EXHIBIT 4.2
EXECUTION COPY
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SECURITY AND PLEDGE AGREEMENT
DATED AS OF
OCTOBER 9, 2002
AMONG
FLAG TELECOM GROUP LIMITED,
THE OTHERS GRANTORS HERETO
AND
THE BANK OF NEW YORK
AS TRUSTEE
AND
THE BANK OF NEW YORK
AS COLLATERAL TRUSTEE
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.......................................................................1
Section 1.1 Definitions.................................................................1
ARTICLE II GRANT OF SECURITY INTERESTS.......................................................6
Section 2.1 Grant of Security Interests.................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES....................................................6
Section 3.1 No Other Lien...............................................................6
Section 3.2 Perfected Liens; Priority...................................................7
Section 3.3 Security Collateral.........................................................7
Section 3.4 Jurisdiction of Incorporation; Chief Executive Office; Records..............8
Section 3.5 Location of Inventory and Equipment.........................................8
Section 3.6 Receivables.................................................................8
Section 3.7 Farm Products...............................................................8
Section 3.8 Intellectual Property Collateral............................................8
Section 3.9 Deposit Accounts............................................................9
Section 3.10 Foreclosure Value...........................................................9
ARTICLE IV COVENANTS.........................................................................9
Section 4.1 Further Assurances..........................................................9
Section 4.2 Delivery of Security Collateral............................................10
Section 4.3 Change of Jurisdiction of Incorporation or Organization....................11
Section 4.4 Change of Location of Inventory and Equipment..............................11
Section 4.5 Additional Deposit Accounts................................................11
Section 4.6 Change of Name; Identity or Corporate Structure............................12
Section 4.7 Delivery of Instruments and Chattel Paper..................................12
Section 4.8 Maintain and ▇▇▇▇ Records and Receivables..................................12
Section 4.9 [Reserved].................................................................12
Section 4.10 Right of Inspection........................................................12
Section 4.11 Receivables................................................................13
Section 4.12 Contracts..................................................................13
Section 4.13 Warehouse Receipts Non-negotiable..........................................13
Section 4.14 No Impairment..............................................................13
Section 4.15 Limitations On Dispositions of Collateral..................................13
Section 4.16 Notice.....................................................................13
Section 4.17 Performance by Collateral Trustee of Grantor's Obligations; Reimbursement..14
Section 4.18 Additional Insured.........................................................14
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE V SPECIAL PROVISIONS REGARDING RECEIVABLES AND CONTRACTS...........................14
Section 5.1 Grantor Remains Liable Under Receivables and Contracts.....................14
Section 5.2 Notice to Account Debtors and Contracting Parties..........................15
Section 5.3 Collections on Receivables and Contracts...................................15
ARTICLE VI SPECIAL PROVISIONS REGARDING SECURITY COLLATERAL.................................15
Section 6.1 Voting Rights; Dividends; Etc..............................................15
Section 6.2 Additional Shares..........................................................17
ARTICLE VII COLLATERAL ACCOUNT...............................................................17
Section 7.1 Collateral Account.........................................................17
Section 7.2 Deposit of Proceeds........................................................17
Section 7.3 Investment and Currency Exchange...........................................17
ARTICLE VIII POWER OF ATTORNEY................................................................18
Section 8.1 Collateral Trustee's Appointment as Attorney-in-fact.......................18
ARTICLE IX REMEDIES; RIGHTS UPON DEFAULT....................................................20
Section 9.1 Rights and Remedies Generally..............................................20
Section 9.2 Collection of Receivables and Other Proceeds...............................20
Section 9.3 Direct Grantor to Dispose of Collateral....................................20
Section 9.4 Collateral Account.........................................................20
Section 9.5 Possession of Collateral...................................................21
Section 9.6 Disposition of the Collateral..............................................21
Section 9.7 Recourse...................................................................22
Section 9.8 Expenses; Attorneys' Fees..................................................22
Section 9.9 Limitation On Duties Regarding Preservation of Collateral..................22
Section 9.10 Waiver of Claims...........................................................23
Section 9.11 Discontinuance of Proceedings..............................................24
Section 9.12 Restoration of Positions...................................................24
Section 9.13 Instruction From Trustee...................................................24
ARTICLE X INDEMNITY........................................................................25
Section 10.1 Indemnity and Expenses.....................................................25
Section 10.2 Indemnity Obligations Secured by Collateral; Survival......................26
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE XI MISCELLANEOUS....................................................................26
Section 11.1 Governing Law..............................................................26
Section 11.2 Submission to Jurisdiction.................................................26
Section 11.3 Waiver of Trial by Jury....................................................26
Section 11.4 Limitation of Liability....................................................27
Section 11.5 Notices....................................................................27
Section 11.6 Successors and Assigns.....................................................27
Section 11.7 Waivers and Amendments.....................................................27
Section 11.8 No Waiver; Remedies Cumulative.............................................28
Section 11.9 Termination; Release.......................................................28
Section 11.10. Additional Grantors........................................................28
Section 11.11 Counterparts...............................................................28
Section 11.12 Effectiveness..............................................................29
Section 11.13 Headings Descriptive.......................................................29
Section 11.14 Severability...............................................................39
Section 11.15 Survival...................................................................39
Section 11.16 Powers Coupled With an Interest............................................39
Section 11.17 Acknowledgement............................................................39
Section 11.18 Consent to Service of Process..............................................39
Section 11.19 Incorporation by Reference.................................................30
ANNEXES
Annex I Initial Perfection Collateral
Annex II Account Control Agreement
SCHEDULES
Schedule 3.2 Filing Offices For UCC Financing Statements
Schedule 3.3 Security Collateral
Schedule 3.4 Jurisdictions Of Incorporation and Locations Of Chief
Executive Offices
Schedule 3.5 Locations Of Equipment and Inventory
Schedule 3.8a Intellectual Property
Schedule 3.9 Deposit Accounts
Schedule 3.10 Foreclosure Value Of Assets
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SECURITY AND PLEDGE AGREEMENT
This
SECURITY AND PLEDGE AGREEMENT, dated as of October 9, 2002, is made
among each of the undersigned (each, a "GRANTOR") and The Bank of
New York, as
collateral trustee (the "COLLATERAL TRUSTEE") and as trustee (the "TRUSTEE") for
the holders of Securities issued under the Indenture referred to below.
RECITALS:
WHEREAS, FLAG Telecom Group Limited (the "COMPANY"), Guarantors and the
Trustee have entered into an Indenture (as the same may be amended, supplemented
or otherwise modified from time to time, the "INDENTURE"), dated as of October
9, 2002 pursuant to which, among other things, the Company has provided for the
authentication and delivery of $45,000,000 aggregate principal amount of the
Company's Series A Notes Due 2005, $4,000,000 aggregate principal amount of the
Company's Series B Notes Due 2004 and $1,250,000 aggregate principal amount of
the Company's Series C Notes Due 2004 (together with any additional securities
issuable thereunder, the "SECURITIES"), and the Collateral Trustee has agreed to
act as collateral trustee for the benefit of the holders of the Securities (the
"HOLDERS");
NOW, THEREFORE, to secure the prompt payment in full of the Secured
Obligations (as hereinafter defined) and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Grantors have agreed to pledge and grant a security interest in the Collateral
(as hereinafter defined) as security for the Secured Obligations. Accordingly
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. Capitalized terms used herein but not otherwise
defined herein or therein shall have the meanings ascribed thereto in the
Indenture. The following terms shall have the following meanings:
"ACCOUNT DEBTOR" shall mean the person who is obligated on a Receivable.
"ACCOUNTS" shall mean "accounts" as such term is defined in Section
9-102(a)(2) of the UCC.
"AGREEMENT" shall mean this
Security and Pledge Agreement, as the same may
from time to time be amended, supplemented or otherwise modified.
"BANKS" shall mean the banks with which the Deposit Accounts are
maintained.
"CHARGE AGREEMENTS" shall mean the debenture from each of the Guarantors
organized under the laws of the United Kingdom and the mortgage and charge
agreement from each of the Guarantors organized under the laws of Ireland, each
in favor of the Collateral Trustee named therein.
"CHATTEL PAPER" shall mean "chattel paper" as such term is defined in
Section 9-102(a)(11) of the UCC.
"COLLATERAL" shall have the meaning set forth in Section 2.1.
"COLLATERAL ACCOUNT" shall mean the account(s) (which may be a securities
account and which account shall be an interest bearing account) maintained
pursuant to this Agreement by the Collateral Trustee, and all funds, investment
property and instruments or other items from time to time credited to such
account(s) and all interest thereon.
"COLLATERAL DOCUMENTS" shall have the meaning set forth in the Indenture.
"COLLATERAL RECORDS" shall mean books, records, computer software, computer
printouts, customer lists, blueprints, technical specifications, manuals, and
similar items that relate to any Collateral other than such items obtained under
license or franchise agreements which prohibit assignment or disclosure of such
items.
"CONTRACTS" shall mean all contracts to which each Grantor now is, or
hereafter will be, bound, or a party, beneficiary or assignee and all other
instruments, agreements and documents executed and delivered with respect to
such contracts, and all revenues, rentals, Proceeds and other sums of money due
and to become due from any of the foregoing, as the same may be modified,
supplemented or amended from time to time in accordance with their terms.
"CONTROL" shall have the meaning ascribed to it in Section 3.1 hereof.
"CONTROL AGREEMENT" shall mean an agreement among the Collateral Trustee,
the respective Grantors and each Bank substantially in the form of Annex II
hereto.
"CORPORATE CHANGES" shall have the meaning ascribed to it in Section 4.16
hereof.
"COPYRIGHTS" shall have the meaning ascribed to it in Section 3.8(a)(3).
"DEBTOR TERMINATION STATEMENT" shall have the meaning ascribed to it in
Section 4.14 hereof.
"DEPOSIT ACCOUNTS" shall mean the Collateral Account and any deposit
account, including without limitation, "deposit accounts" as such term is
defined in Section 9-102(a)(29) of the UCC and any other deposit or securities
account, together with any funds, instruments or other items credited to any
such account from time to time, and all interest thereon.
"DOCUMENTS" shall mean "documents" as such term is defined in Section
9-102(a)(30) of the UCC.
"EXCLUDED ASSETS" shall have the meaning ascribed to it in Section 2.1
hereof.
"EQUIPMENT" shall mean "equipment" as such term is defined in Section
9-102(a)(33) of the UCC, including, without limitation, machinery, manufacturing
equipment, data processing equipment, computers, office equipment, furniture,
appliances, tools, furnishings, fixtures,
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vehicles, motor vehicles, and any manuals, instructions, blueprints, computer
software and similar items which relate to the above, and any and all additions,
substitutions and replacements of any of the foregoing, wherever located,
together with all improvements thereon and all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
"EVENT OF DEFAULT" shall have the meaning assigned thereto in the
Indenture.
"FIXTURES" shall mean "fixtures" as such term is defined in Section
9-102(a)(41) of the UCC.
"GENERAL INTANGIBLES" shall mean "general intangibles" as such term is
defined in Section 9-102(a)(42) of the UCC, including, without limitation,
rights to the payment of money (other than Receivables), Trademarks, Copyrights,
Patents and Contracts, licenses and franchises, partnership interests, joint
venture interests, federal income tax refunds, computer software, databases,
inventions, designs, trade secrets, goodwill, tradenames, fictitious business
names, business names, company names, business identifiers, trade styles and
service marks (whether or not registered), proprietary rights, customer lists,
supplier and customer contracts, sale orders, correspondence, advertising
materials, payments due in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of any property, reversionary interests in
pension and profit-sharing plans and reversionary, beneficial and residual
interests in trusts, credits with and other claims against any Person, insurance
policies and all rights and claims therein or thereunder (including prepaid and
unearned premiums), including insurance against casualty (including by fire or
earthquake) or liability (including against environmental cleanup costs), title
insurance, business interruption insurance and builders risk insurance, whether
covering personal or real property, together with any collateral for any of the
foregoing and the rights under any security agreement granting a security
interest in such collateral.
"INSTRUMENT" shall mean "instrument" as such term is defined in Section
9-102(a)(47)of the UCC.
"INTELLECTUAL PROPERTY" shall mean, collectively, the Copyrights, the
Patents and the Trademarks.
"INTEREST RATE AGREEMENTS" shall mean interest rate or currency protection
or hedging arrangements, including without limitation, caps, collars, floors,
forwards and any other similar or dissimilar interest rate or currency exchange
agreements or other interest rate or currency hedging arrangements.
"INVENTORY" shall mean "inventory" as such term is defined in Section
9-102(a)(48) of the UCC, including, without limitation, all goods (whether such
goods are in the possession of a Grantor or of a bailee or other Person for
sale, lease, storage, transit, processing, use or otherwise and whether
consisting of whole goods, spare parts, components, supplies, materials or
consigned or returned or repossessed goods), including without limitation, all
such goods whether raw, in process or finished, all materials usable in
processing the same and all documents of title covering any inventory,
including, but not limited to, work in process, materials used or consumed in
such Grantor's business, now owned or hereafter acquired or manufactured by such
Grantor and held for sale in the ordinary course of its business; all present
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and future substitutions therefor, parts and accessories thereof and all
additions thereto; and all proceeds thereof and products of such inventory in
any form whatsoever.
"INVESTMENT PROPERTY" shall mean "investment property" as such term is
defined in Section 9-102(a)(49) of the UCC and including all "financial assets"
and "security entitlements" as each term is defined in Section 8-102 of the UCC.
"LIENS" shall have the meaning set forth in the Indenture.
"MONEY" shall mean "money" as such term is defined in Section 1-201(24) of
the UCC.
"MOTOR VEHICLES" shall mean motor vehicles, tractors, trailers and other
like property, if title thereto is governed by a certificate of title ownership.
"PATENTS" shall have the meaning ascribed to it in Section 3.8(a)(1).
"PERMITTED LIENS" has the meaning set forth in the Indenture.
"PERSON" means an individual, a corporation, a partnership, a limited
liability company, a trust, an unincorporated organization or any other entity
or organization, including a government or any agency or political subdivision
thereof.
"PLEDGED NOTES" shall mean any promissory notes listed on Schedule 3.3
hereto and all promissory notes at any time issued to a Grantor.
"PLEDGED STOCK" shall mean any shares of Capital Stock listed on Schedule
3.3 hereto, together with any other shares, stock certificates, options or
rights of any nature whatsoever in respect of the Capital Stock of any Person
that may be issued or granted to, or held by, a Grantor while this Agreement is
in effect.
"PROCEEDS" shall mean "proceeds" as such term is defined in Section
9-102(a)(64) of the UCC.
"RECEIVABLES" shall mean all rights to payment for goods sold or leased or
services rendered, whether or not earned by performance and all rights in
respect of an Account Debtor, including, without limitation, all such rights in
which a Grantor has any right, title or interest by reason of the purchase
thereof by such Grantor, and including, without limitation, all such rights
constituting or evidenced by any Account, Chattel Paper, Instrument, General
Intangible, note, contract, invoice, purchase order, draft, acceptance,
intercompany account, security agreement, or other evidence of indebtedness or
security, together with (a) any collateral assigned, hypothecated or held to
secure any of the foregoing and the rights under any security agreement granting
a security interest in such collateral, (b) all goods, the sale of which gave
rise to any of the foregoing, including, without limitation, all rights in any
returned or repossessed goods and unpaid seller's rights, (c) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing and (d) all
powers of attorney for the execution of any evidence of indebtedness or security
or other writing in connection therewith.
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"RECEIVABLES RECORDS" shall mean (a) all original copies of all documents,
instruments or other writings evidencing the Receivables, (b) all books,
correspondence, credit or other files, records, ledger sheets or cards,
invoices, and other papers relating to Receivables, including without
limitation, all tapes, cards, computer tapes, computer discs, computer runs,
record keeping systems and other papers and documents relating to the
Receivables, whether in the possession or under the control of a Grantor or any
computer bureau or agent from time to time acting for such Grantor or otherwise,
(c) all evidences of the filing of financing statements and the registration of
other instruments in connection therewith and amendments, supplements or other
modifications thereto, notices to other creditors or secured parties, and
certificates, acknowledgments, or other writings, including, without limitation,
charge or Lien search reports, from filing or other registration officers, (d)
all credit information, reports and memoranda relating thereto, and (e) all
other written or non-written forms of information related in any way to the
foregoing or any Receivable.
"SECURED OBLIGATIONS" shall mean each Grantor's obligations under the
Indenture, the Securities, the Subsidiary Guaranties and the Collateral
Documents.
"SECURITY COLLATERAL" shall mean:
(i) any Pledged Stock and the certificates representing the
Pledged Stock, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Pledged Stock;
(ii) any Pledged Notes and the instruments evidencing the Pledged
Notes, and all interest, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Notes;
(iii) all additional shares of Capital Stock (of any issuer of the
Pledged Stock) from time to time acquired by each Grantor in any manner,
and the certificates representing such additional shares, and all
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all of such shares; and
(iv) all additional indebtedness from time to time owed to each
Grantor by any obligor of the Pledged Notes and the instruments evidencing
such indebtedness, and all interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such indebtedness.
"SECURITY INTEREST" shall mean "Security Interest" as such term is defined
in Section 1-201(37) of the UCC, and the other Liens in the Collateral granted
pursuant to Section 2.1.
"TRADEMARKS" shall have the meaning ascribed to it in Section 3.8(a)(2).
"UCC" shall mean the Uniform Commercial Code as in effect from time to time
in the State of
New York.
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ARTICLE II
GRANT OF SECURITY INTERESTS
Section 2.1 GRANT OF SECURITY INTERESTS. As security for the prompt and
complete payment and performance in full of all the Secured Obligations when due
(whether at stated maturity, by acceleration or otherwise), each Grantor hereby
grants to the Collateral Trustee a security interest in and lien on all of such
Grantor's right, title and interest in, to and under the all of its assets of
any kind or character, including, without limitation, all Accounts, Capital
Stock, Chattel Paper, Contracts, Equipment, Fixtures, General Intangibles,
Instruments, Intellectual Property, Interest Rate Agreements, Inventory,
Investment Property, Money, Motor Vehicles, Pledged Notes, Pledged Stock,
Receivables, Receivable Records and Security Collateral, including, without
limitation, the assets listed opposite such Grantor's name on Annex I hereto, in
each case, whether now owned or existing or hereafter acquired or arising and
wherever located and any and all Proceeds and products of the foregoing, but
excluding the Excluded Assets (collectively, the "COLLATERAL"). For purposes
hereof, the term "EXCLUDED ASSETS" means, collectively, (i) the assets of the
Grantors pledged as of the Issue Date pursuant to the Liens listed on Schedule
8.04 of the Indenture and (ii) assets of the Grantors subjected after the Issue
Date to Liens incurred pursuant to and in compliance with Section 8.04(12) of
the Indenture, in each case to the extent of such Liens for as long as such
Liens exist.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Grantor hereby represents and warrants to the Collateral Trustee,
which representations and warranties shall survive execution and delivery of
this Agreement, as follows:
Section 3.1 NO OTHER LIEN.
(a) Each Grantor owns and, as to all of its Collateral, whether
now existing or hereafter acquired, will continue to own, each item of its
Collateral free and clear of any and all Liens, rights or claims of all other
Persons other than Permitted Liens; such Grantor has the right to pledge, sell,
assign or transfer such Collateral, subject to the terms of the Indenture, and
such Grantor shall defend such Collateral against all claims and demands of all
Persons (except beneficiaries of Permitted Liens) at any time claiming the same
or any interest therein adverse to the Collateral Trustee.
(b) No effective financing statement or other evidence of a Lien
covering or purporting to cover any of such Grantor's Collateral is or will be
on file in any public office other than (i) financing statements filed or to be
filed in connection with the Security Interests and liens granted to the
Collateral Trustee hereunder and under the other Collateral Documents, (ii)
financing statements or equivalent instruments for which proper termination
statements have been delivered to the Collateral Trustee for filing and (iii)
financing statements or equivalent instruments filed in connection with
Permitted Liens. None of the Grantors have consented to
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any other Person other than the Collateral Trustee having "control" (within the
meaning of Section 9-104 of the UCC) over the Collateral Account or any other
Collateral.
Section 3.2 PERFECTED LIENS; PRIORITY.
(a) The Security Interests in such Grantor's Collateral granted to
the Collateral Trustee hereunder constitute valid Security Interests in such
Collateral.
(b) (i) Upon filing the financing statements or equivalent
instrument listed in Schedule 3.2 naming each Grantor as "debtor" and the
Collateral Trustee as "secured party" and describing such Grantor's Initial
Perfection Collateral in the filing offices set forth on Schedule 3.2 hereto,
(ii) in the case of such Grantor's Deposit Account, if any (other than the
Collateral Account which does not require the execution of a Control Agreement
to be perfected), upon the execution by each of the Banks of a counterpart of
the Control Agreement in the form of Annex II hereto with respect to a Deposit
Account held by a Bank domiciled in the United States (or upon taking equivalent
steps with respect to a Deposit Account held by a Bank not domiciled in the
United States), and (iii) to the extent not subject to Article 9 of the UCC, in
the case of such Grantor's Security Collateral, if any, upon the delivery of
such Grantor's Security Collateral and Investments, to the Collateral Trustee,
then in each instance, the Security Interests in such Grantor's Collateral
described in subsections (i), (ii) and (iii) above granted to the Collateral
Trustee hereunder will constitute perfected first priority Security Interests
therein superior and prior to all Liens (other than Permitted Liens pursuant to
Section 8.04(4)(a), (b) or (c) of the Indenture and the Trustee's lien pursuant
to Section 12.06 of the Indenture), rights or claims of all other Persons;
PROVIDED, HOWEVER, that the foregoing is accurate only to the extent that a
Security Interest can be perfected by such filings or delivery.
Section 3.3 SECURITY COLLATERAL.
(a) Such Grantor's Pledged Stock, if any, has been and when issued
to any Grantor hereafter will be duly authorized and validly issued, and such
Pledged Stock is fully paid, non-assessable and freely transferable to the
Collateral Trustee. An appropriate notation has been or will be placed on the
stock ledger or other books and records of the respective issuer of such Pledged
Stock in the case of Pledged Stock included in the Initial Perfection Collateral
(and, subject to the exceptions contained in Section 16.02 of the Indenture, in
the case of Pledged Stock that is not Initial Perfection Collateral or that is
hereafter acquired by the Grantors, will be so placed on the stock ledger or
other books and records of the respective issuer of such stock pledged
hereunder) in order to reflect the pledge in favor of the Collateral Trustee for
the ratable benefit and security of the Holders created or provided for in this
Agreement. Each of such Grantor's Pledged Notes, if any, has been duly
authorized, authenticated or issued and delivered, and is the legal, valid and
binding obligation of the issuer or issuers thereof, is freely transferable to
the Collateral Trustee and is not in default.
(b) Such Grantor's Pledged Stock, if any, constitutes (i) the
percentage of the issued and outstanding shares of Capital Stock of the
respective issuers thereof indicated on Schedule 3.3 hereto and (ii) all of the
shares of Capital Stock of the respective issuer held by the Grantor. There are
no outstanding options, warrants or other rights to purchase any shares of the
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Pledged Stock. Such Grantor's Pledged Notes, if any, are outstanding in the
principal amount indicated on Schedule 3.3 hereto.
Section 3.4 JURISDICTION OF ORGANIZATION; CHIEF EXECUTIVE OFFICE;
RECORDS. The jurisdiction of organization, exact legal name and jurisdiction of
chief executive office of each Grantor is as specified on Schedule 3.4 hereto.
Such Grantor's Receivables Records, Contracts and Collateral Records are at the
locations identified on Schedule 3.4 hereto as such or at the chief executive
office of such Grantor. All such Grantor's Receivables and Contracts are
identified on Schedule 3.4 and maintained at and controlled and directed
(including, without limitation, for general accounting purposes) from the chief
executive office of the applicable Grantor that owns such Receivables and
Contracts or the offices identified on Schedule 3.4 hereto as such.
Section 3.5 LOCATION OF INVENTORY AND EQUIPMENT. All such Grantor's
Inventory and Equipment now or from time to time included in the Collateral are
kept only at the locations listed on Schedule 3.5 hereto. None of such Inventory
or Equipment is in the possession of an issuer of a negotiable document (as
defined in Section 7-104 of the UCC) therefor or otherwise in the possession of
a bailee.
Section 3.6 RECEIVABLES. All Accounts and other Receivables of such
Grantor, to the Company's knowledge, represent enforceable obligations of the
Account Debtor thereunder, except Accounts or other Receivables not exceeding
$5,000,000 in the aggregate with respect to all Grantors.
Section 3.7 FARM PRODUCTS. None of such Grantor's Collateral constitutes,
or is the proceeds of, Farm Products (as defined in the UCC).
Section 3.8 INTELLECTUAL PROPERTY COLLATERAL.
(a) Schedule 3.8(a) lists all of the following in which any
Grantor that has granted a Security Interest in Intellectual Property pursuant
to Section 2.1 has an interest or uses on the date hereof:
(i) all patents and patent applications (including all
amendments, "PATENTS");
(ii) all trademarks, trademark applications, service marks,
service ▇▇▇▇ applications, tradenames and trade dress, including logos and
designs, and whether or not registered (including all amendments from time
to time, the "TRADEMARKS"); and
(iii) all copyrights and copyright applications, whether or
not registered (including all amendments from time to time, "COPYRIGHTS").
(b) Except as disclosed in Schedule 3.8(b)
(i) all such Grantor's Patents, Trademarks and Copyrights
are valid and enforceable;
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(ii) the relevant Grantor is the sole and exclusive owner of
each of the Patents, Trademarks and Copyrights, free and clear of any Liens
other than Permitted Liens (including licenses, shop rights and covenants
not to ▇▇▇); and
(iii) the relevant Grantor is not aware of any claim by any
third party that, or any reason why, any of the Patents, Trademarks and
Copyrights are or would be invalid or unenforceable.
Section 3.9 DEPOSIT ACCOUNTS. Schedule 3.9 is a complete list of all
Deposit Accounts maintained by such Grantor on the date hereof and includes the
name and location of the financial institutions with which such Deposit Accounts
are maintained and the account numbers.
Section 3.10 FORECLOSURE VALUE. The Company believes in good faith that
Schedule 3.10 hereto lists substantially all of the assets of the Company and
its Subsidiaries as of the Issue Date. The foreclosure values of the assets
listed on Schedule 3.10 hereto represent the Company's good faith best estimate
of the actual foreclosure values of such assets. Such foreclosure values have
been reasonably prepared based on assumptions reflecting the best currently
available estimates and good faith judgments by management of the Company. Based
on such Schedule 3.10, the foreclosure value of assets subject to a perfected
Security Interest granted to the Collateral Trustee hereunder is equal to not
less than 85% of the aggregate foreclosure value of the assets listed on
Schedule 3.10. For the purposes hereof, the term "foreclosure values" means the
cash consideration, as of the date hereof, that would be received by the
Trustee, on behalf of the holders of the Company or one of its Subsidiaries, in
the event of a sale of any assets of the Company or its Subsidiaries to a third
party upon the foreclosure of one or more liens on such assets.
ARTICLE IV
COVENANTS
Each Grantor covenants and agrees with the Collateral Trustee that from and
after the date of this Agreement:
Section 4.1 FURTHER ASSURANCES. Without limitation of Article 16 of the
Indenture, each Grantor, upon consultation with the Collateral Trustee, will
promptly take the following steps to the extent required pursuant to Article
Sixteen of the Indenture:
(a) file any financing statements as necessary to perfect the
Security Interests granted hereby by such Grantor and take all other steps
required under Article Sixteen of the Indenture. A photocopy or other
reproduction of this Agreement shall be sufficient as a financing statement
and may be filed in lieu of the original to the extent permitted by
applicable law. Each Grantor will pay or reimburse the Collateral Trustee
for all filing fees and related expenses;
(b) furnish to each of the Banks an executed Control Agreement
stating that the Collateral Trustee has Control of each of such Grantor's
Deposit Accounts held by a
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Bank domiciled in the United States (or take equivalent steps with respect
to a Deposit Account held by a Bank not domiciled in the United States);
(c) if an Event of Default shall occur and be continuing, furnish
to each of the Banks notice in an authenticated record that the Grantor has
no further right to Control any of such Grantor's Deposit Accounts held by
a Bank domiciled in the United States (or take equivalent steps with
respect to a Deposit Account held by a Bank not domiciled in the United
States) and the Collateral Trustee has exclusive Control of each such
Deposit Account with respect to a Deposit Account held by a Bank domiciled
in the United States (or take equivalent steps with respect to a Deposit
Account held by a Bank not domiciled in the United States);
(d) furnish to the Collateral Trustee from time to time statements
and schedules further identifying and describing such Grantor's Collateral,
and such other reports in connection with the Collateral as the Collateral
Trustee may reasonably request, all in reasonable detail and in a form
satisfactory to the Collateral Trustee; and
(e) if an Event of Default shall occur and be continuing, then,
notwithstanding the foregoing, the Company shall, and shall cause the
Guarantors to, promptly upon request by the Collateral Trustee, make all
recordings, registerings and filings of financing statements, notices of
lien and other instruments of further assurance with respect to Collateral
and otherwise take all steps necessary to cause the security interest and
lien of the Collateral Trustee to constitute a perfected security interest
and lien, whether or not commercially reasonable.
Section 4.2 DELIVERY OF SECURITY COLLATERAL.
(a) Each Grantor shall at all times and from time to time (i)
cause all Indebtedness owed to it by the Company, any Subsidiary or any other
Person to be evidenced by a Pledged Note, (ii) except in the case of the
Company, cause, to the fullest extent permitted by the law of the jurisdiction
where such Grantor is organized, all Capital Stock of such Grantor to be
evidenced by physical certificates, and (iii) with respect to all Capital Stock
of other Persons (each, an "ISSUER") legally or beneficially owned by such
Grantor, use its commercially reasonable best efforts to cause each such Issuer
to evidence all such Capital Stock by physical certificates (other than with
respect to any Issuer where the law of the jurisdiction where such Issuer is
organized does not permit such physical certificates).
(b) All certificates or instruments representing or evidencing
such Grantor's Security Collateral that is required to be subject to a perfected
Security Interest pursuant to Article Sixteen of the Indenture, to the extent
permitted under the laws of the jurisdiction of organization of the issuer of
such Security Collateral, shall be delivered to and held by or on behalf of the
Collateral Trustee pursuant hereto and shall be in suitable form for transfer by
delivery or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Collateral
Trustee. The Collateral Trustee shall have the right, at any time in its
discretion, to transfer to or to register in the name of the Collateral Trustee
any or all of such Grantor's Security Collateral, subject only to the revocable
rights specified in Section 6.1(a).
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Section 4.3 CHANGE OF JURISDICTION OF INCORPORATION OR ORGANIZATION. None
of the Grantors will change its jurisdiction of incorporation or organization
except to such new jurisdiction as such Grantor may establish in accordance with
the last sentence of this Section 4.3. The originals of all such Grantor's
Receivables Records and Contracts and all Collateral Records will continue to be
kept at such chief executive office or at the locations identified on Schedule
3.4 hereto as such, or at such new locations as such Grantor may establish in
accordance with the last sentence of this Section 4.3. All Receivables,
Receivables Records and Contracts of such Grantor will continue to be maintained
at and controlled and directed (including, without limitation, for general
accounting purposes) from, a location identified as such on Schedule 3.4 hereto
or such new locations as such Grantor may establish in accordance with the last
sentence of this Section 4.3. None of the Grantors shall establish a new
jurisdiction of incorporation or organization (or move any such activities from
the location listed in Schedule 3.4 therefor) or be continued from one
jurisdiction to another or merge or consolidate with a Person organized under
the law of another jurisdiction until (i) it shall have given to the Collateral
Trustee not less than thirty (30) days' prior written notice of its intention to
do so, clearly describing such new jurisdiction and providing such other
information in connection therewith as the Collateral Trustee may reasonably
request and (ii) with respect to such new jurisdiction, it shall have taken all
action necessary to ensure that the Security Interest of the Collateral Trustee
in all Collateral that is required to be subject to a perfected Security
Interest pursuant to Article Sixteen of the Indenture is at all times subject to
a fully perfected Security Interest, with the same or better priority than prior
to such event and in full force and effect. Notwithstanding the foregoing, any
such merger or consolidation shall be subject to the terms, conditions and
limitations set forth in the Indenture.
Section 4.4 CHANGE OF LOCATION OF INVENTORY AND EQUIPMENT. Each Grantor
agrees that all Inventory and Equipment now held or subsequently acquired by it
shall be kept at (or shall be in transport to) any one of the locations shown on
Schedule 3.5 hereto or such new location as such Grantor may establish in
accordance with the last sentence of this Section 4.4. Each Grantor agrees that
it shall change the location of its Inventory and Equipment only for legitimate
business purposes and not with intent to avoid or impair the Collateral
Trustee's Lien or to cause such Lien to be unperfected or of a lower priority.
Each Grantor agrees to provide the Collateral Trustee notice of any change of
location of any Inventory or Equipment in excess of $500,000 within the
locations shown on Schedule 3.5 hereto within ten (10) days of such change of
location. Each Grantor may establish a new location for Inventory and Equipment
only if (i) it shall have given to the Collateral Trustee not less than thirty
(30) days prior written notice of its intention to do so, clearly describing
such new location and providing such other information in connection therewith
as the Collateral Trustee may reasonably request and (ii) with respect to such
new location, it shall have taken all action necessary to ensure that the
Security Interest of the Collateral Trustee in all Collateral that is required
to be subject to a perfected Security Interest pursuant to Article Sixteen of
the Indenture is at all times subject to a fully perfected Security Interest,
with the same or better priority than prior to such event and in full force and
effect.
Section 4.5 ADDITIONAL DEPOSIT ACCOUNTS. Subject to the exceptions
contained in Section 16.02 of the Indenture, no Grantor may establish a new
Deposit Account unless (i) it shall have given to the Collateral Trustee not
less than 1 Business Day's prior written notice of its intention to do so,
clearly describing the location and account number of such new Deposit
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Account and providing such other information in connection therewith as the
Collateral Trustee may reasonably request; provided that any such new Deposit
Account shall be established only for legitimate cash management purposes and
(ii) with respect to such new Deposit Account, if established with a Bank
domiciled in the United States, it shall have entered into a Control Agreement,
with such changes as the Bank may reasonably require and the Collateral Trustee
shall approve (or take equivalent steps with respect to a Deposit Account held
by a Bank not domiciled in the United States).
Section 4.6 CHANGE OF NAME; IDENTITY OR CORPORATE STRUCTURE. None of the
Grantors shall change its name (or conduct any significant portion of its
business under any new tradenames), identity or corporate structure until (i) it
shall have given to the Collateral Trustee not less than thirty (30) days' prior
written notice of its intention to do so, clearly describing such new name,
identity or corporate structure or such new trade name and providing such other
information in connection therewith as the Collateral Trustee may reasonably
request and (ii) with respect to such new name, identity or corporate structure
or such new trade name, it shall have taken all action necessary to maintain the
Security Interest of the Collateral Trustee in all Collateral that is required
to be subject to a perfected Security Interest pursuant to Article Sixteen of
the Indenture and to ensure that such Collateral is at all times subject to a
fully perfected Security Interest, with the same or better priority than prior
to such event and in full force and effect.
Section 4.7 DELIVERY OF INSTRUMENTS AND CHATTEL PAPER. If any amount
payable under or in connection with any of such Grantor's Collateral shall be or
become evidenced by any Instrument or Chattel Paper, such Instrument or Chattel
Paper shall be immediately delivered to the Collateral Trustee, duly indorsed to
the Collateral Trustee, to be held as Collateral pursuant to this Agreement.
Section 4.8 MAINTAIN AND ▇▇▇▇ RECORDS AND RECEIVABLES. Each Grantor will
keep and maintain at its own cost and expense in the ordinary course of business
satisfactory and complete records of such Grantor's Collateral, including, but
not limited to, the originals of all documentation with respect to all
Receivables and records of all payments received and all credits granted on the
Receivables and all merchandise returned and all other dealings therewith. Each
Grantor shall legend all Chattel Paper and other evidence of Receivables, as
well as the Receivables Records with an appropriate reference to the fact that
such Chattel Paper, Receivables and Receivable Records have been assigned to the
Collateral Trustee and that the Collateral Trustee has a Security Interest
therein.
Section 4.9 [Reserved]
Section 4.10 RIGHT OF INSPECTION. Subject to the prior execution of a
confidentiality agreement in a form reasonably acceptable to the Grantors, the
Collateral Trustee shall at all times have full and free access during normal
business hours to all the books, correspondence and records of the Grantors and
the Collateral Trustee and its representatives may examine the same, take
extracts therefrom and make photocopies thereof, and each Grantor agrees to
render to the Collateral Trustee, at such Grantor's reasonable cost and expense,
such clerical and other assistance as may be reasonably requested with regard
thereto. The Collateral Trustee and its respective representatives shall at all
times have the right to enter and inspect any property of any
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of the Grantors and enter into and upon any premises where any of the Inventory
or Equipment is located for the purpose of inspecting the same, observing its
use or otherwise protecting its interests therein.
Section 4.11 RECEIVABLES. Each Grantor shall perform in all material
respects all of its obligations with respect to its Receivables.
Section 4.12 CONTRACTS. Each Grantor shall perform in all material respects
all of its obligations under each of its Contracts.
Section 4.13 WAREHOUSE RECEIPTS NON-NEGOTIABLE. Each Grantor agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt or other
Document is issued with respect to any of its Inventory such warehouse receipt
or receipt in the nature thereof or other Document shall not be "negotiable" (as
such term is used in Section 7-104 of the UCC or under other relevant law).
Section 4.14 NO IMPAIRMENT.
(a) None of the Grantors will take or permit to be taken any
action that could impair the Collateral Trustee's rights in such Grantor's
Collateral.
(b) Each Grantor shall not file or record any instrument or
document with any entity, officer or office having responsibility for recording
of security interests or liens which purports to terminate, vitiate, modify or
extinguish a Security Interest in the Collateral in which the Trustee holds a
Security Interest or lien (a "DEBTOR TERMINATION STATEMENT").
(c) Each Grantor will take any action reasonably necessary to
maintain or preserve any of such Grantor's Collateral.
Section 4.15 LIMITATIONS ON DISPOSITIONS OF COLLATERAL. None of the
Grantors will sell, transfer, lease, license or otherwise dispose of any of its
Collateral or any rights therein or attempt, offer or contract to do so, except
as permitted in the Indenture or this Security Agreement.
Section 4.16 NOTICE.
(a) Each Grantor will advise the Collateral Trustee promptly, in
reasonable detail and in accordance with the provisions hereof of any Lien
(other than a Permitted Lien) on, or claim asserted against, any of its
Collateral.
(b) Each Grantor shall inform the Collateral Trustee in writing
within thirty (30) days of any change, amendment, or modification of its place
of organization, form of organization, or change in Grantor's name (including,
but not by way of limitation, resulting from mergers, acquisitions, tax free
exchanges, or other transactions) (all of which are sometimes referred to as
"CORPORATE CHANGES," regardless of whether the Grantor is organized as a
corporation, partnership, limited partnership, limited liability company,
limited liability partnership, sole proprietorship, or other form of entity
recognized under the law of the state in which the Grantor is organized), and
each Grantor shall cooperate with the Collateral Trustee by
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executing as soon as reasonably practicable after receipt thereof any and all
amendments to UCC financing statements to insure that the security interest and
lien of the Collateral Trustee in all Collateral that is required to be subject
to a perfected security interest pursuant to Article Sixteen of the Indenture is
at all times subject to a fully perfected Security Interest. The Collateral
Trustee may rely on opinions of counsel as to whether any or all UCC financing
statements of the Grantor need to be amended as a result. If the Grantors fail
to provide information to the Collateral Trustee about Corporate Changes on a
timely basis, the Collateral Trustee shall not be liable or responsible to any
party for any failure to maintain a perfected security interest in the Grantors'
collateral, for which the Collateral Trustee needed to have information about
the Corporate Changes. The Collateral Trustee shall have no duty to inquire
about Corporate Changes if the Grantors do not inform the Collateral Trustee of
such Corporate Changes, the parties acknowledging and agreeing that it would not
be feasible or practical for the Collateral Trustee to search for information on
the Corporate Changes if such information is not provided by the Grantors.
(c) Each Grantor shall provide the Collateral Trustee with copies
of any Debtor Termination Statement the Grantor files in violation of the
covenant contained in this document at Section 4.14.
Section 4.17 PERFORMANCE BY COLLATERAL TRUSTEE OF GRANTOR'S OBLIGATIONS;
REIMBURSEMENT. Unless otherwise permitted hereby, if a Grantor fails to perform
or comply with any of its agreements contained herein which would, if not cured,
result in an Event of Default, the Collateral Trustee may, but shall not be
obligated to, without notice to or consent by such Grantor, perform or comply or
cause performance or compliance therewith and the expenses of the Collateral
Trustee incurred in connection with such performance or compliance, together
with interest thereon, shall be payable by such Grantor to the Collateral
Trustee on demand and such reimbursement obligation shall be secured hereby.
Section 4.18 ADDITIONAL INSURED. The Company shall cause each policy of
property insurance it maintains to name the Collateral Trustee as a loss payee
and each policy of liability insurance it maintains to name the Collateral
Trustee as an additional insured, other than employer's liability insurance.
ARTICLE V
SPECIAL PROVISIONS REGARDING
RECEIVABLES AND CONTRACTS
Section 5.1 GRANTOR REMAINS LIABLE UNDER RECEIVABLES AND CONTRACTS.
Anything herein to the contrary notwithstanding (including, without limitation,
the grant of any rights to the Collateral Trustee), each Grantor shall remain
liable under each of its Receivables and Contracts to observe and perform all
the conditions and obligations to be observed and performed by it thereunder,
all in accordance with the terms of any agreement giving rise to each such
Receivable or Contract. The Collateral Trustee shall have no obligation or
liability under any Receivable (or any agreement giving rise thereto) or
Contract by reason of or arising out of this Agreement or the receipt by the
Collateral Trustee of any payment relating to such Receivable or Contract
pursuant hereto, nor shall the Collateral Trustee be obligated in any
14
manner to perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) or under or pursuant to any
Contract, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Receivable (or any agreement giving rise
thereto) or under any Contract, to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts that may
have been assigned to it or to which it may be entitled at any time or times.
Section 5.2 NOTICE TO ACCOUNT DEBTORS AND CONTRACTING PARTIES. At any time
after an Event of Default has occurred and is continuing, (i) the Collateral
Trustee may, upon the direction of the Trustee, and upon request of the
Collateral Trustee, each Grantor that has granted a Security Interest in
Accounts and Contracts pursuant to Section 2.1 shall notify Account Debtors and
parties to such Contracts that the Accounts and the Contracts have been assigned
to the Collateral Trustee and that payments in respect thereof shall be made
directly to the Collateral Trustee, and (ii) the Collateral Trustee may in its
own name or in the name of others, communicate with Account Debtors and parties
to the Contracts to verify with them to the Collateral Trustee's satisfaction
the existence, amount and terms of any such Receivables or Contracts.
Section 5.3 COLLECTIONS ON RECEIVABLES AND CONTRACTS. The Collateral
Trustee hereby authorizes each Grantor that has granted a Security Interest in
Receivables and Contracts pursuant to Section 2.1 to collect such Receivables
and Contracts and, at any time after an Event of Default has occurred and is
continuing, the Collateral Trustee may curtail or terminate said authority and
by itself or by its agents, collect all Receivables and amounts owing under the
Contracts. After an Event of Default has occurred and is continuing, if required
by the Collateral Trustee, any payments of such Receivables and Contracts, when
collected by a Grantor, shall be forthwith (and, in any event, within two (2)
Business Days) delivered by such Grantor to the Collateral Trustee in the exact
form received, duly indorsed to the Collateral Trustee if required, for deposit
into the Collateral Account, and until so turned over, shall be held by such
Grantor in trust for the Collateral Trustee, segregated from other funds of such
Grantor. All Proceeds, while held by the Collateral Trustee (or by a Grantor in
trust for the Collateral Trustee) shall continue to be Collateral securing all
of the Secured Obligations and shall not constitute payment thereof until
applied as hereinafter provided.
ARTICLE VI
SPECIAL PROVISIONS REGARDING
SECURITY COLLATERAL
Section 6.1 VOTING RIGHTS; DIVIDENDS; ETC.
(a) Subject to Section 6.1(b) below:
(i) Each Grantor shall be entitled to exercise or refrain
from exercising any and all voting and other consensual rights pertaining
to the Security Collateral or any part thereof, for any purpose not
inconsistent with the terms of this Agreement or the Indenture;
15
(ii) Each Grantor shall be entitled to receive and retain
any and all dividends and interest paid in respect of its Security
Collateral, PROVIDED, HOWEVER, that any and all
(A) dividends and interest paid or payable other than
in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for,
any Security Collateral,
(B) dividends and other distributions paid or payable
in cash in respect of any Security Collateral in connection with a
partial or total liquidation or dissolution or in connection with a
reduction of capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in
respect of principal of, or in redemption of, or in exchange for, any
Security Collateral,
shall be forthwith delivered to the Collateral Trustee to hold as Security
Collateral and shall, if received by such Grantor, be received in trust for
the benefit of the Collateral Trustee, be segregated from the other
property or funds of such Grantor and be forthwith delivered to the
Collateral Trustee as Security Collateral in the same form as so received
(with any necessary endorsement or assignment; provided, however, in the
event that such a dividend, distribution or payment is payable in cash,
such cash shall be deposited with the Collateral Trustee to redeem the
Securities in accordance with the terms of the Indenture; and
(iii) The Collateral Trustee shall execute and deliver (or
cause to be executed and delivered) to each Grantor all such proxies and
other instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default or an event that, with the giving of notice or the lapse of time or
both, would become an Event of Default:
(i) All rights of each Grantor (x) to exercise or refrain
from exercising the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to Section 6.1(a)(i) shall
automatically cease and (y) to receive the dividends and interest payments
that it would otherwise be authorized to receive and retain pursuant to
Section 6.1(a)(ii) shall automatically cease and all such rights shall
thereupon become vested in the Collateral Trustee who shall thereupon have
the sole right to exercise or refrain from exercising such voting and other
consensual rights and to receive and hold as Security Collateral such
dividends and interest payments; and
(ii) All dividends and interest payments that are received
by a Grantor contrary to the provisions of this Section 6.1(b), shall be
received in trust for the benefit of the Collateral Trustee, shall be
segregated from other funds of such Grantor and shall
16
be forthwith paid over to the Collateral Trustee as Security Collateral in
the same form as so received (with any necessary endorsement).
Section 6.2 ADDITIONAL SHARES. Each Grantor agrees that it will (i) cause
each issuer of the Pledged Stock (if controlled by a Grantor) not to issue any
stock or other securities in addition to or in substitution for the Pledged
Stock issued by such issuer, except to such Grantor and (ii) immediately upon
its acquisition (directly or indirectly) thereof, deliver to the Collateral
Trustee as additional security hereunder any and all additional shares of stock
or other securities of each issuer of the Pledged Stock.
ARTICLE VII
COLLATERAL ACCOUNT
Section 7.1 COLLATERAL ACCOUNT. There is hereby established with The Bank
of
New York the Collateral Account. The Collateral Account shall be under the
sole and exclusive dominion and control of the Collateral Trustee and none of
the Grantors shall have any rights with respect to the Collateral Account.
Without limiting the generality of the foregoing, none of the Grantors shall
have a right of withdrawal or transfer from the Collateral Account.
Section 7.2 DEPOSIT OF PROCEEDS. There shall be deposited in the
Collateral Account from time to time the cash proceeds (as defined in Section
9-102(a)(9) of the UCC) of any of the Collateral (including insurance proceeds
thereon) required to be delivered to the Collateral Trustee pursuant to the
terms of the Indenture or this Agreement. All amounts and investments and other
items credited to the Collateral Account from time to time shall constitute
Collateral hereunder and shall not constitute payment of the Secured Obligations
until applied as hereinafter provided. At any time following the occurrence and
during the continuance of an Event of Default, the Collateral Trustee may in its
discretion with written notice to Grantors apply or cause to be applied (subject
to collection) the balance from time to time outstanding to the credit of the
Collateral Account to the payment of the Secured Obligations in the manner
specified in Section 9.9 hereof and as provided in the Indenture.
Section 7.3 INVESTMENT AND CURRENCY EXCHANGE. The Collateral Trustee shall
invest or reinvest cash deposited in any Collateral Account, without distinction
between principal and income, in The Bank of
New York's Cash Reserves Fund or
other similar investment. The Collateral Trustee shall have no liability for any
loss arising from or related to any such investment. The Collateral Trustee may
hold cash in any currency, provided, however, that whenever legally possible,
such cash will be held in Dollars, and may deposit such cash with one or more of
its subsidiaries or affiliates or one or more co-trustees. In each country in
which cash is held, it will be held in currencies which may be legally held in
such country and (except as otherwise provided above) may be held in
non-interest bearing, commingled bank accounts. None of the Collateral Trustee,
any of its subsidiaries or affiliates or any co-trustee shall be liable for any
fluctuations or changes in foreign exchange rates, which shall be the sole risk
and liability of the Company and the Grantors, or shall be required to
substitute one currency for any other currency in any Collateral Account. In no
event shall the Collateral Trustee, any of its subsidiaries or affiliates or any
co-trustee be liable (i) for holding Collateral or other property in any
particular country, including, but not limited to, losses resulting from
nationalization,
17
expropriation or other governmental actions; regulation of the banking or
securities industry; exchange or currency controls or restrictions, devaluations
or fluctuations; availability of cash or securities or market conditions which
prevent the transfer of property or the execution of securities transactions or
affect the value of property, or (ii) for any losses due to forces beyond its
control, including, without limitation, strikes, work stoppages, natural
catastrophes or acts of God, and interruptions, loss or malfunctions of
utilities, communications or computer (software and hardware) services. In no
event shall the Collateral Trustee, any of its subsidiaries or affiliates or any
co-trustee be obligated to substitute another currency for a currency whose
transferability, convertibility or availability has been affected, limited,
prohibited or prevented by law, regulation or other event. The Collateral
Trustee, any of its subsidiaries or affiliates or any co-trustee is hereby
authorized to convert cash on deposit in any Collateral Account or otherwise
held by it in a currency other than Dollars to Dollars at its own rate of
exchange then prevailing.
ARTICLE VIII
POWER OF ATTORNEY
Section 8.1 COLLATERAL TRUSTEE'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Each Grantor hereby irrevocably constitutes and appoints the
Collateral Trustee and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, from time to time in the Collateral Trustee's
discretion, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments that may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Collateral Trustee the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do the following:
(i) at any time when any Event of Default shall have
occurred and be continuing, in the name of such Grantor or its own name or
otherwise, (A) to take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of moneys
due under or with respect to, any Collateral; (B) to direct any party
liable for any payment under any of the Collateral to make payment of any
and all moneys due or to become due thereunder directly to the Collateral
Trustee or as the Collateral Trustee shall direct; and (C) to ask or demand
for, collect and receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in respect of or
arising out of any Collateral;
(ii) to prepare, sign and file any UCC financing statements
in the name of such Grantor as debtor;
(iii) to prepare, sign and deliver to the Banks appropriate
evidence of the Security Interest granted herein in the Deposit Accounts in
the name of such Grantor as such Grantor;
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(iv) to take or cause to be taken all actions necessary to
perform or comply or cause performance or compliance with the terms of this
Agreement, including, without limitation, actions to pay or discharge taxes
and Liens levied or placed on or threatened against the Collateral, to
effect any repairs or obtain any insurance called for by the terms of this
Agreement and to pay all or any part of the premiums therefor and the costs
thereof;
(v) upon the occurrence and during the continuance of any
Event of Default (A) to sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in
connection with any of the Collateral; (B) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any Proceeds thereof and to
enforce any other right in respect of any Collateral; (C) to defend any
suit, action or proceeding brought against such Grantor with respect to any
Collateral; (D) to settle, compromise or adjust any suit, action or
proceeding described in the preceding clause and, in connection therewith,
to give such discharges or releases as the Collateral Trustee may deem
appropriate; (E) and generally, to sell or transfer and make any agreement
with respect to, or otherwise deal with, any of the Collateral as fully and
completely as though the Collateral Trustee were the absolute owner thereof
for all purposes, and to do, at the Collateral Trustee's option and such
Grantor's expense, at any time or from time to time, all acts and things
that the Collateral Trustee deems necessary or advisable to protect,
preserve or realize upon the Security Interest over Collateral and to
effect the intent of this Agreement, all as fully and effectively as such
Grantor might do;
(vi) at any time and from time to time, to execute, in
connection with any foreclosure, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
Each Grantor hereby ratifies all that said attorney shall lawfully do
or cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
Each Grantor hereby acknowledges and agrees that in acting pursuant to
this power-of-attorney, the Collateral Trustee shall be acting in its own
interest and such Grantor acknowledges and agrees that the Collateral Trustee
shall have no fiduciary duties to such Grantor and such Grantor hereby waives
any claims to the rights of a beneficiary of a fiduciary relationship hereunder.
(b) NO DUTY ON THE PART OF COLLATERAL TRUSTEE. The powers
conferred on the Collateral Trustee hereunder are solely to protect the
interests of the Collateral Trustee in the Collateral and shall not impose any
duty upon the Collateral Trustee to exercise any such powers. The Collateral
Trustee shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers and neither it nor any of its officers,
directors, employees or agents shall be responsible to such Grantor for any act
or failure to act hereunder, except for their own negligence or willful
misconduct.
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ARTICLE IX
REMEDIES; RIGHTS UPON DEFAULT
Section 9.1 RIGHTS AND REMEDIES GENERALLY.
(a) If an Event of Default shall occur and be continuing, then and
in every such case, the Collateral Trustee shall have all the rights of a
secured party under Article 9 of the UCC, shall have all rights now or hereafter
existing under all other applicable laws or in equity and, subject to any
mandatory requirements of applicable law then in effect, shall have all the
rights set forth in this Agreement and all the rights set forth with respect to
the Collateral or this Agreement or in any other agreement between the parties.
No enumeration of rights in this Article IX or elsewhere in this Agreement or in
any related document or other agreement, shall be deemed to in any way limit the
rights of the Collateral Trustee as described in this Article.
(b) If an Event of Default occurs and is continuing, the
Collateral Trustee, shall, upon notice of such Event of Default from the
Trustee, act upon the direction of the Trustee to effect any one or more rights
or remedies available to the Collateral Trustee under any of the Collateral
Documents.
Section 9.2 COLLECTION OF RECEIVABLES AND OTHER PROCEEDS. If an Event of
Default shall occur and be continuing, in addition to the rights of the
Collateral Trustee specified in Section 5.3 with respect to the collection of
Receivables and Contracts, all Proceeds received by a Grantor consisting of
cash, checks and other near-cash items shall be held by such Grantor in trust
for the Collateral Trustee, segregated from other funds of such Grantor and
shall forthwith upon receipt by such Grantor, be turned over to the Collateral
Trustee, in the same form received by such Grantor (appropriately indorsed or
assigned by such Grantor to the order of the Collateral Trustee or in such other
manner as shall be satisfactory to the Collateral Trustee) for deposit into the
Collateral Account.
Section 9.3 DIRECT GRANTOR TO DISPOSE OF COLLATERAL. If an Event of
Default shall occur and be continuing, upon the direction of the Trustee, the
Collateral Trustee may direct a Grantor to sell, assign or otherwise liquidate
or dispose of all, or from time to time any portion of its Collateral and such
Grantor shall do so, and the Collateral Trustee may, at its option, take
possession of the Proceeds of such Collateral. The Collateral Trustee may direct
a Grantor to direct that all Proceeds of such Collateral be paid directly to the
Collateral Trustee or may permit the Proceeds of such Collateral to be paid to
such Grantor and, if directed by the Collateral Trustee, all such Proceeds
consisting of cash, checks or near-cash items shall be held by such Grantor in
trust for the Collateral Trustee, segregated from other funds of such Grantor
and shall forthwith upon receipt by such Grantor, be turned over to the
Collateral Trustee, in the same form received by such Grantor (appropriately
indorsed or assigned by such Grantor to the order of the Collateral Trustee or
in such other manner as shall be satisfactory to the Collateral Trustee) for
deposit into the Collateral Account.
Section 9.4 COLLATERAL ACCOUNT. If an Event of Default shall occur and be
continuing, upon direction from the Trustee, the Collateral Trustee, with
written notice to Grantor, may liquidate any securities credited to the
Collateral Account and pay over the proceeds thereof and
20
any other amounts credited to the Collateral Account to the Trustee for
application in accordance with the Indenture. Any balance of such Proceeds
remaining after the Secured Obligations have been paid and performed in full
shall be paid over to each Grantor or to whomsoever may lawfully be entitled to
receive the same or as a court of competent jurisdiction may direct.
Section 9.5 POSSESSION OF COLLATERAL.
(a) If an Event of Default shall occur and be continuing and upon
direction from the Trustee:
(i) the Collateral Trustee may personally or by agents or
attorneys, immediately take possession of the Collateral (including taking
possession of the originals of all or any Receivables or Receivables
Records and exercising exclusive Control of the Deposit Accounts) or any
part thereof, from a Grantor or any other Person who then has possession of
any part thereof, with or without notice or judicial process and for that
purpose may enter upon such Grantor's premises where any of the Collateral
is located and remove the same and, the Collateral Trustee may use in
connection with such removal, any and all services, supplies, aids and
other facilities of such Grantor; and
(ii) upon five (5) Business Days notice to each Grantor,
such Grantor shall, at its own expense, assemble the Collateral, including,
without limitation, the originals of all Receivables Records (or from time
to time any portion thereof) and make it available to the Collateral
Trustee at any place or places designated by the Collateral Trustee which
is reasonably convenient to both parties, whether at such Grantor's or the
Collateral Trustee's premises or elsewhere. Each Grantor shall, at its sole
expense, store and keep any Collateral so assembled at such place or places
pending further action by the Collateral Trustee and while the Collateral
shall be so stored and kept, provide such guards and maintenance services
as shall be necessary to protect the same and to preserve and maintain the
Collateral in good condition. Such Grantor's obligation so to assemble and
deliver the Collateral is of the essence of this Agreement and,
accordingly, upon application to a court of equity having jurisdiction, the
Collateral Trustee shall be entitled to a decree requiring specific
performance by such Grantor of said obligation.
(b) When Collateral is in the Collateral Trustee's possession the
risk of accidental loss or damage shall be on the Grantors to the extent of any
deficiency in any effective insurance coverage maintained by the Grantors.
Section 9.6 DISPOSITION OF THE COLLATERAL. If an Event of Default shall
occur and be continuing and upon direction from the Trustee, the Collateral
Trustee may sell, assign, lease, license (on an exclusive or non-exclusive
basis) give an option or options to purchase or otherwise dispose of the
Collateral (or contract to do any of the foregoing) under one or more contracts
or as an entirety and without the necessity of gathering at the place of sale
the property to be sold, at public or private sale or sales, conducted by any
officer, nominee or agent of, or auctioneer or attorney for, the Collateral
Trustee at any location of any third party conducting or otherwise involved in
such sale or any office of the Collateral Trustee or elsewhere and in general,
in such manner, at such time or times and upon such terms and conditions and at
such prices as it may consider commercially reasonable in its sole discretion,
for cash or on credit or
21
for future delivery without assumption of any credit risk. Any of the Collateral
may be sold, leased, assigned or options or contracts entered to do so or
otherwise disposed of, in the condition in which the same existed when taken by
the Collateral Trustee or after any overhaul or repair which the Collateral
Trustee shall determine to be commercially reasonable in its sole discretion. To
the extent permitted by applicable law, the Collateral Trustee or the Trustee
may bid for and become the purchaser of the Collateral or any item thereof,
offered for sale in accordance with this Section 9.6 without accountability to a
Grantor (except to the extent of surplus money received) as provided below. In
the payment of the purchase price of the Collateral, the purchaser shall be
entitled to have credit on account of the purchase price thereof of amounts
owing to such purchaser on account of any of the Secured Obligations and any
such purchaser may deliver securities, notes, claims for interest or claims for
other payment with respect to such Secured Obligations in lieu of cash up to the
amount which would, upon distribution of the net proceeds of such sale, be
payable thereon. Such securities or notes, if the amount payable hereunder shall
be less than the amount due thereon, shall be returned to the holder thereof
after being appropriately stamped to show partial payment.
Section 9.7 RECOURSE. Each Grantor shall remain liable for any deficiency
if the Proceeds of any sale or other disposition of the Collateral are
insufficient to satisfy the Secured Obligations. Each Grantor shall also be
liable for all expenses of the Collateral Trustee incurred in connection with
collecting such deficiency including, without limitation, the fees and
disbursements of any attorneys employed by the Collateral Trustee to collect
such deficiency.
Section 9.8 EXPENSES; ATTORNEYS' FEES. Each Grantor shall reimburse the
Collateral Trustee for all its reasonable third party expenses in connection
with the exercise of its rights hereunder, including, without limitation, all
reasonable attorneys' fees and disbursements incurred by the Collateral Trustee
and all other reasonable third party expenses and fees in connection with
obtaining, taking possession of, removing, holding, insuring, repairing,
preparing for sale or lease, storing and disposing of Collateral. The Proceeds
of any disposition of Collateral shall be applied in accordance with Section
9.04 of the Indenture.
Section 9.9 LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL.
(a) The Collateral Trustee's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the UCC or otherwise, shall be to deal with
it in the same manner as the Collateral Trustee deals with similar property for
its own account. Neither the Collateral Trustee, any Holder nor any of their
respective officers, directors, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or any other person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
powers conferred on the Collateral Trustee and the Holders hereunder are solely
to protect the Collateral Trustee's and the Holders' interests in the Collateral
and shall not impose any duty upon the Collateral Trustee or any Holder to
exercise any such powers. The Collateral Trustee and any Holder shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for its own negligence or willful misconduct. Except
for the safe custody of any Collateral in its possession and the
22
accounting for monies actually received by it hereunder, the Collateral Trustee
shall have no duty as to any Collateral, as to ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not the Collateral Trustee has or
is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Collateral Trustee accords its own
property. Except as provided in this Section 9.9(a), the Collateral Trustee
shall not have any duty or liability to protect or preserve any Collateral or to
preserve rights pertaining thereto. Nothing contained in this Agreement shall be
construed as requiring or obligating the Collateral Trustee or the Holders, and
neither the Collateral Trustee nor the Holders shall be required or obligated,
to (i) present or file any claim or notice or take any action with respect to
any Collateral or in connection therewith or (ii) notify any Grantor of any
decline in the value of any Collateral. The Collateral Trustee shall have no
duty as to the collection of any Collateral in its possession or control or in
the possession or control of any agent or nominee of the Collateral Trustee, or
any income thereon or any other rights pertaining thereto.
(b) The Collateral Trustee shall have no obligation to take any
steps to preserve rights against prior parties to any Collateral.
(c) Neither the Collateral Trustee nor any of its directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of a Grantor or otherwise.
(d) The Collateral Trustee shall not be responsible for perfecting
or maintaining the perfection of any security interest granted to it under this
Agreement or for filing, refiling, recording or re-recording any document,
financing statement, notice or instrument in any public office at any time or
times and shall not be responsible for seeing to the provision of insurance on
or the payment of any taxes with respect to any property subject to this
Agreement.
(e) No provision of this Agreement shall be deemed to impose any
duty or obligation on the Collateral Trustee to perform any act or acts, receive
or obtain any interest in property or exercise any interest in property, or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Collateral Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, to receive or obtain any such interest in property
or to exercise any such right, power, duty or obligation; and no permissive or
discretionary power or authority available to the Collateral Trustee shall be
construed to be a duty.
Section 9.10 WAIVER OF CLAIMS. Except as otherwise provided in this
Agreement, EACH GRANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL TRUSTEE'S
TAKING POSSESSION OR THE COLLATERAL TRUSTEE'S DISPOSITION OF ANY OF THE
COLLATERAL, and such Grantor hereby further waives, to the extent permitted by
law:
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(a) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Trustee's negligence
or willful misconduct;
(b) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Collateral
Trustee's rights hereunder;
(c) demand of performance or other demand, notice of intent to
demand or accelerate, notice of presentment, notice of acceleration, notice
of intent to accelerate, protest, advertisement or notice of any kind
(other than a notice of a Default) to or upon such Grantor or any other
Person; and
(d) all rights of redemption, appraisement, valuation, diligence,
stay, extension or moratorium now or hereafter in force under any
applicable law in order to prevent or delay the enforcement of this
Agreement or the absolute sale of the Collateral or any portion thereof and
such Grantor, for itself and all who may claim under it, insofar as it or
they now or hereafter lawfully may, hereby waives the benefit of all such
laws.
Section 9.11 DISCONTINUANCE OF PROCEEDINGS. In case the Collateral Trustee
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Trustee, then and in every such case each
Grantor and the Collateral Trustee shall be returned to their former positions
and rights hereunder with respect to the Collateral subject to the Security
Interest created under this Agreement, and all rights, remedies and powers of
the Collateral Trustee shall continue as if no such proceeding had been
instituted.
Section 9.12 RESTORATION OF POSITIONS. If the Collateral Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Agreement by foreclosure, entry or otherwise and such proceeding has been
discontinued or abandoned for any reason or has been determined adversely to the
Collateral Trustee or to such Holder, then and in every such case the Grantors,
the Collateral Trustee and the Holders shall, subject to any determination in
such proceeding, be restored to their former positions hereunder, and thereafter
all rights and remedies of the Collateral Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 9.13 INSTRUCTION FROM TRUSTEE. Whenever in the administration of
this Agreement, the Collateral Trustee shall deem it desirable to receive
instructions with respect to exercising or enforcing any right or remedy
hereunder or taking any other action hereunder, the Collateral Trustee (a) may
request instructions from the Trustee, (b) may refrain from exercising or
enforcing any such right or remedy or taking any such other action until such
instructions are received, and (c) shall be fully protected in acting in
accordance with such instructions.
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ARTICLE X
INDEMNITY
Section 10.1 INDEMNITY AND EXPENSES.
(a) Each Grantor agrees jointly and severally to indemnify,
reimburse and hold the Holders, beneficial holders, Collateral Trustee and their
respective officers, directors, managers, members, employees, representatives
and agents (hereinafter in this Section 10.1 referred to individually as
"INDEMNITEE" and collectively as "INDEMNITEES") harmless from any and all
liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, suits, costs, expenses or disbursements (including reasonable
attorneys' fees and expenses) (for the purposes of this Section 10.1 the
foregoing are collectively called "EXPENSES") for whatsoever kind or nature
which may be imposed on, asserted against or incurred by any of the Indemnitees
in any way relating to or arising out of this Agreement or the documents
executed in connection herewith or in any other way connected with the
administration of the transactions contemplated hereby or the enforcement of any
of the terms of or the preservation of any rights hereunder or in any way
relating to or arising out of the manufacture, ownership, ordering, purchase,
delivery, control, acceptance, lease, financing, possession, operation,
condition, sale, return or other disposition or use of the Collateral
(including, without limitation, latent or other defects, whether or not
discoverable), the violation of the applicable laws of any country, state or
other governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or for
property damage) or any contract claim; provided that no Indemnitee shall be
indemnified pursuant to this Section 10.1 for expenses to the extent caused by
or attributable to the negligence or willful misconduct of such Indemnitee. Each
Grantor agrees that upon written notice by any Indemnitee of any assertion that
could give rise to an expense, such Grantor shall assume full responsibility for
the defense thereof. Each Indemnitee agrees to use commercially reasonable
efforts to promptly notify such Grantor of any such assertion of which such
Indemnitee has knowledge.
(b) Without limiting the application of Section 10.1(a) hereof,
each Grantor agrees to pay, or reimburse the Collateral Trustee for, any and all
reasonable third party fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Collateral Trustee's Security Interest in the Collateral, including, without
limitation, all fees and taxes in connection with the recording or filing of
instruments and documents in public offices, payment or discharge of any taxes
or Lien upon or in respect of the Collateral, premiums for insurance with
respect to the Collateral and all other fees, costs and expenses in connection
with protecting, maintaining or preserving the Collateral and the Collateral
Trustee's interest therein, whether through judicial proceedings or otherwise,
or in defending or prosecuting any actions, suits or proceedings arising out of
or relating to the Collateral.
(c) Without limiting the application of Section 10.1(a) or (b)
hereof, each Grantor agrees to pay, indemnify and hold each Indemnitee harmless
from and against any expenses which such Indemnitee may suffer, expend or incur
in consequence of or growing out
25
of any material misrepresentation by such Grantor in this Agreement or in any
statement or writing contemplated by or made or delivered pursuant to or in
connection with this Agreement.
(d) If and to the extent that the obligations of a Grantor under
this Section 10.1 are unenforceable for any reason, such Grantor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations that is permissible under applicable law.
Section 10.2 INDEMNITY OBLIGATIONS SECURED BY COLLATERAL; SURVIVAL. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Secured Obligations secured by the Collateral.
The indemnity obligations of each Grantor contained in this Article X shall
continue in full force and effect notwithstanding the full payment and
performance of the Secured Obligations and notwithstanding the discharge
thereof.
ARTICLE XI
MISCELLANEOUS
Section 11.1 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL, SUBSTANTIVE LAWS OF THE STATE OF
NEW YORK.
Section 11.2 SUBMISSION TO JURISDICTION. Any legal action or proceeding
with respect to this Agreement and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the State of
New York or of the
United States of America for the Southern District of
New York and, by execution
and delivery of this Agreement, each Grantor hereby accepts for itself and in
respect of its property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts and appellate courts from any thereof. Each
Grantor irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid or nationally
recognized overnight carrier service, to such Grantor at its address set forth
under its signature below. Each Grantor hereby irrevocably waives any objection
that it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
brought in the courts referred to above and hereby further irrevocably waives
and agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
Nothing herein shall affect the right of the Collateral Trustee to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against a Grantor in any other jurisdiction.
Section 11.3 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH GRANTOR AND THE COLLATERAL TRUSTEE HEREBY IRREVOCABLY WAIVE ALL RIGHT
OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.
26
Section 11.4 LIMITATION OF LIABILITY. No claim may be made by a Grantor or
any other Person against the Collateral Trustee, holders of Securities or the
affiliates, directors, officers, employees, attorneys or agents of any of them
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement or any act, omission
or event occurring in connection therewith; and each Grantor hereby waives,
releases and agrees not to ▇▇▇ upon any claim for any such damages, whether or
not accrued and whether or not known or suspected to exist in its favor.
Section 11.5 NOTICES. Any notice or demand authorized by this Agreement to
be given to a Grantor shall be sufficiently given for all purposes, if it shall
be given or made in writing, by hand, telecopier (with confirmation of receipt)
or certified or registered mail (confirmation of receipt requested and obtained)
to the Company (or to such other Grantor care of the Company) addressed to it
at: ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇, Bermuda
(telephone: ▇▇▇-▇▇▇-▇▇▇▇; telecopier: ▇▇▇-▇▇▇-▇▇▇▇ to the attention of General
Counsel with a copy to ▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (telephone:
▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇; telecopier: 44 20 7317 0808) to the attention of General
Counsel or at such other address as may have been furnished in writing to the
Collateral Trustee by the Company. Any notice, direction, request or demand to
or upon the Collateral Trustee shall be sufficiently given, for all purposes, if
it shall be given or made in writing, by hand, telecopier (with confirmation of
receipt) or certified or registered mail (confirmation of receipt requested and
obtained) to The Bank of
New York, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇--▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, (telephone: (▇▇▇) ▇▇▇-▇▇▇▇; telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ or 815-5803) to
the attention of Vice President, Global Finance Unit (GFU), or at such other
address as may have been furnished in writing to the Company by the Collateral
Trustee.
Section 11.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of each Grantor, the Collateral Trustee, all
Indemnitees hereunder, all future Holders and their respective successors and
assigns, except that no Grantor may assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of the
Collateral Trustee.
Section 11.7 WAIVERS AND AMENDMENTS. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified unless
such waiver, amendment, supplement or modification is (i) evidenced by a written
instrument executed by each Grantor and the Collateral Trustee, provided that
any provision of this Agreement may be waived by the Collateral Trustee in a
written letter or agreement executed by the Collateral Trustee or by telex or
facsimile transmission from the Collateral Trustee and (ii) approved by the
Holders, if and to the extent required under Article Fifteen of the Indenture.
Any such amendment, supplement, modification or waiver shall be binding upon
each Grantor and the Collateral Trustee and all future Holders of the
Securities. In the case of any waiver, each Grantor and the Collateral Trustee
shall be restored to their former position and rights hereunder and under the
outstanding Secured Obligations, and any Default or Event of Default waived
shall be deemed to be cured and not continuing, but no such waiver shall extend
to any subsequent or other Default or Event of Default, or impair any right
consequent thereon.
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Section 11.8 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Collateral Trustee in exercising any right, power or privilege
hereunder and no course of dealing between any of the Grantors and the
Collateral Trustee shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Collateral Trustee of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy which
the Collateral Trustee would otherwise have on any future occasion. The rights
and remedies herein expressly provided are cumulative and may be exercised
singly or concurrently and as often and in such order as the Collateral Trustee
deems expedient and are not exclusive of any rights or remedies which the
Collateral Trustee would otherwise have whether by agreement or now or hereafter
existing under applicable law. No notice to or demand on a Grantor in any case
shall entitle such Grantor to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of the Collateral
Trustee to any other or further action in any circumstances without notice or
demand.
Section 11.9 TERMINATION; RELEASE. When all of the Secured Obligations
have been indefeasibly paid in full this Agreement shall terminate and the
Collateral Trustee will execute and deliver to the respective Grantors, upon the
direction of the Trustee and at the expense of the Grantors, the proper
instruments (including UCC termination statements) acknowledging the termination
of this Agreement, and will duly assign, transfer and deliver to the Grantors,
at the expense of the Grantors and without recourse, representation or warranty
of any kind whatsoever (except with respect to the absence of any liens created
by or arising under the Collateral Trustee), such of the Collateral of the
respective Grantors as may be in possession of the Collateral Trustee and has
not theretofore been disposed of, applied or released PROVIDED, HOWEVER, if no
default or Event of Default exists, the Company and each Grantor's Accounts will
be automatically released from the Lien at such time as the Company has paid
five million dollars ($5,000,000) of the principal amount of the Series A Notes
in accordance with Section 3.05(c) or 3.06(b) of the Indenture and, upon the
direction of the Trustee and at the expense of the Grantors, the Collateral
Trustee will execute and deliver to the respective Grantors the proper
instruments acknowledging the termination of such Lien. Upon the release of any
Collateral pursuant to the terms of the Indenture, the Collateral Trustee will
promptly return (and in any event within 10 Business Days) to the Grantors any
Collateral so released that is held by or on behalf of the Collateral Trustee,
including, without limitation, any Pledged Stock and any and all instruments of
transfer or assignments in blank with respect thereto.
Section 11.10 ADDITIONAL GRANTORS. If the Company or any Grantor
transfers or causes to be transferred, in one transaction or a series of related
transactions, any property to any Subsidiary that is not a Guarantor, or if the
Company or any of its Subsidiaries organizes, acquires or otherwise invests in
another Subsidiary, then such transferee or acquired or other Subsidiary shall
agree to be bound by this Security Agreement, provided that it shall not be
necessary to amend this Security Agreement to effectuate the addition of such
additional Guarantor.
Section 11.11 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
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Section 11.12 EFFECTIVENESS. This Agreement shall become effective on the
date on which a Grantor shall have signed a counterpart hereof and shall have
delivered the same to the Collateral Trustee.
Section 11.13 HEADINGS DESCRIPTIVE. The headings of the several Sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
Section 11.4 SEVERABILITY. In case any provision in or obligation under
this Agreement or the Secured Obligations shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
Section 11.15 SURVIVAL. All indemnities set forth herein shall survive the
execution and delivery of this Agreement and the making and repayment of the
Secured Obligations.
Section 11.16 POWERS COUPLED WITH AN INTEREST. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
Section 11.17 ACKNOWLEDGEMENT. The obligations of the Grantors
under this document are in addition to and are not in substitution of the
obligations of the Grantors under the Indenture, the Securities and the
Collateral Documents.
Section 11.18 CONSENT TO SERVICE OF PROCESS.
(a) The Company irrevocably (i) agrees that any legal suit,
action or proceeding arising out of or based upon this Agreement may be
instituted in any federal or state court located in the City of New York, (ii)
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of venue of any such proceeding, and any claim that
any suit, action or proceeding in such a court has been brought in an
inconvenient forum, and (iii) irrevocably submits to the nonexclusive
jurisdiction of such courts in any such suit, action or proceeding. Each of the
Company and the Grantors has appointed CT Corporation, as its authorized agent
(the "AUTHORIZED AGENT") upon whom process may be served in any suit, action or
proceeding arising out of or based on this Agreement which may be instituted in
any federal or state court located in the City of New York, expressly consents
to the jurisdiction of any such court in respect of any suit, action or
proceeding, and waives any other requirements of or objections to personal
jurisdiction with respect thereto. Such appointment shall be irrevocable. The
Company agrees to take any and all action, including the filing of any and all
documents and instruments, that may be necessary to continue such appointment in
full force and effect as aforesaid. Service of process upon the Authorized Agent
and written notice of such service to the Company or a Grantor shall be deemed,
in every respect, effective service of process upon the Company or such Grantor,
as applicable.
(b) To the extent that any of the Company and the Grantors have
or hereafter may acquire any immunity (sovereign or otherwise) from any legal
action, suit or proceeding, from jurisdiction of any court or from set-off or
any legal process (whether service or notice, attachment in aid or otherwise)
with respect to itself or any of its property, the Company and the
29
Grantors hereby irrevocably waive and agree not to plead or claim such immunity
in respect of their respective obligations under this Agreement.
Section 11.19 INCORPORATION BY REFERENCE. All terms, covenants,
conditions, provisions and requirements of the Indenture are incorporated by
reference in this Agreement. In the event of any conflict between the provisions
of this Agreement and the provisions of the Indenture, the provisions of the
Indenture shall govern and control. The actions of the Collateral Trustee
hereunder are subject to the provisions of the Indenture. The Collateral Trustee
shall have the right hereunder to make demands, to give notices, to exercise or
refrain from exercising any rights, and to take or refrain from taking action
(including without limitation, the release or substitution of Collateral), in
each case in accordance with this Agreement and the Indenture. The Collateral
Trustee may resign and a successor Collateral Trustee may be appointed in the
manner provided in the Indenture. Upon the acceptance of any appointment as the
Collateral Trustee by a successor Collateral Trustee, such successor Collateral
Trustee shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Collateral Trustee under this
Agreement, and the retiring Collateral Trustee shall thereupon be discharged
from its duties and obligations under this Agreement. After any retiring
Collateral Trustee's resignation, the provisions of this Agreement shall inure
to its benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was the Collateral Trustee.
30
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
FLAG TELECOM GROUP LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Chairman
FLAG PACIFIC HOLDINGS LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Assistant Secretary
FLAG PACIFIC LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Assistant Secretary
FLAG PACIFIC CANADA LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Secretary
FLAG PACIFIC JAPAN LIMITED
By:
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
31
FLAG TELECOM SINGAPORE PTE. LIMITED
By:
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM DEVELOPMENT LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Assistant Secretary
FLAG TELECOM DEVELOPMENT SERVICES COMPANY LLC
By:
----------------------------------------------
Name:
-------------------------------
Title:
------------------------------
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG ACCESS INDIA PRIVATE LTD.
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAGWEB LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Assistant Secretary
32
FLAG TELECOM NETWORK SERVICES LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Secretary
FLAG TELECOM IRELAND LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Secretary
FLAG TELECOM JAPAN LIMITED
By:
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM ESPANA SA
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM SERVIZI ITALIA SPA
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM IRELAND SERVICES LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Assistant Secretary
33
FLAG TELECOM SERVICIOS S.A. DE C.V.
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM ARGENTINA SA
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM BRASIL HOLDINGS LTDA
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Title: Manager
FLAG TELECOM BRASIL LTDA
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Title: Manager
FLAG TELECOM IRELAND NETWORK LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Secretary
FLAG TELECOM NETWORK USA LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Secretary
34
FLAG TELECOM DEUTSCHLAND NETWORK GMBH
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM NEDERLAND NETWORK BV
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM BELGIUM NETWORK SA
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM AUSTRIA NETWORK GMBH
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM NORWAY NETWORK AS
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM FRANCE NETWORK SAS
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
35
FLAG TELECOM ESPANA NETWORK SAU
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM GLOBAL NETWORK LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Assistant Secretary
FLAG TELECOM ASIA LIMITED
By:
----------------------------------------------
Name: ▇▇▇▇ Best
Title: Director
FLAG TELECOM FRANCE SERVICES EURL
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM DEUTSCHLAND GMBH
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM NEDERLAND BV
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
36
FLAG TELECOM HELLAS AE
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG TELECOM AUSTRIA GMBH
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG ASIA HOLDINGS LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Assistant Secretary
FLAG TELECOM TAIWAN SERVICES LIMITED
By:
----------------------------------------------
Name: ▇▇▇▇ Best
Title: Director
FLAG HOLDINGS (TAIWAN) LIMITED
By:
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇
Title: Director
FLAG TELECOM TAIWAN LIMITED
By:
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇
Title: Director
37
FLAG ATLANTIC UK LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Secretary
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG ATLANTIC FRANCE SARL
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
FLAG LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Assistant Secretary
FLAG PACIFIC USA LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Secretary
FLAG TELECOM GROUP SERVICES LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Assistant Secretary
38
FLAG TELECOM LIMITED
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
By:
----------------------------------------------
Name: Kees van Ophem
Title: Secretary
FLAG TELECOM USA LTD.
By:
----------------------------------------------
Name: Kees van Ophem
Title: Secretary
FLAG ASIA LIMITED
By:
----------------------------------------------
Name: Kees van Ophem
Title: Assistant Secretary
Acknowledged and Agreed:
THE BANK OF NEW YORK,
as Collateral Trustee and Trustee
By:
-----------------------------
Name:
--------------------
Title:
--------------------
39
ANNEX I
Jurisdiction of
Grantor Incorporation Collateral
--------------------------------------------------------------------------------------------------------------------
FLAG Telecom Group Limited Bermuda 1. Common stock of FLAG Telecom Singapore Pte. Limited, FLAG
Telecom Development Limited, FLAG Limited, FLAG Telecom Group
Services Limited, FLAG Telecom Global Network Limited and
FLAG Asia Holdings Limited
2. Deposit Accounts
3. Intercompany notes and receivables
4. Proceeds from the claims in the Teleglobe bankruptcy
FLAG Pacific Holdings Limited Bermuda None
FLAG Pacific Limited Bermuda None
FLAG Pacific Canada Limited New Brunswick None
FLAG Pacific Japan Limited Japan None
FLAG Telecom Singapore Pte. Singapore None
Limited
FLAG Telecom Development Bermuda 1. Common stock of FLAGWEB Limited and FLAG Telecom Network
Limited Services Limited
FLAG Telecom Development Egypt None
Services Company LLC
FLAG Access India Private Ltd. India None
FLAGWEB Limited Bermuda None
FLAG Telecom Network Services Ireland 1. Common stock of FLAG Telecom Ireland Limited
Limited
I-1
Jurisdiction of
Grantor Incorporation Collateral
--------------------------------------------------------------------------------------------------------------------
FLAG Telecom Ireland Limited Ireland 1. Common stock of FLAG Telecom Japan Limited, FLAG Telecom
Espana SA, FLAG Telecom Servizi Italia SpA, FLAG Telecom
Ireland Network Limited.
2. Intercompany notes and receivables
3. Receivables
FLAG Telecom Espana SA Spain None
FLAG Telecom Servizi Italia SpA Italy None
FLAG Telecom Ireland Services Ireland None
Limited
FLAG Telecom Servicios S.A. de Mexico None
C.V.
FLAG Telecom Argentina SA Argentina None
FLAG Telecom Brasil Holdings Brazil None
Ltda
FLAG Telecom Brasil Ltda Brazil None
FLAG Telecom Ireland Network Ireland 1. Common stock of FLAG Telecom Network USA Limited, FLAG
Limited Telecom Switzerland Network AG, FLAG Telecom Norway Network
AS, FLAG Telecom France Network SAS and FLAG Telecom Espana
Network SAS
2. Terrestrial switching equipment located in Europe
3. Backhaul contracts related to terrestrial switching
equipment located in Europe
4. Bank accounts
I-2
Jurisdiction of
Grantor Incorporation Collateral
--------------------------------------------------------------------------------------------------------------------
FLAG Telecom Network USA Delaware 1. Landing stations in New York
Limited 2. Backhaul agreements related to equipment located in the
United States
3. Terrestrial assets located in the United States that were
part of Atlantic Group
4. Bank accounts
FLAG Telecom Deutschland Germany None
Network GmbH
FLAG Telecom Nederland Network The Netherlands None
BV
FLAG Telecom Belgium Network SA Belgium None
FLAG Telecom Switzerland Switzerland None
Network AG
FLAG Telecom Austria Network Austria None
GmbH
FLAG Telecom Norway Network AS Norway None
FLAG Telecom France Network SAS France None
FLAG Telecom Espana Network SAU Spain None
FLAG Telecom Global Network Bermuda 1. Common stock of FLAG Atlantic UK Limited and FLAG
Limited Atlantic France SARL
2. Transpacific IRUs
3. Intercompany notes and receivables
4. Receivables
5. Bank accounts
6. FA-1 cable
FLAG Telecom Asia Limited Hong Kong None
I-3
Jurisdiction of
Grantor Incorporation Collateral
--------------------------------------------------------------------------------------------------------------------
FLAG Telecom France Services France None
Eurl
FLAG Telecom Deutschland GmbH Germany None
FLAG Telecom Nederland BV The Netherlands None
FLAG Telecom Hellas AE Greece None
FLAG Telecom Austria GmbH Austria None
FLAG Asia Holdings Limited Bermuda 1. Common stock of FLAG Asia Limited
FLAG Telecom Taiwan Services Taiwan None
Limited
FLAG Holdings (Taiwan) Limited Taiwan None
FLAG Telecom Taiwan Limited Taiwan None
FLAG Atlantic UK Limited United Kingdom 1. Terrestrial equipment in located United Kingdom
2. Backhaul contracts related to terrestrial equipment
located in United Kingdom
FLAG Atlantic France SARL France None
FLAG Limited Bermuda 1. Common stock of FLAG Pacific USA Limited
2. FEA cable
3. Transpacific IRUs
4. Intercompany notes and receivables
5. Receivables
6. Bank accounts
FLAG Pacific USA Limited Delaware None
I-4
Jurisdiction of
Grantor Incorporation Collateral
--------------------------------------------------------------------------------------------------------------------
FLAG Telecom Group Services Bermuda 1. Common stock of FLAG Telecom Limited and FLAG Telecom USA
Limited Ltd.
2. Bank accounts
FLAG Telecom Limited United Kingdom 1. Cash deposits with landlords
2. Offices in London and Heathrow
3. Equipment in offices in London and Heathrow
4. Bank accounts
FLAG Telecom USA Ltd. Delaware None
FLAG Asia Limited Bermuda 1. The portion of FLAG Asia Limited's interest in the FNAL
cable that is not pledged pursuant to the Security Agreement
dated as of October __, 2002 among FLAG Asia Limited, Seoul
Telenet Inc., FLAG Telecom Asia Limited and FLAG Telecom
Japan Limited, and Wilmington Trust Company as Collateral
Agent on behalf of and as collateral agent for itself and
Alcatel Submarine Networks, S.A
2. Terrestrial equipment for FNAL, including Taiwan and Korea
3. Backhaul contracts related to terrestrial equipment for
FNAL, including in Taiwan and Korea
4. Intercompany notes and receivables
5. Receivables
6. Bank accounts
7. Common stock of Seoul Telenet Inc.
I-5
ANNEX II
ACCOUNT CONTROL AGREEMENT
AGREEMENT dated as of _________, 2002, among _____________ (the "COMPANY"),
and Bank of New York, as collateral trustee (the "COLLATERAL TRUSTEE"), and
[name of bank holding the account] (the "INTERMEDIARY").
Intermediary represents and warrants to the Collateral Trustee that
Intermediary maintains Account No. ________ in the name of the Company (the
"ACCOUNT"). The parties hereto refer to the Account and hereby agree as follows:
1. The Company and the Collateral Trustee notify Intermediary that by
separate security agreement between the Company and the Collateral Trustee dated
as of _______,__ 2002 (the "SECURITY AGREEMENT") the Company has granted the
Collateral Trustee a security interest in the Account and any and all money,
instruments and other property from time to time deposited therein or credited
thereto, including all interest accruing thereon (collectively, "ITEMS").
Intermediary acknowledges that, as of the date hereof, it has not received
notice of any restraint, security interest, lien or other adverse claim in or to
the Account or any item therein.
2. The respective rights and duties of the Collateral Trustee, the
Company and the Intermediary regarding control of the Account shall be as
follows:
(a) The Intermediary shall comply with any instructions originated
by the Collateral Trustee directing disposition of the items in the Account
without further consent by the Company.
(b) The Intermediary may rely on a written notice from the
Collateral Trustee (an "ACCELERATION CERTIFICATION") that an Event of Default as
defined in the Security Agreement has occurred and is continuing. The
Acceleration Certification shall state an effective date (which shall be no
earlier than the date it is delivered to the Intermediary) and may include a
demand that the Intermediary thereafter recognize the exclusive control by the
Collateral Trustee over the Account (including all items then held in the
Account), plus any and all items or amounts subsequently deposited or
transferred into the Account. The Collateral Trustee shall simultaneously
provide a copy of the Acceleration Certification to the Company by notice in
accordance with Section 6 hereof.
(c) Upon receipt of the Acceleration Certification, the
Intermediary shall follow all instructions of the Collateral Trustee regarding
the Account, and shall not allow withdrawals from or transfers out of the
Account by or at the direction of the Company, whether by check, draft, written
or other instruction, or other device or instrument.
(d) The Intermediary is authorized and shall be directed to accept
the Acceleration Certification from Collateral Trustee without obligation to
independently verify the correctness thereof.
II-1
(e) Until such time as the Intermediary has received an
Acceleration Certification from the Collateral Trustee, the Collateral Trustee
hereby agrees and consents that the Company shall be entitled to withdraw or
receive items from the Account as it may elect, and that the Intermediary shall
have no liability to Collateral Trustee for having released such items to, or
upon the direction of, the Company prior to the receipt by the Intermediary of
an Acceleration Certification in accordance with this Section 2.
(f) Except as expressly provided in this Agreement, the
Intermediary shall have no responsibility or liability to any party for
determining or verifying the occurrence of any event or circumstance or the
satisfaction of any condition giving rise to any order or other direction of or
by the Collateral Trustee. The parties hereto acknowledge that, notwithstanding
any other provision of this Agreement, the Intermediary shall have no
responsibility or liability for monitoring or determining compliance by any
party with the provisions of the Security Agreement or any other agreement
between the Company and the Collateral Trustee and to which the Intermediary is
not a party.
(g) Intermediary shall send copies of all statements and
confirmations for the Account to the Collateral Trustee and the Company.
Intermediary will use reasonable efforts promptly to notify the Collateral
Trustee and the Company if any other person claims that it has a property
interest in property in the Account and that it is a violation of that person's
rights for anyone else to hold, transfer or deal with the property.
3. Intermediary (a) waives, releases and agrees not to assert, exercise
or claim any lien, encumbrance, right (including setoff rights) or other claim
against the Account or any cash balance, funds or other item therein, and (b)
shall neither advance margin or other credit against the Account, nor
hypothecate any items carried in the Account, without the prior written consent
of the Collateral Trustee. Intermediary shall not agree with any other person or
entity that it will comply with any withdrawal, delivery, transfer, payment and
redemption instructions, or any other entitlement or other orders, from such
person or entity concerning the Account or any items therein without the prior
written consent of the Collateral Trustee and any such agreement entered into
without such consent shall be null and void.
4. Anything to the contrary in this Agreement notwithstanding, (i)
Intermediary shall have only the duties and responsibilities expressly set forth
in writing herein, (ii) Intermediary shall be fully protected in acting or
refraining from acting in good faith on any written notice, instruction or
request purportedly furnished to it by the Collateral Trustee in accordance with
the terms hereof, in which case the parties hereto agree that Intermediary has
no duty to make any further inquiry whatsoever, (iii) Intermediary shall not be
liable to any party hereto or any other person for any action or failure to act
under or in connection with this Agreement except for its own willful misconduct
or gross negligence (and, to the maximum extent permitted by law, shall under no
circumstances be liable for indirect, special, punitive or consequential
damages) and (iv) the Company hereby indemnifies Intermediary for, and holds
Intermediary harmless against, any loss, cost, liability or expense (including
reasonable inside or outside counsel fees and disbursements) incurred or
suffered by Intermediary arising out of or in connection with this Agreement or
the Account, except as may result from its willful misconduct or gross
negligence.
II-2
5. Intermediary may terminate this Agreement upon the sending of at least
thirty (30) days' advance written notice to the other parties hereto. Any other
termination or any amendment or waiver of this Agreement shall be effected
solely by an instrument in writing executed by all the parties hereto.
6. All notices shall be in writing and sent (including via facsimile
transmission) to the parties hereto at their respective addresses or fax number
(or to such other address or fax number as any such party shall designate in
writing to the other parties from time to time):
the Collateral Trustee:
[To be added]
Attention:
Facsimile No.:
Company:
[Company]
___________________________
___________________________
Attention: _______________
Facsimile No.: ___________
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Intermediary:
[To be added]
Attention:
Facsimile No.:
7. This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument and shall become effective when
counterparts hereof have been signed by the parties hereto. This Agreement and
the Account and all agreements relating thereto shall be governed by and
construed in accordance with the internal laws of the State of New York without
giving effect to conflict of laws provisions that would require the application
of any other law and New York shall be the Intermediary's jurisdiction for
purposes of Section 9-304(b) of the Uniform Commercial Code. It is expressly
agreed that this Agreement supersedes the provisions of any other agreement
relating to the Account or any item therein to the extent inconsistent herewith.
II-3
8. With respect to any actions, claims, or proceedings ("PROCEEDINGS")
relating to this Agreement, each party irrevocably (i) submits to the
non-exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in New York City and
(ii) waives any objection which it may have at any time to the laying of venue
of any Proceedings brought in any such court, waives any claim that such
Proceedings have been brought in an inconvenient forum and further waives the
right to object, with respect to such Proceedings that such court does not have
jurisdiction over such party. Nothing in this Agreement precludes a party from
bringing Proceedings in any other jurisdiction nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction. Each party hereby irrevocably waives any
and all right to trial by jury in any Proceedings.
9. To the extent a provision of this Agreement is unenforceable, this
Agreement will be construed as if the unenforceable provision were omitted.
10. Intermediary and the Collateral Trustee agree that the individuals
whose names and specimen signatures are from time to time furnished to
Intermediary by the Collateral Trustee are authorized to give notices or orders
under the terms of this Agreement ("AUTHORIZED PERSONS"), until such authority
is revoked in writing by the Collateral Trustee. The names and specimen
signatures of Authorized Persons on the date hereof are set forth on Exhibit A
hereto.
11. A successor to or assignee of the Collateral Trustee's rights and
obligations under the Security Agreement between the Collateral Trustee and the
Company will succeed to the Collateral Trustee's rights and obligations under
this Agreement.
II-4
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
[COMPANY]
By:
------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
------------------------------
Name:
Title:
BANK
By:
------------------------------
Name:
Title:
II-5
EXHIBIT A
AUTHORIZED PERSONS
Name Signature
------------------------ ------------------------
------------------------ ------------------------
A-1
SCHEDULE 3.2
FILING OFFICES FOR UCC FINANCING STATEMENTS
DISTRICT OF COLUMBIA for: FLAG Telecom Group Limited, FLAG Telecom
Development Limited, FLAG Telecom Network Services Limited, FLAG Telecom Ireland
Limited, FLAG Telecom Ireland Network Limited, FLAG Telecom Global Network
Limited, FLAG Asia Holdings Limited, FLAG Atlantic UK Limited, FLAG Limited,
FLAG Telecom Group Services Limited, FLAG Telecom Limited, FLAG Asia Limited
DELAWARE for: FLAG Telecom Network USA Limited
3.2-1
SCHEDULE 3.3
SECURITY COLLATERAL
PART I
Common stock of FLAG Telecom Singapore Pte. Limited 100%
Common stock of FLAG Telecom Development Limited 100%
Common stock of FLAG Limited 100%
Common stock of FLAG Telecom Group Services Limited 100%
Common stock of FLAG Telecom Global Network Limited 100%
Common stock of FLAG Asia Holdings Limited 100%
Common stock of FLAG Telecom Development Services Company LLC (Egypt) 100%
Common stock of FLAGWEB Limited 100%
Common stock of FLAG Telecom Network Services Limited 100%
Common stock of FLAG Telecom Japan Limited 100%
Common stock of FLAG Telecom Espana SA 100%
Common stock of FLAG Telecom Servizi Italia SpA 100%
Common stock of FLAG Telecom Ireland Network Limited 100%
Common stock of FLAG Telecom Network USA Limited 100%
Common stock of FLAG Telecom Deutschland Network GmbH 100%
Common stock of FLAG Telecom Nederland Network BV 100%
Common stock of FLAG Telecom Belgium Network SA 100%
Common stock of FLAG Telecom Switzerland Network AG 99.98%
Common stock of FLAG Telecom Norway Network AS 100%
Common stock of FLAG Telecom France Network SAS 100%
Common stock of FLAG Telecom Espana Network SAS 100%
3.3-1
Common stock of FLAG Atlantic UK Limited 100%
Common stock of FLAG Atlantic France SARL 100%
Common stock of FLAG Asia Limited 100%
Common stock of FLAG Telecom Taiwan Limited 80%
Common stock of FLAG Pacific USA Limited 100%
Common stock of FLAG Telecom Limited 100%
Common stock of FLAG Telecom USA Ltd. 100%
Common stock of FLAG Telecom Asia Limited 100%
Common stock of FLAG Telecom Deutschland GmbH 100%
Common stock of FLAG Telecom Nederland BV 100%
Common stock of FLAG Telecom Hellas AE 100%
Common stock of FLAG Telecom Austria GmbH 100%
Common stock of Seoul Telenet Inc. 49%
Common stock of FLAG Holdings (Taiwan) Limited 50%
Common stock of FLAG Pacific Holdings Limited 100%
Common stock of FLAG Pacific Limited 100%
Common stock of FLAG Pacific Canada Limited 100%
Common stock of FLAG Pacific Japan Limited 100%
Common stock of FLAG Access India Private Limited 100%
Common stock of FLAG Telecom Ireland Limited 100%
Common stock of FLAG Telecom Ireland Services Limited 100%
Common stock of FLAG Telecom Servicios Sa De CV 100%
Common stock of FLAG Telecom Argentina SA 100%
Common stock of FLAG Telecom Brasil Holdings Ltda 100%
Common stock of FLAG Telecom Brasil Ltda 100%
3.3-2
Common stock of FLAG Telecom Austria Network GmbH 100%
Common stock of FLAG Telecom France Services Eurl 100%
Common stock of FLAG Telecom Korea Limited 100%
Common stock of FLAG Telecom Taiwan Services Limited 100%
PART II
Pledged Notes
None.
3.3-3
SCHEDULE 3.4
JURISDICTIONS OF INCORPORATION
AND
LOCATIONS OF CHIEF EXECUTIVE OFFICES
Jurisdiction of Location of Chief
Grantor Incorporation Executive Office
------- --------------- -----------------
FLAG Pacific Holdings Limited Bermuda ▇▇▇▇▇▇▇▇
FLAG Pacific Limited Bermuda ▇▇▇▇▇▇▇▇
FLAG Pacific Canada Limited New Brunswick London
FLAG Pacific Japan Limited Japan Tokyo
FLAG Telecom Singapore Pte. Limited Singapore Singapore
FLAG Telecom Development Limited Bermuda ▇▇▇▇▇▇▇▇
FLAG Telecom Development Services Company LLC Egypt Cairo
FLAG Access India Private Ltd. India London
FLAGWEB Limited Bermuda ▇▇▇▇▇▇▇▇
FLAG Telecom Network Services Limited Ireland Dublin
FLAG Telecom Ireland Limited Ireland Dublin
FLAG Telecom Japan Limited Japan Tokyo
FLAG Telecom Espana SA Spain Madrid
FLAG Telecom Servizi Italia SpA Italy Rome
FLAG Telecom Ireland Services Limited Ireland Dublin
FLAG Telecom Servicios S.A. de C.V. Mexico London
FLAG Telecom Argentina SA Argentina London
FLAG Telecom Brasil Holdings Ltda Brazil London
FLAG Telecom Brasil Ltda Brazil London
3.4-1
Jurisdiction of Location of Chief
Grantor Incorporation Executive Office
------- --------------- -----------------
FLAG Telecom Ireland Network Limited Ireland Dublin
FLAG Telecom Network USA Limited Delaware New York
FLAG Telecom Deutschland Network GmbH Germany Frankfurt
FLAG Telecom Nederland Network BV The Netherlands London
FLAG Telecom Belgium Network SA Belgium London
FLAG Telecom Switzerland Network AG Switzerland London
FLAG Telecom Austria Network GmbH Austria London
FLAG Telecom Norway Network AS Norway London
FLAG Telecom France Network SAS France Paris
FLAG Telecom Espana Network SAU Spain Madrid
FLAG Telecom Global Network Limited Bermuda ▇▇▇▇▇▇▇▇
FLAG Telecom Asia Limited Bermuda ▇▇▇▇▇▇▇▇
FLAG Telecom France Services Eurl France Paris
FLAG Telecom Deutschland GmbH Germany Frankfurt
FLAG Telecom Services Italia Srl Italy Rome
FLAG Telecom Nederland BV The Netherlands London
FLAG Telecom Hellas AE Greece London
FLAG Telecom Austria GmbH Austria London
FLAG Asia Holdings Limited Bermuda ▇▇▇▇▇▇▇▇
FLAG Telecom Taiwan Services Limited Taiwan Taipei
FLAG Holdings (Taiwan) Limited Taiwan Taipei
FLAG Telecom Taiwan Limited (in incorporation) Taiwan Taipei
FLAG Atlantic UK Limited United Kingdom London
3.4-2
Jurisdiction of Location of Chief
Grantor Incorporation Executive Office
------- --------------- -----------------
FLAG Atlantic France SARL France Paris
FLAG Limited Bermuda ▇▇▇▇▇▇▇▇
FLAG Pacific USA Limited Delaware New York
FLAG Telecom Group Services Limited Bermuda ▇▇▇▇▇▇▇▇
FLAG Telecom Limited United Kingdom London
FLAG Telecom USA Ltd. Delaware New York
FLAG Asia Limited Bermuda Hamilton
3.4-3
SCHEDULE 3.5
LOCATIONS OF EQUIPMENT AND INVENTORY
Locations of Equipment: Locations of Inventory:
---------------------- ----------------------
United States United States
China China
India India
Japan Japan
Korea Korea
Malaysia Malaysia
Taiwan Taiwan
Egypt Egypt
Iran Iran
Belgium Belgium
France France
Germany Germany
Italy Italy
The Netherlands The Netherlands
Spain Spain
United Kingdom United Kingdom
Thailand Philippines
Singapore United Arab Emirates
United Arab Emirates Singapore
Turkey Thailand
Ireland Saudi Arabia
Pakistan Jordan
Saudi Arabia
Jordan
3.5-1
SCHEDULE 3.8a
INTELLECTUAL PROPERTY
PATENTS
None
TRADEMARKS
None
COPYRIGHTS
None
3.8a-1
SCHEDULE 3.9
DEPOSIT ACCOUNTS
Account Name Bank Name Bank Domiciled
------------ --------- --------------
FLAG Access India Private Limited Bank of America New Delhi, India
FLAG Asia Holdings Limited Bermuda Commercial Bank Ltd Hamilton, Bermuda
FLAG Asia Limited Bermuda Commercial Bank Ltd Hamilton, Bermuda
FLAG Asia Limited Barclays Bank plc New York
FLAG Asia Limited Korea Exchange Bank, Securities Seoul, Korea
Service Division
FLAG Asia Ltd Citibank, N.A. New York
FLAG Atlantic France SARL Barclays Bank plc Paris
FLAG Atlantic UK Ltd Barclays Bank plc London
FLAG Atlantic UK Ltd Citibank, N.A. New York
FLAG Holdings Taiwan Limited Taiwan Business Bank Taipei, Taiwan
FLAG Ltd Barclays Bank plc London
FLAG Ltd Bermuda Commercial Bank Ltd Hamilton, Bermuda
FLAG Ltd HSBC Bangkok, Thailand
FLAG Ltd Lloyds Bank plc Dubai
FLAG Ltd Standard Chartered Bank Dubai
FLAG Ltd - Spain branch Sucursal en Barclays Bank ▇▇ ▇▇▇▇▇▇, Spain
Espagna
3.9-1
Account Name Bank Name Bank Domiciled
------------ --------- --------------
FLAG Pacific Holdings Limited Bermuda Commercial Bank Ltd Hamilton, Bermuda
FLAG Pacific Holdings Limited Bank of Bermuda Hamilton, Bermuda
FLAG Pacific Limited Bermuda Commercial Bank Ltd Hamilton, Bermuda
FLAG Telecom Asia Ltd Citibank, N.A. New York
FLAG Telecom Asia Ltd - Beijing Rep Office Bank of China Beijing, China
FLAG Telecom Asia Ltd - Liaison Office Bank of America New Delhi, India
FLAG Telecom Asia Ltd. Bank of America Central, Hong Kong
FLAG Telecom Austria GmbH Raiffeisen Zentralbank Osterreich AG Austria
FLAG Telecom Austria Network GmbH Raiffeisen Zentralbank Osterreich AG Austria
FLAG Telecom Belgium Network SA Banque Brussels ▇▇▇▇▇▇▇ Brussels, Belgium
FLAG Telecom Deutschland GmbH Barclays Bank plc Frankfurt
FLAG Telecom Deutschland Network GmbH Barclays Bank plc Frankfurt
FLAG Telecom Development Services Cairo Barclays Bank Cairo, Egypt
Company LLC
FLAG Telecom Espana Networks SA Barclays Bank ▇▇ ▇▇▇▇▇▇, Spain
FLAG Telecom Espana SA Barclays Bank ▇▇ ▇▇▇▇▇▇, Spain
FLAG Telecom France Network SAS Barclays Bank plc Paris
3.9-2
Account Name Bank Name Bank Domiciled
------------ --------- --------------
FLAG Telecom France Services Eurl Barclays Bank plc Paris
FLAG Telecom Global Network Limited Bermuda Commercial Bank Ltd Hamilton, Bermuda
FLAG Telecom Group Services Ltd Barclays Bank plc London
FLAG Telecom Group Services Ltd Bermuda Commercial Bank Ltd Hamilton, Bermuda
FLAG Telecom Group Services Ltd Citibank, N.A. New York
FLAG Telecom Hellas S.A. Piraeus Bank Athens, Greece
FLAG Telecom Ireland Ltd Barclays Bank plc Dublin, Ireland
FLAG Telecom Ireland Ltd Barclays Bank ▇▇ ▇▇▇▇▇▇, Spain
FLAG Telecom Ireland Network Ltd Barclays Bank plc Dublin, Ireland
FLAG Telecom Japan Ltd Mitsui-Sumitomo Bank Tokyo, Japan
FLAG Telecom Japan Ltd Citibank, N.A. New York
FLAG Telecom Ltd. Barclays Bank plc London
FLAG Telecom Ltd. Citibank, N.A. New York
FLAG Telecom Ltd. HSBC London
FLAG Telecom Nederland B.V. Fortis Bank (Nederland) N.V. Rotterdam, Netherlands
FLAG Telecom Nederland Network B.V. Fortis Bank (Nederland) N.V. Rotterdam, Netherlands
FLAG Telecom Network Services Ltd Barclays Bank plc Dublin, Ireland
FLAG Telecom Network USA Ltd (Delaware) Citibank, N.A. New York
3.9-3
Account Name Bank Name Bank Domiciled
------------ --------- --------------
FLAG Telecom Norway Network AS Den Norske Bank Norway
FLAG Telecom Servizi Italy S.p.a. Banca Commerciale Italiana Italy
FLAG Telecom Singapore Pte Ltd Citibank, N.A. Singapore
FLAG Telecom Singapore Pte Ltd Barclays Bank plc Singapore
FLAG Telecom Switzerland Network AG Credit Suisse Zurich, Switzerland
FLAG Telecom Taiwan Limited Taiwan Business Bank Taipei, Taiwan
FLAG Telecom Taiwan Services Limited Taiwan Business Bank Taipei, Taiwan
FLAG Telecom USA Ltd Bank of America Charlotte, NC
FLAG Telecom USA Ltd Barclays Bank plc New York
FLAG Telecom USA Ltd (FTGSL) Barclays Bank plc New York
Studio di Consulenza Legale e Banca Popolare Commercio e Milan, Italy
Tributaria Industria
3.9-4
SCHEDULE 3.10
FORECLOSURE VALUE OF ASSETS
Location Estimated
FLAG Entity Type of Assets of Assets Foreclosure Value
---------------------------------------------------------------------------------------------------------------------------
1. FLAG Telecom Group Stock in subsidiaries (FLAG Acquisition Subsidiaries see each subsidiary
Limited (Bermuda) No. 1 Corporation, FLAG Pacific Holdings incorporated in
Limited, FLAG Telecom Singapore Pte. Delaware, Singapore and
Limited, FLAG Telecom Development Bermuda
Limited, FLAG Limited, FLAG Telecom Group
Services Limited, FLAG Telecom Global
Network Limited and FLAG Asia Holdings
Limited)
Bank accounts New York, UK, Bermuda, estimated balance at
Italy Effective Date of
$72,000,000
Intercompany receivables $0
Common law intellectual property rights various $0
in trade names, marks, logos and related
property
Claim in Teleglobe bankruptcy Delaware cases pending impossible to ascertain
(probably close to $0)
2. FLAG Acquisition No assets n/a n/a
No. 1 Corporation
(Delaware)
3. FLAG Pacific Stock in subsidiary (FLAG Pacific Limited) Subsidiary incorporated see subsidiary
Holdings Limited in Bermuda
(Bermuda)
Bank account Bermuda $0
4. FLAG Pacific Stock in subsidiaries (FLAG Pacific Subsidiaries see subsidiaries
Limited (Bermuda) Canada Limited and FLAG Pacific Japan incorporated in Canada
Limited) and Japan
Bank account Bermuda $0
5. FLAG Pacific Canada Virtually no assets n/a $0
Limited (New
Brunswick)
6. FLAG Pacific Japan Virtually no assets n/a $0
Limited (Japan)
3.10-1
Location Estimated
FLAG Entity Type of Assets of Assets Foreclosure Value
---------------------------------------------------------------------------------------------------------------------------
7. FLAG Telecom PoP and related equipment Singapore $50,000
Singapore Pte.
Limited (Singapore) Contractual backhaul rights Singapore $50,000
FF&E / leasehold improvements for office Singapore de minimis amount
License Singapore $0
Bank account Singapore de minimis amount
Service agreement for lease of office Singapore $0
8. FLAG Telecom Stock in subsidiaries (FLAG Telecom Subsidiaries see subsidiaries
Development Limited Development Services Company LLC, FLAG incorporated in Egypt,
(Bermuda) Access India Private Ltd., FLAGWEB India, Bermuda and
Limited and FLAG Telecom Network Services Ireland
Limited)
9. FLAG Telecom Bank account Egypt de minimis amount
Development
Services Company
LLC (Egypt) FF&E / leasehold improvements for office Egypt de minimis amount
10. FLAG Access India Bank account India $0
Private Ltd (India)
11. FLAGWEB Limited Common law intellectual property rights various $0
(Bermuda) in trade names, marks, logos and related
property
12. FLAG Telecom Stock in subsidiary (FLAG Telecom Ireland Subsidiary incorporated see subsidiary
Network Services Limited) in Ireland
Limited (Ireland)
Bank account Ireland de minimis amount
13. FLAG Telecom Stock in subsidiaries (FLAG Telecom Subsidiaries see subsidiaries
Ireland Limited Ireland Network Limited, FLAG Telecom incorporated in Japan,
(Ireland) Japan Limited, FLAG Telecom Espana SA, Spain, Italy, Ireland,
FLAG Telecom Servizi Italia SpA, FLAG Mexico, Argentina,
Telecom Ireland Services Limited, FLAG Brazil
Telecom Servicios SA de CV, FLAG Telecom
Argentina SA and FLAG Telecom Brasil
Holdings Ltda.)
Leases for offices Turkey, Ireland, Italy, $0
Spain
FF&E / leasehold improvements for offices Turkey, Ireland, Italy, de minimis amount
Spain
3.10-2
Location Estimated
FLAG Entity Type of Assets of Assets Foreclosure Value
---------------------------------------------------------------------------------------------------------------------------
Licenses Ireland, Italy, Japan $0
Intercompany receivables $0
Accounts receivable Ireland $400,000
Customer contracts various de minimis value (value
is in receivables)
Bank accounts Ireland, Spain de minimis amount
14. FLAG Telecom Japan PoPs office and related equipment and Japan $300,000
Limited (Japan) real estate interests
FF&E / leasehold improvements for offices Japan de minimis amount
License Japan $0
Bank account Japan, NY de minimis amount
15. FLAG Telecom Espana Bank account Spain de minimis amount
SA (Spain)
16. FLAG Telecom Bank account Italy de minimis amount
Servizi Italia SpA
(Italy)
Terrestrial equipment Italy $50,000
Contractual backhaul rights Italy $50,000
License Italy $0
17. FLAG Telecom Virtually no assets n/a n/a
Ireland Services
Limited (Ireland)
18. FLAG Telecom License Mexico $0
Servicios S.A. de
C.V. (Mexico)
19. FLAG Telecom License Argentina $0
Argentina SA
(Argentina)
20. FLAG Telecom Brasil Stock of subsidiary (FLAG Telecom Brasil subsidiary incorporated see subsidiary
Holdings Ltda Ltda) in Brazil
(Brazil)
21. FLAG Telecom Brasil Virtually no assets n/a $0
Ltda (Brazil)
3.10-3
Location Estimated
FLAG Entity Type of Assets of Assets Foreclosure Value
---------------------------------------------------------------------------------------------------------------------------
22. FLAG Telecom Stock in subsidiaries (FLAG Telecom Subsidiaries see subsidiaries
Ireland Network Network USA Limited, FLAG Telecom incorporated in
Limited (Ireland) Deutschland Network GmbH, FLAG Telecom Delaware, Germany,
Nederland Network BV, FLAG Telecom
Netherlands, Belgium, Belgium Network SA,
FLAG Telecom Switzerland, Austria,
Switzerland Network AG, FLAG Telecom
Norway, France and Spain Austria Network
GmbH, FLAG Telecom Norway Network AS, FLAG
Telecom France Network SAS and FLAG
Telecom Espana Network SAU)
PoPs and terrestrial equipment various countries $500,000
Contractual backhaul rights various countries $400,000
Licenses
Bank accounts Ireland de minimis amount
23. FLAG Telecom PoPs and related terrestrial equipment New York, Miami, Los $100,000
Network USA Limited (FEA and FA-1 related) Angeles, San Francisco
(Delaware)
Bank account NY de minimis amount
Contractual backhaul rights U.S. $100,000
Licenses Germany, The $0
Netherlands, Belgium,
Switzerland, Norway,
France, Spain
24. FLAG Telecom PoP and related terrestrial equipment and Germany $50,000
Deutschland Network backhaul rights
GmbH (Germany)
License Germany $0
25. FLAG Telecom License Netherlands $0
Nederland Network
BV (Netherlands)
Terrestrial equipment and backhaul rights Netherlands de minimis value
Bank account Netherlands de minimis value
License The Netherlands $0
26. FLAG Telecom Bank account Belgium de minimis value
Belgium Network SA
(Belgium)
License Belgium $0
3.10-4
Location Estimated
FLAG Entity Type of Assets of Assets Foreclosure Value
---------------------------------------------------------------------------------------------------------------------------
27. FLAG Telecom License Switzerland $0
Switzerland Network
AG (Switzerland)
Bank account Switzerland de minimis value
28. FLAG Telecom License application (on hold) Austria $0
Austria Network
GmbH (Austria)
Bank account Austria de minimis value
29. FLAG Telecom Norway License Norway $0
Network AS (Norway)
Bank account Norway de minimis value
30. FLAG Telecom France License France $0
Network SAS (France)
Terristrial equipment and backhaul rights France $50,000
Bank account France de minimis value
31. FLAG Telecom Espana PoP and related terrestrial equipment and Spain $100,000
Network SAU (Spain) backhaul rights
Bank account Spain de minimis amount
License Spain $0
32. FLAG Limited Stock in subsidiary (FLAG Pacific USA Subsidiary incorporated see subsidiary
(Bermuda) Limited) in Delaware
Service contracts and leases for FEA China, India, $0 (mostly expense items)
cable landing sites, offices NOC, depots Thailand, Egypt, UAE
(Fujairah, Dubai, Jebel
Ali, Abu Dhabi), Italy,
Jordan, Saudi Arabia,
Spain, Egypt
FF&E / leasehold improvements for office Dubai, Fujairah de minimis value
/ NOC
Common law intellectual property rights various $0
in trade names, marks, logos and related
property
FEA undersea cable termination points in $40,500,000
UK, Hong Kong
Transpacific IRU $600,000
3.10-5
Location Estimated
FLAG Entity Type of Assets of Assets Foreclosure Value
---------------------------------------------------------------------------------------------------------------------------
Switching equipment and other terrestrial UK, China, India, de minimis value
equipment related to landing stations and Malaysia, Thailand,
NOC for FEA; software rights related to Egypt, UAE (Fujairah,
same Dubai, Jebel Ali, Abu
Dhabi), Italy, Jordan,
Saudi Arabia, Spain,
Egypt, Hong Kong
Certain customer contracts related to FEA $0 (value is in
cable receivables)
Accounts receivable $3,500,000
Common law intellectual property rights various $0
in trade names, marks, logos and related
property
Intercompany receivables $0
Bank accounts Bermuda, Thailand, Dubai de minimis value
33. FLAG Pacific USA License USA $0
Limited (Delaware)
34. FLAG Telecom Group Stock in subsidiaries (FLAG Telecom Subsidiaries see subsidiaries
Services Limited Limited, FLAG Telecom USA Ltd., FLAG incorporated in UK,
(Bermuda) Telecom Asia Limited, FLAG Telecom France Delaware, Hong Kong,
Services Eurl, FLAG Telecom Deutschland France, Germany, Italy,
GmbH, FLAG Telecom Nederland BV, FLAG Netherlands, Greece and
Telecom Hellas AE and FLAG Telecom Austria
Austria GmbH)
Bank accounts Bermuda, NY, UK de minimis value
35. FLAG Telecom Service contracts and leases for offices UK $0 (mostly expense items)
Limited (UK) / NOC
Cash deposit on leasehold UK $5,000,000
FF&E / leasehold improvements for offices UK de minimis value
/ NOC
Equipment at Heathrow NOC UK de minimis value
Intercompany receivables $0
Bank accounts UK, NY de minimis value
3.10-6
Location Estimated
FLAG Entity Type of Assets of Assets Foreclosure Value
---------------------------------------------------------------------------------------------------------------------------
36. FLAG Telecom USA Service contracts and leases for offices USA $0 (mostly expense items)
Ltd (Delaware)
FF&E / leasehold improvements for offices USA de minimis value
License USA $0
Bank accounts USA de minimis value
37. FLAG Telecom Asia Contracts and leases for PoPs, cable Hong Kong, China, Taiwan $0 (mostly expense items)
Limited (Hong Kong) landing sites, offices
FF&E / leasehold improvements for office Hong Kong de minimis value
License Hong Kong $0
Bank accounts China, India, Hong Kong de minimis value
38. FLAG Telecom France Service contracts and lease for office France $0 (mostly expense items)
Services Eurl
(France)
FF&E / leasehold improvements for office France de minimis value
Bank account France de minimis value
39. FLAG Telecom Service agreement for office Germany $0 (mostly expense items)
Deutschland GmbH
(Germany)
FF&E / leasehold improvements for office Germany de minimis value
License Germany $0
Bank account Germany de minimis value
40. FLAG Telecom Service agreement for office Netherlands $0 (mostly expense items)
Nederland BV
(Netherlands)
FF&E / leasehold improvements for office Netherlands de minimis value
Bank account Netherlands de minimis value
41. FLAG Telecom Hellas License Greece $0
AE (Greece)
Bank account Greece de minimis value
42. FLAG Telecom Bank account Austria de minimis value
3.10-7
Location Estimated
FLAG Entity Type of Assets of Assets Foreclosure Value
---------------------------------------------------------------------------------------------------------------------------
Austria GmbH
(Austria)
43. FLAG Telecom Global Customer contracts $0 (value is in
Network Limited receivables)
(Bermuda)
stock of subsidiaries (FLAG Atlantic UK subsidiaries are see subsidiaries
Limited and FLAG Atlantic France SARL) incorporated in UK and
France
Accounts receivable $800,000
Intercompany receivables $0
Bank accounts Bermuda de minimis value
Transpacific IRU $600,000
FA-1 cable termination points in $1,100,000
USA, UK and France
44. FLAG Atlantic UK Terrestrial assets related to UK PoP and UK $150,000
Limited (UK) landing site
Contractual backhaul rights UK $150,000
Bank accounts UK, NY de minimis amount
License UK $0
45. FLAG Atlantic Terrestrial assets related to French PoPs France $70,000
France SARL (France) and landing site
Contractual backhaul rights France $30,000
License France $0
46. FLAG Asia Holdings stock in subsidiary (FLAG Asia Limited) Subsidiary incorporated see subsidiary
Limited (Bermuda) in Bermuda
Bank accounts Bermuda, NY, Korea de minimis value
47. FLAG Asia Limited stock in subsidiaries FLAG Telecom Korea Subsidiaries see subsidiaries
(Bermuda) Limited, Seoul Telenet Inc (49% only), incorporated in Korea
FLAG Telecom Taiwan Services Limited and and Taiwan
FLAG Holdings (Taiwan) Limited (50% only))
Contracts and leases for PoPs and cable Korea, Taiwan, Japan $0 (mostly expense items)
landing sites
3.10-8
Location Estimated
FLAG Entity Type of Assets of Assets Foreclosure Value
---------------------------------------------------------------------------------------------------------------------------
Common law intellectual property rights various $0
in trade names, marks, logos and related
property
FNAL undersea cable termination points in $10,000,000
Hong Kong, Taiwan,
Korea, Japan
PoP and related terrestrial equipment in Korea $300,000
Korea
Contractual backhaul rights in Korea Korea $700,000
Contractual backhaul rights in Japan Japan $1,000,000
Contractual backhaul rights in Hong Kong Hong Kong $600,000
Contractual backhaul rights in Taiwan Taiwan $500,000
Certain customer contracts related to $0 (value is in
FNAL cable receivables)
Accounts receivable $600,000
Common law intellectual property rights various $0
in trade names, marks, logos and related
property
Intercompany receivables $0
Bank accounts Bermuda, New York, Korea de minimis amount
48. Seoul Telenet Inc. License Korea $0
(Korea)
49. FLAG Telecom Taiwan Service agreement for office Taiwan $0
Services Limited
(Taiwan)
50. FLAG Holdings stock in subsidiary (FLAG Telecom Taiwan Subsidiary incorporated
(Taiwan) Limited Limited) in Taiwan
(Taiwan)
Bank account Taiwan de minimis amount
51. FLAG Telecom Taiwan License Taiwan $0
Limited (Taiwan)
Bank account Taiwan de minimis amount
52. FLAG Telecom Korea Lease Korea $0
Limited (Korea)
3.10-9
3.10-10