE OF CONTENTS
Page
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SECTION 1. Definitions, Appointment; Deposit and Investment................................................................. 2
1.1 Definitions...................................................................................................... 2
1.2 Appointment of the Trustee....................................................................................... 5
1.3 Pledge and Grant of Security Interest............................................................................ 5
SECTION 2. Delivery of Collateral; Establishment of Collateral Accounts..................................................... 6
SECTION 3. Delivery of the Pledged Securities............................................................................... 7
SECTION 4. Delivery of Collateral Other than U.S. Government Obligations.................................................... 8
SECTION 5. Investing of Amounts in the Collateral Accounts.................................................................. 9
SECTION 6. Disbursements.................................................................................................... 9
SECTION 7. Representations and Warranties................................................................................... 11
SECTION 8. Further Assurances............................................................................................... 13
SECTION 9. Covenants........................................................................................................ 13
SECTION 10. Power of Attorney............................................................................................... 14
SECTION 11. No Assumption of Duties; Reasonable Care........................................................................ 14
SECTION 12. Indemnity....................................................................................................... 15
SECTION 13. Remedies upon Event of Default.................................................................................. 15
SECTION 14. Expenses........................................................................................................ 16
SECTION 15. Security Interest Absolute...................................................................................... 16
SECTION 16. WAXS Securities Intermediary's Representations, Warranties and Covenants........................................ 17
SECTION 17. Miscellaneous Provisions........................................................................................ 18
17.1 Notices........................................................................................................... 18
17.2 No Adverse Interpretation of Other Agreements..................................................................... 19
17.3 Severability...................................................................................................... 19
17.4 Headings.......................................................................................................... 19
17.5 Counterpart Originals............................................................................................. 19
17.6 Benefits of Pledge Agreement...................................................................................... 19
17.7 Amendments, Waivers and Consents.................................................................................. 19
17.8 Interpretation of Agreement....................................................................................... 20
17.9 Continuing Security Interest; Termination......................................................................... 20
17.10 Survival Provisions.............................................................................................. 20
17.11 Waivers.......................................................................................................... 20
17.12 Authority of the Trustee......................................................................................... 20
17.13 Final Expression................................................................................................. 21
17.14 Rights of Holders of the Notes................................................................................... 21
17.15 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; WAIVER OF DAMAGES............................... 21
17.16 Effectiveness.................................................................................................... 23
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SCHEDULE I: Pledged Securities....................................................................................... I-1
SCHEDULE II: Pledged Securities....................................................................................... II-1
EXHIBIT A: Officer's Certificate.................................................................................... A-1
EXHIBIT B: Independent Public Accountant's Report .................................................................. B-1
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This Collateral Pledge and Security Agreement (this "Pledge
Agreement") is made and entered into as of_______ __, 1999 by World Access,
Inc., a Delaware corporation (the "Pledgor"), having its principal offices at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, in favor of First
Union National Bank, a national banking association having a corporate trust
office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Department, as trustee (the "Trustee") for the
holders (the "Holders") of the Notes (as defined herein) issued by the Pledgor
under the Indenture referred to below.
W I T N E S S E T H:
WHEREAS, Pledgor and FaciliCom International, Inc., a
Delaware Corporation ("FaciliCom") and certain shareholders of FaciliCom have
entered into an Agreement and Plan of Merger, dated as of August 17, 1999, with
respect to the merger (the "Merger") of FaciliCom with and into the Pledgor and
in connection with the Merger the Pledgor has offered to exchange its 13.25%
Senior Notes due 2008 (the "Notes") and certain other consideration for
FaciliCom's outstanding 10.5% Senior Notes due 2008 (the "FaciliCom Notes").
WHEREAS, the Pledgor and the Trustee (as defined herein),
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 the Notes on the date
hereof;
WHEREAS, pursuant to the Indenture, the Pledgor is required
to deposit Collateral and pledge to the Trustee for the benefit of the Holders
of the Notes, on the Exchange Date (as defined in the Indenture) Pledged
Securities (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 and delivered to the Trustee, to provide
for payment of scheduled interest due on the Notes in an amount (the "Pledge
Amount") equal to the aggregate amount of scheduled interest payments that
would be due on the Notes on or prior to January 15, 2001 assuming an interest
rate of 10.5% instead of 13.25%, to secure the Pledgor's obligation to provide
for payment of the scheduled interest payments due on the Notes on or prior to
January 15, 2001 (such obligation, together with the obligation to repay the
principal, premium and interest on the Notes in the event that the Notes become
due and payable prior to such time as the 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 "WAXS Securities Intermediary"), at its office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Account No.__ (designated "Pledge
Account pledged by World Access, Inc. to First Union
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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 WAXS Securities
Intermediary, at its office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, Account No. [l] (designated "Cash Collateral Account pledged by World
Access, Inc. 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, to secure the Obligations of the Pledgor, the
Pledgor has agreed as part of the exchange of the Notes for the FaciliCom Notes
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.
NOW, THEREFORE, in consideration of the premises herein
contained, and in order to induce the Holders of the Notes to accept the Notes
in exchange for the FaciliCom Notes, 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.
(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).
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"Cash Collateral Account" has the meaning specified in
Preliminary Statements hereof.
"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-l" (or the then equivalent grade) by Standard &
Poor's Ratings Group, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies or (d) overnight
repurchase agreements (including overnight repurchase agreements between the
Trustee and the WAXS 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.
"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).
"Financial Asset" has the meaning specified in UCC ss.
8-102(a)(9).
"FRBB" means Federal Reserve Bank of Richmond.
"FRBB Account" means the participant's securities account
maintained in the name of the WAXS Securities Intermediary by the FRBB.
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"FRBB Member": any Person that is eligible to maintain (and
that maintains) with the FRBB one or more FRBB Member Securities Accounts in
such Person's name.
"FRBB Member Securities Account": in respect of any Person,
an account in the name of such Person at the FRBB, 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(l)(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.
"Pledgor" has the meaning specified in the recital of the
parties hereto.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) 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(l)(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.
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"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) January 15, 2001
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 January 15, 2001.
"Treasury Regulations" means (a) the federal 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 federal
regulations referred to in clause (a) above (as in effect from time to time)
the federal regulations governing other U.S. Government Obligations.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this Pledge Agreement until a successor Trustee shall have
become such, and thereafter "Trustee" shall mean the Person who is then the
Trustee hereunder.
"UCC" means, unless otherwise specified herein, the Uniform
Commercial 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 FRBB and held
for the related Entitlement Holder by a FRBB Member pursuant to the Treasury
Regulations.
"WAXS Securities Intermediary" has the meaning specified in
the preliminary statements.
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.
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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, bank accounts,
Securities Accounts, Money, Proceeds, Investment Property, General Intangibles
or otherwise): (a) the U.S. Government Obligations identified by CUSIP No. in
Schedule I [and Schedule II] to this Pledge Agreement (the "Pledged
Securities"), the scheduled payments of principal and interest of which will be
sufficient to provide for payment of scheduled interest due on the Notes in an
amount equal to the Pledge Amount, (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 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, 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 WAXS Securities
Intermediary, and at all times until the Termination Date, the Pledgor shall
maintain with the WAXS 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
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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 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 Exchange Date, the Pledgor shall [(i) transfer,
or cause to be transferred, to the Trustee an amount equal to $[__] by
depositing all such proceeds into the Cash Collateral Account and (ii)]
transfer, or cause to be transferred, to the Trustee the U.S. Government
Obligation (in the name of the Trustee) listed on Schedule I hereto.
(c) [As soon as possible after receipt of the amount
referred to in Section 2(b)(i), (i) the Trustee shall apply such amount to
purchase the U.S. Government Obligations (in the name of the Trustee) listed on
Schedule II hereto,] and cause the WAXS Securities Intermediary to credit such
U.S. Government Obligations, together with the U.S. Government Obligations
listed on Schedule I hereto, to the Pledge Account as Collateral hereunder; and
(ii) the Trustee shall ensure that, on the Settlement Date, the FRBB credits in
the FRBB 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 shall become the Entitlement Holder of a
Security Entitlement to the Pledged Securities through action by the WAXS
Securities Intermediary, as confirmed (in writing or electronically or
otherwise in accordance with standard industry practice) to the Trustee by the
WAXS 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)
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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 WAXS
Securities Intermediary shall establish the Pledge Account on the books of the
WAXS Securities Intermediary as Securities Account 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
WAXS Securities Intermediary at the FRBB, as Securities Intermediary. Upon
transfer of the Pledged Securities to the Trustee (or the Trustee's acquisition
of a Security Entitlement thereto), as confirmed to the WAXS Securities
Intermediary by FRBB or another securities intermediary, the WAXS 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 WAXS 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 a
nationally recognized firm of independent public accountants, selected by the
Pledgor, 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
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the UCC of the State of New York, [__] and the State of Georgia, 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 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 WAXS
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 WAXS 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
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Investments"). Except as otherwise provided in Sections 11 and 12, the 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 scheduled interest payments on the Notes on or prior to January 15,
2001, 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 (or, with respect to the interest payment date on January 15, 2001, in
part) 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 or portion thereof from proceeds
of the Collateral or such Pledgor Funds or both, 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 contravene any provision of applicable
law or Certificate of Incorporation or the By-laws of the Pledgor or any
material agreement or other material instrument binding upon the pledgor or any
of its subsidiaries or any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Pledgor or any of its subsidiaries
or result in the creation or imposition of any Lien on any assets of the
Pledgor, except for the security interest granted under the Pledge Agreement.
(c) At least one Business Day prior to the due date of any
of the scheduled interest payments on the Notes on or prior to January 15,
2001, the Pledgor covenants to give the Trustee (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
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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 opinion of a nationally
recognized firm of independent public accountants selected by the Pledgor, to
provide for payment of the scheduled interest due on the Notes in an amount
equal to the Pledge Amount (or, in the event an interest payment or payments
have been made, the Pledge Amount less an amount equal to any interest
previously paid) the Trustee shall release to the Pledgor, at the Pledgor's
written request, accompanied by an opinion prepared by a nationally recognized
firm of independent public accountants, 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, Section 13, this
Section 6 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 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
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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 contravene any provision of applicable law or the Certificate of
Incorporation or By-laws of the Pledgor or any material agreement or other
material instrument binding upon the Pledgor or any of its subsidiaries or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Pledgor or any of its subsidiaries, or result in the
creation or imposition of any Lien on any assets of the Pledgor, except for the
security interests granted under this Pledge Agreement; no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required (i) for the performance by the Pledgor of its obligations
under this Pledge Agreement, (ii) for the pledge by the Pledgor of the
Collateral pursuant to this Pledge Agreement or (iii) except for any such
consents, approvals, authorizations or orders required to be obtained by the
Trustee (or the Holders) for reasons other than the consummation of this
transaction, for the exercise by the Trustee of the rights provided for in this
Pledge 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) constitutes a valid and binding agreement of the
Pledgor, enforceable against the Pledgor in accordance with its terms, except
as (i) the enforceability hereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, preference, reorganization, moratorium or similar laws
now or hereafter in effect relating to or affecting 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.
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(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 substance reasonably
satisfactory to the Trustee, deliver any instruments to the Trustee and take
any other actions that are necessary or desirable to perfect, continue the
perfection of, or protect the first priority of the Trustee's security interest
in and to the Collateral, to protect the Collateral against the rights, claims
or interests of third persons (other than any such rights, claims or interests
created by or arising through the Trustee) or to effect the purposes of this
Pledge Agreement. The Pledgor also hereby authorizes the Trustee to file any
financing or continuation statements in the United States with respect to the
Collateral without the signature of the Pledgor (to the extent permitted by
applicable law). The Pledgor will promptly pay all reasonable costs incurred in
connection with any of the foregoing within 45 days of receipt of an invoice
therefor. The Pledgor also agrees, whether or not requested by the Trustee, to
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).
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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 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 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 sole 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.
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
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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.
(a) The Pledgor shall indemnify, hold harmless and defend
the Trustee and its directors, officers, agents, employees and attorneys from
and against any and all claims, actions, obligations, liabilities and expenses,
including reasonable defense costs, reasonable investigative fees and costs,
and reasonable legal fees and damages arising from the Trustee's performance as
Trustee under this Pledge Agreement, except to the extent that such claim,
action, obligation, liability or expense is directly attributable to the bad
faith, gross negligence or wilful misconduct of such indemnified person. The
provisions of this Section 12 shall survive termination of this Pledge
Agreement and the resignation and removal of the Trustee.
(b) The Pledgor shall indemnify, hold harmless and defend
the WAXS Securities Intermediary and its directors, officers, agents, employees
and attorneys from and against any and all claims, actions, obligations,
liabilities and expenses, including reasonable defense costs, reasonable
investigative fees and costs, and reasonable legal fees and damages arising
from the WAXS Securities Intermediary's performance as WAXS Securities
Intermediary under this Pledge Agreement, except to the extent that such claim,
action, obligation, liability or expense is directly attributable to the bad
faith, gross negligence or wilful misconduct of such indemnified person. The
provisions of this Section 12 shall survive termination of this Pledge
Agreement and the resignation and removal of the WAXS Securities Intermediary.
SECTION 13. Remedies upon Event of Default. If any Event of
Default under the Indenture or default hereunder (any such Event of Default or
default being referred to in this Pledge Agreement as an "Event of Default")
shall have occurred and be continuing:
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(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 in effect in the States of New York and Georgia at
that time. In addition, with respect to any Collateral that shall then be in or
shall thereafter come into the possession or custody of the Trustee, the
Trustee may and, at the direction of the Holders of a majority in aggregate
principal amount of the Notes then outstanding, shall appoint a broker or other
expert to sell or cause the same to be sold at any broker's board or at public
or private sale, in one or more sales or lots, at such price or prices such
broker or other expert may deem best, for cash or on credit or for future
delivery, without assumption of any credit risk. The purchaser of any or all
Collateral so sold shall thereafter hold the same absolutely, free from any
claim, encumbrance or right of any kind whatsoever created by or through the
Pledgor. Unless any of the Collateral threatens, in the reasonable judgment of
the Trustee, to decline speedily in value, the Trustee will give the Pledgor
reasonable notice of the time and place of any public sale thereof, or of the
time after which any private sale or other intended disposition is to be made.
Any sale of the Collateral conducted in conformity with reasonable commercial
practices of banks, insurance companies, commercial finance companies, or other
financial institutions disposing of property similar to the Collateral shall be
deemed to be commercially reasonable. Any requirements of reasonable notice
shall be met if such notice is mailed to the Pledgor as provided in Section
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.
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
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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. WAXS Securities Intermediary's Representations,
Warranties and Covenants. The WAXS 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
FRBB Member. In furtherance of the foregoing the WAXS Securities Intermediary
hereby:
(a) represents and warrants that it is a national banking
association 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;
(b) represents and warrants that it maintains a FRBB
Member Securities Account with the FRBB;
(c) agrees that the Pledge Account shall be an account to
which Financial Assets may be credited, and the WAXS 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;
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(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 WAXS 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 set-off in favor of the WAXS Securities Intermediary, except as may be
expressly permitted under the Indenture (and the WAXS 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 WAXS Securities Intermediary holds
such Collateral or any Security Entitlement thereto);
(h) agrees, so long as it serves as WAXS 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 WAXS Security Intermediary's jurisdiction, for
purposes of Section 8-110(e) 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:
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if to the Pledgor:
World Access, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Long ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
5300 One Peachtree Center
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Trustee:
First Union National Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
17.2 No Adverse Interpretation of Other Agreements. This
Pledge Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor or any subsidiary thereof. No such pledge, security or
debt agreement (other than the Indenture) may be used to interpret this Pledge
Agreement.
17.3 Severability. The provisions of this Pledge Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Pledge Agreement in any jurisdiction.
17.4 Headings. The headings in this Pledge Agreement have
been inserted for convenience of reference only, are not to be considered a
part hereof and shall in no way modify or restrict any of the terms or
provisions hereof.
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17.5 Counterpart Originals. This Pledge Agreement may be
signed in two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement.
17.6 Benefits of Pledge Agreement. Nothing in this Pledge
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder, and the Holders of the Notes, any
benefit or any legal or equitable right, remedy or claim under this Pledge
Agreement.
17.7 Amendments, Waivers and Consents. Any amendment or
waiver of any provision of this Pledge Agreement and any consent to any
departure by the Pledgor from any provision of this Pledge Agreement shall be
effective only if made or duly given in compliance with all of the terms and
provisions of the Indenture, and neither the Trustee nor any Holder 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.
17.8 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.
17.9 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 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.
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(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.
17.10 Survival Provisions. All representations, warranties
and covenants of the Pledgor contained herein shall survive the execution and
delivery of this Pledge Agreement, and shall terminate only upon the
termination of this Pledge Agreement. The obligations of the Pledgor under
Sections 12 and 14 hereof shall survive the termination of this Pledge
Agreement.
17.11 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.
17.12 Authority of the Trustee.
(a) The Trustee shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Trustee by the term
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 Trustee
and its directors, officers, employees, attorneys and agents shall be entitled
to rely on any communication, instrument or document 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
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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.
17.13 Final Expression. This Pledge Agreement, together with
the Indenture and any other agreement executed in connection herewith, is
intended by the parties as a final expression of this Pledge Agreement and is
intended as a complete and exclusive statement of the terms and conditions
thereof.
17.14 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.
17.15 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL; WAIVER OF DAMAGES.
(a) THIS PLEDGE AGREEMENT 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.
▇▇.▇▇. 357.0 AND 357.11 (AS IN EFFECT ON THE DATE OF THIS PLEDGE AGREEMENT)
SHALL BE GOVERNED SOLELY BY THE LAWS SPECIFIED THEREIN.
(b) THE PLEDGOR HEREBY APPOINTS CORPORATION SERVICE
COMPANY 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
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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 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
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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.
17.16 Effectiveness. This Pledge Agreement shall become
effective upon the effectiveness of the Indenture.
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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:
WORLD ACCESS, INC.
By:
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
Trustee:
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:
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SCHEDULE I
PLEDGED SECURITIES
Description Original
of Debt CUSIP No(s). Final Maturity Principal Amount
------- ------------ -------------- ----------------
I-1
30
SCHEDULE II
PLEDGED SECURITIES
Description Original Cost at
of Debt CUSIP No(s). Final Maturity Principal Amount Exchange Date
------- ------------ -------------- ---------------- -------------
I-2
31
EXHIBIT A
FIRST UNION NATIONAL BANK
OFFICER'S CERTIFICATE
Pursuant to Section 3 of the Collateral Pledge and Security Agreement
(the "Pledge Agreement") dated as of _______ __, ____ between World Access,
Inc. a Delaware corporation (the "Pledgor") and First Union National Bank,
trustee (the "Trustee") for the holder's of the Pledgor's 13 1/4% Senior Notes
Due 2009, the undersigned officer of the Trustee, on behalf of the Trustee,
makes the following certifications to the Pledgor and the initial holders of
the Notes. 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
acquired its security entitlement to the Pledged Securities
or through a "securities account" (as defined in Section
8-501(a) of the UCC) maintained by the Trustee at the WAXS
Securities Intermediary, for value and without notice of any
Adverse Claim thereto. 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 to the Collateral 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 Trustee at the WAXS
Securities Intermediary, or the Federal Reserve Bank of
Richmond) through which the Trustee derives its security
entitlement to the Collateral.
2. The Trustee has not caused or permitted the Collateral
Account or its Security Entitlement thereto to become subject
to any Lien created by or arising through the Trustee.
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IN WITNESS WHEREOF, the undersigned officer has executed this
Officer's Certificate on behalf of First Union National Bank, Trustee this ___
day of _______, ____.
FIRST UNION NATIONAL BANK,
Trustee
By:
------------------------------
----------------------------
Name:
Title:
A-2
33
EXHIBIT B
INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES
To the Board of Directors
World Access, Inc.
We understand that $________ 13.25% Senior Notes due 2008 ("Notes") of World
Access, Inc. (the "Issuer"), are to be issued on __________________. We also
understand that First Union National Bank (the "Trustee") will hold the
Securities listed on the attached Annex I (the "Securities") pursuant to
Section 6 of the Collateral Pledge and Security Agreement, between the Issuer
and the Trustee, dated as of ___________________ (the "Pledge Agreement").
We have been requested by the Issuer and the Trustee (collectively, the
"Intended Users") to prove the arithmetic accuracy of the computations shown on
the attached schedules, prepared by the Issuer.
We have performed the procedures enumerated below, which were agreed to by the
Intended Users, solely to assist you and the Trustee with respect to proving
the arithmetic accuracy of the computations shown on the attached schedules.
This engagement to apply agreed-upon procedures was performed in accordance
with standards established by the American Institute of Certified Public
Accountants. The sufficiency of the procedures is solely the responsibility of
the specified users of the report. Consequently, we make no representations
regarding the sufficiency of the procedures described below either for the
purpose for which this report has been requested or for any other purpose. The
procedures that we performed and our findings are as follows:
1. We have proved the arithmetic accuracy of the computations of the
Pledge Amount (as defined in the Pledge Agreement), as shown on the
attached Annex II, which was prepared by the Issuer.
2. We have proved the arithmetic accuracy of the computation of the
scheduled receipts of maturing principal and interest to be received
from the Securities and cash on deposit as shown on the attached Annex
I, which was prepared by the Issuer. Other than proving such
arithmetic accuracy, we have not confirmed or otherwise verified the
information on that schedule.
3. We recomputed each amount in the net cash flow column by deducting
each amount in the interest payment column from each amount in the
total available column, individually and in total.
In performing the above calculations, we have relied solely on the data set
forth in the attached schedules prepared and provided to us by the Issuer. The
scope of our engagement did not include
B-1
34
verification of any underlying data, assumptions or definitions necessary to
derive the calculations. Such underlying data, assumptions and definitions
including, but are not limited to the following:
1. The principal amounts, coupon rates, and the related maturities
for the Securities and Notes; and
2. Interest start dates, maturity dates, and interest payment dates
for the Securities and the Notes.
We were not engaged to, and did not, perform and audit, the objective of which
would be the expression of an opinion on the specified elements, accounts, or
items included in the attached schedules. Accordingly, we do not express such
an opinion. Had we performed additional procedures, other matters might have
come to our attention that would have been reported to you.
This report is intended solely for the use of the Intended Users listed above
and should not be used by those who have not agreed to the procedures and taken
responsibility for the sufficiency of the procedures for their purposes.
Dated:
-----------
B-1
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ANNEX I
Coupon Maturity Par Coupon Cash Total Interest Net Cash
Security Rate Date Amount Interest Flow Available(2) Payment(3) Flow(4)
(1)Coupon interest is calculated assuming a 180-day semi-annual period and a
360 day year.
(2)Total Available for each period is equal to the Cash Flow for the period
plus Net Cash Flow from the previous period. (3) See Annex I attached
hereto.
(4)Net Cash flow for each period is equal to Total Available for the period
less the Interest Payment for each period.
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ANNEX II
Interest Payment Date Assumed
on the Notes Principal Interest Rate Interest Payment (1)
--------------------- ----------- --------------- ----------------------
10.5%
10.5%
10.5%
10.5%
10.5%
10.5%
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(1) Interest payments for each period are calculated assuming a 180-day semi-
annual period and 360-day year.
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