Exhibit 10.67
EXECUTION COPY
COLLATERAL AGENCY AGREEMENT
This COLLATERAL AGENCY AGREEMENT (this "AGREEMENT") is made as of June 18,
2004, among (i) The Bank of New York, as collateral agent (in such capacity, the
"COLLATERAL AGENT") for the Noteholders (as defined below), (ii) the
Noteholders, (iii) iBASIS, Inc., a Delaware corporation (the "BORROWER"), (iv)
iBASIS Global, Inc., a Delaware corporation ("iBASIS GLOBAL"), (v) iBASIS
Securities corporation, a Massachusetts corporation ("iBASIS SECURITIES"), and
(vi) iBASIS Holdings, Inc., a Delaware corporation ("iBASIS HOLDINGS", and,
together with the iBASIS Global and iBASIS Securities, the "SUBSIDIARY
GUARANTORS", and collectively with the Borrower, the "COMPANIES").
WHEREAS, pursuant to that certain Indenture (the "INDENTURE"), dated as of
June 18, 2004, by and between the Borrower and the Collateral Agent, the
Borrower has issued its 8% Secured Convertible Notes due 2007 (the "NEW SECURED
NOTES") in an aggregate principal amount of $29,000,000;
WHEREAS, the Companies and the Collateral Agent have entered into certain
security agreements and related documents pursuant to which each Company has
granted or agreed to grant to the Collateral Agent, for its benefit and the
equal and ratable benefit of the Noteholders, a security interest in and lien
upon the Collateral (as defined below);
WHEREAS, the parties hereto wish to set forth their relative rights and
priorities with respect to the Collateral as set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS.
1.1. DEFINITIONS. The following terms shall have the meanings set forth in
this Section 1 or elsewhere in the provisions of this Agreement referred to
below:
ACT. See Section 2.2.
ACTIONABLE DEFAULT. Any Event of Default under and as defined in the
Indenture.
COLLATERAL. Any of the properties and assets of whatever nature, tangible
or intangible, now owned or existing or hereafter acquired or arising, of the
Companies in which the Companies have at the time of reference granted a Lien to
the Collateral Agent to secure any of the Noteholder Debt and which has not been
released pursuant to the terms hereof.
COLLATERAL AGENT. As defined in the preamble hereto unless and until a
successor Collateral Agent shall have been appointed pursuant to Section 5.3
hereof, and thereafter "Collateral Agent" shall mean such successor Collateral
Agent.
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CREDIT DOCUMENTS. Collectively, this Agreement, the New Secured Notes, and
the Security Documents (as defined herein).
CREDIT AGREEMENT. The Loan and Security Agreement, dated as of December 29,
2003, among the Company, iBASIS Global, Inc, and the Senior Lender, together
with the related documents thereto (including, without limitation, any notes,
guarantee agreements and security documents), in each case as such agreements
may be amended (including any amendment and restatement thereof), supplemented
or otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Subsidiaries
of the Company as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
lenders.
DEMAND NOTEHOLDERS. The Noteholders holding New Secured Notes in an
outstanding principal amount greater than 25% of the total outstanding principal
amount of all New Secured Notes.
NOTEHOLDER DEBT. The aggregate outstanding principal amount of the New
Secured Notes, plus accrued interest.
EXPOSURE. With respect to any Noteholder, the outstanding principal amount
of New Secured Notes held by such Noteholder.
INDEBTEDNESS. With respect to any Person, all obligations, contingent or
otherwise, which in accordance with generally accepted accounting principles are
required to be classified upon the balance sheet of such specified Person as
liabilities.
INDENTURE. As defined in the Recitals hereto.
INTERCREDITOR AGREEMENT. The Intercreditor Agreement, dated as of June 18,
2004, among the Borrower, the Subsidiary Guarantors, the Senior Lender, the
Collateral Agent, and each of the Creditors from time to time party thereto, as
amended, restated or supplemented from time to time in accordance with the terms
thereof.
LIEN. Any consensual mortgage, security deed, deed of trust, pledge, lien,
security interest or other voluntary encumbrance, whether now existing or
hereafter created, acquired or arising.
NEW SECURED NOTES. As defined in the Recitals hereto.
NOTEHOLDERS. Each of the parties that from time to time holds the New
Secured Notes, issued pursuant to the that certain Note Purchase Agreement,
dated as of June 18, 2004, by and among the Borrower and the Purchasers names
therein, pursuant to which the Borrower issued and sold an aggregate principal
amount of $29,000,000 of its New Secured Notes.
NOTICE OF ACTIONABLE DEFAULT. A notice by the Noteholders delivered to the
Collateral Agent, stating that an Actionable Default has occurred. A Notice of
Actionable Default shall be deemed to have been given when the notice referred
to in the preceding sentence has
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actually been received by the Collateral Agent and to have been rescinded when
the Collateral Agent has actually received from the notifying party a notice
withdrawing such notice. A Notice of Actionable Default shall be deemed to be
outstanding at all times after such notice has been given until such time, if
any, as such notice has been rescinded.
PERSON. Any individual, partnership, joint venture, limited liability
company, corporation, association, trust or other enterprise or any government
or political subdivision or any agency, department or instrumentality thereof.
RATABLE SHARE. With respect to each Noteholder, the percentage obtained by
dividing such Noteholder's Exposure by the Total Exposure.
REQUIRED NOTEHOLDERS. The Noteholders holding New Secured Notes in an
aggregate outstanding principal amount greater than 50% of the total outstanding
principal amount of all New Secured Notes.
SECURED OBLIGATIONS. Collectively, the Noteholder Debt, any Obligations
owing to the Collateral Agent pursuant to any of the Credit Documents and the
obligations of the Companies owing to the Collateral Agent hereunder.
SECURED PARTIES. The Collateral Agent for its benefit as Collateral Agent
and for the benefit of each of the Noteholders.
SECURITY AGREEMENTS. Collectively, (i) the Security Agreement, dated as of
June 18, 2004, between the Borrower and the Collateral Agent, (ii) the Security
Agreement, dated as of June 18, 2004, between iBASIS Global and the Collateral
Agent, (iii) the Security Agreement, dated as of June 18, 2004, between iBASIS
Securities and the Collateral Agent, (iv) the Security Agreement, dated as of
June 18, 2004, between iBASIS Holdings and the Collateral Agent, (v) the
Intellectual Property Security Agreement, dated as of June 18, 2004, between the
Borrower and the Collateral Agent, and (vi) any other security agreement
executed and delivered by the Borrowers, the Subsidiary Guarantors and the
Collateral Agent.
SECURITY DOCUMENTS. Collectively, the Security Agreements and any other
agreements, guarantees and other documents executed in connection with the
Security Agreements.
SENIOR LENDER. Silicon Valley Bank, a California chartered bank.
SENIOR LOAN AGREEMENT. The Amended and Restated Loan and Security Agreement
dated as of December 30, 2002, by and among the Borrower and the Senior Lender.
TOTAL EXPOSURE. The sum of all Noteholders' Exposure.
1.2. TERMS GENERALLY. The definitions in Section 1.2 shall apply equally to
both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". All references herein to
Sections shall be deemed references to Sections of this Agreement unless the
context shall otherwise require.
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2. RECOURSE OF SECURED PARTIES; ACTS OF SECURED PARTIES.
2.1. RECOURSE OF SECURED PARTIES. Each of the Secured Parties acknowledges
and agrees that (i) it shall only have recourse to the Collateral through the
Collateral Agent and that it shall have no independent recourse to the
Collateral and (ii) the Collateral Agent shall have no obligation to take any
action, or refrain from taking any action, except upon instructions from the
Required Noteholders in accordance with Section 2.2 hereof. Nothing contained
herein shall restrict the Noteholders' rights to pursue remedies, by proceedings
in law and equity, to collect principal or interest due under the terms of the
Indenture or the New Secured Notes, or to enforce payments under and the
performance of and provisions of the Indenture or the New Secured Notes, to the
extent that such remedies do not relate to the Collateral or interfere with the
Collateral Agent's right to take action hereunder or under the Security
Documents.
2.2. ACTS OF SECURED PARTIES.
Except as provided in Section 3 hereof, any request, demand, authorization,
direction, notice, consent, waiver or other action permitted or required by this
Agreement to be given or taken by any Noteholder, may be and, at the request of
the Collateral Agent, shall be embodied in and evidenced by one or more
instruments satisfactory in form to the Collateral Agent and signed by or on
behalf of such Noteholder and, except as otherwise expressly provided in any
such instrument, any such action shall become effective when such instrument or
instruments shall have been delivered to the Collateral Agent. The instrument or
instruments evidencing any action (and the action embodied therein and evidenced
thereby) are sometimes referred to herein as an "Act" of the Persons signing
such instrument or instruments. The Collateral Agent shall be entitled to rely
absolutely upon an Act of any Noteholders if such Act purports to be taken by or
on behalf of such Noteholders, and nothing in this Section 2.2 or elsewhere in
this Agreement shall be construed to require the Collateral Agent to demonstrate
that it has been authorized by the Required Noteholders or the Demand
Noteholders, as appropriate, to take any action which it purports to be taking,
the Collateral Agent being entitled to rely conclusively, and being fully
protected in so relying, on any Act of the Noteholders.
2.3. INTERCREDITOR AGREEMENT. Nothwithstanding any of the provisions
contained herein, each of the Secured Parties agrees to be bound by, and agrees
that its rights and remedies hereunder and under any of the Security Documents
shall be subject in all respects to the provisions of the Intercreditor
Agreement.
3. DUTIES OF COLLATERAL AGENT.
3.1. ACTIONS UNDER SECURITY DOCUMENTS. The Collateral Agent shall not have
any duties or obligation under, and shall not be obligated to take any action
under, this Agreement or any of the Security Documents except for the
performance of such duties as are specifically set forth herein or therein. No
implied duties shall be read into this Agreement or any of the Security
Documents on the part of the Collateral Agent. Subject to the provisions of this
Section 3 and Section 5 hereof, the Collateral Agent shall take any action under
or with respect to the Security Documents which is requested by the Required
Noteholders or, if after the occurrence of an Actionable Default, the Demand
Noteholders, and which is not
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inconsistent with or contrary to the provisions of this Agreement or the Credit
Documents; PROVIDED that the Collateral Agent shall not amend or waive any
provision of the Security Documents except in accordance with Section 9 hereof.
The Collateral Agent shall give notice to each of the Noteholders: (a) upon
receipt of a Notice of Actionable Default or cancellation of any Notice of
Actionable Default, (b) upon receipt of a written notice of a default under any
security document pursuant to which the Companies have granted a lien to a
lender other than to the Senior Lender under the Senior Loan Agreement or the
Noteholders and (c) in the event the Collateral Agent elects to waive a material
delivery requirement under the Security Documents. At any time when a Notice of
Actionable Default shall have been given and shall be outstanding, the
Collateral Agent shall, subject in all cases to the provisions of this Section 3
and Section 5 hereof, exercise or refrain from exercising all such rights,
powers and remedies as shall be available to it under the Security Documents or
any of them in accordance with any specific written instructions received from
the Demand Noteholders. The Required Noteholders may direct the time, method and
place of conducting any proceeding for any right or remedy available to the
Collateral Agent, or of exercising any trust or power conferred on the
Collateral Agent, or for the appointment of a receiver, or to direct the taking
or refraining from taking of any action authorized by this Agreement or any
Security Document; provided that such direction shall not conflict with any
provision of law or this Agreement. The Collateral Agent shall have the right to
decline to follow any such direction if the Collateral Agent, being advised by
counsel, determines that the directed action is not permitted by the terms of
this Agreement, the Security Documents or the other Credit Documents, may not
lawfully be taken or would involve it in personal liability. Notwithstanding any
term hereof or in any Security Agreement to the contrary, the Collateral Agent
shall not in any instance be required to take any such action pursuant to this
Agreement or any of the Security Documents (whether at the direction of the
Demand Noteholders or otherwise) that it reasonably determines may cause it to
incur or risk any cost, expense or liability for which it is not adequately
indemnified, unless satisfactory indemnity is provided to it. Subject to Section
5 hereof, the Collateral Agent may rely on any such direction given to it by the
Demand Noteholders and shall be fully protected, and shall under no
circumstances (absent the gross negligence and willful misconduct of the
Collateral Agent) be liable to the Companies, any holder of any Secured
Obligations or any other Person for taking or refraining from taking action in
accordance therewith. Absent written instructions from the Demand Noteholders at
a time when a Notice of Actionable Default shall be outstanding or the Required
Holders in the case of an emergency in order to protect any of the Collateral,
the Collateral Agent may take, but shall have no obligation to take, any and all
such actions under the Security Documents or any of them or otherwise as it
shall deem to be in the best interests of the Noteholders and shall give notice
to each of the Noteholders of any such actions taken.
3.2 ACTIONS WITH RESPECT TO THE COLLATERAL.
Each of the Companies and each of the Noteholders hereby irrevocably
constitutes and appoints the Collateral Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full power and authority in its or his own name, from time to time in the
Collateral Agent's discretion, subject to Sections 2.1 and 3.1 hereof, so long
as any Notice of Actionable Default is in effect, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Agreement and the
Security Documents and accomplish the purposes hereof and thereof and, without
limiting the generality of the
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foregoing, each Company hereby acknowledges that the Collateral Agent shall have
all powers and remedies set forth in the Security Documents, subject to Sections
2.2 and 3.1 hereof.
4. PRIORITY OF RIGHTS AGAINST COLLATERAL AND PROCEEDS THEREOF.
It is the intent of the parties hereto that each of the Noteholders shall
be paid from the proceeds of the Collateral their Ratable Share, subject,
however, to the following:
(a) If and to the extent the Collateral Agent receives any
identifiable net cash proceeds of any of the Collateral following an
Actionable Default, such amounts shall be applied (i) FIRST, to reimburse
the Collateral Agent for any and all reasonable fees, costs, expenses,
disbursements and losses which shall have been incurred by the Collateral
Agent in connection with the collection of such proceeds by the Collateral
Agent, for the exercise, protection or enforcement by the Collateral Agent
of all or any of the rights, remedies, powers and privileges of the
Collateral Agent under any of the Security Documents or in respect of the
Collateral or in support of any provision of adequate indemnity to the
Collateral Agent against any taxes or liens which by law shall have, or may
have, priority over the rights of the Collateral Agent to such proceeds,
(ii) SECOND, each Noteholder shall receive its Ratable Share of such
amounts until indefeasible payment in full of the Secured Obligations up to
the Total Exposure; (iii) THIRD, to the Borrower or the Subsidiary
Guarantors or to such party as a court of competent jurisdiction shall
direct.
(b) If the Collateral Agent receives any non-cash distributions or
proceeds in respect of the Collateral, then, unless the Security Documents
expressly provide to the contrary, the Collateral Agent shall hold such
non-cash distributions and proceeds thereof as Collateral upon the terms of
this Agreement and the Security Documents until converted to cash and
thereupon distributed in accordance with paragraph (a) of this Section 4.
5. CONCERNING THE COLLATERAL AGENT.
5.1. LIMITATIONS ON RESPONSIBILITY OF COLLATERAL AGENT. The Collateral
Agent shall not be responsible in any manner whatsoever for the correctness of
any recitals, statements, representations or warranties contained herein or in
any Security Document, except for those expressly made by it herein or therein.
The Collateral Agent makes no representation as to the value or condition of the
Collateral or any part thereof, as to the title of the Companies to the
Collateral, as to the security afforded by this Agreement or any Security
Document or, except as set forth in Section 6, as to the validity, execution,
enforceability, legality or sufficiency of this Agreement or any Security
Document, and the Collateral Agent shall incur no liability or responsibility in
respect of any such matters. The Collateral Agent shall not be responsible for
insuring the Collateral, for the payment of taxes, charges, assessments or liens
upon the Collateral or otherwise as to the maintenance of the Collateral, except
as provided in the immediately following sentence when the Collateral Agent has
possession of the Collateral. The Collateral Agent shall have no duty to the
Companies or to the holders of any of the Secured Obligations as to any
Collateral in its possession or control or in the possession or control of any
agent or nominee of the Collateral Agent or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto, except the duty to accord such of the Collateral as may be in its
possession substantially the same care
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as it accords its own assets and the duty to account for monies received by it.
The Collateral Agent shall not be required to ascertain or inquire as to the
performance by the Companies of any of the covenants or agreements contained
herein or any of the Credit Documents. Neither the Collateral Agent nor any
officer, agent or representative thereof shall be personally liable for any
action taken or omitted to be taken by any such Person in connection with this
Agreement or any Security Document except for such Person's own gross negligence
or willful misconduct. Neither the Collateral Agent nor any officer, agent or
representative thereof shall be personally liable for any action taken by any
such Person in accordance with any notice given by the Required Noteholders or,
if after the occurrence of an Actionable Default, the Demand Noteholders,
pursuant to the terms of this Agreement. The Collateral Agent may execute any of
the powers granted under this Agreement or any of the Security Documents and
perform any duty hereunder or thereunder either directly or by or through agents
or attorneys-in-fact, and shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it absent gross
negligence or willful misconduct.
5.2. RELIANCE BY COLLATERAL AGENT; ETC. The Collateral Agent shall not be
deemed to have actual, constructive, direct or indirect notice or knowledge of
the occurrence of any Actionable Default unless and until the Collateral Agent
shall have received a Notice of Actionable Default or with respect to any other
matter pertinent to this Agreement or any Security Document unless and except to
the extent it has received written notice thereof or has actual knowledge
thereof. The Collateral Agent shall have no obligation whatsoever either prior
to or after receiving such a Notice of Actionable Default to inquire whether an
Actionable Default has in fact occurred and shall be entitled to rely
conclusively, and shall be fully protected in so relying, on any certificate
furnished to it by the Demand Noteholders and shall have no obligation, absent
written instructions from the Demand Noteholders, to take or omit to take any
action with respect to such Notice of Actionable Default. The Collateral Agent
may rely upon and shall be protected in acting or refraining from acting upon
any notice, instruction, certificate, report, correspondence, direction,
instrument, statement, request or other document furnished to it hereunder or
pursuant to any Security Document and reasonably believed by it to be genuine
and, if applicable, to have been signed or presented by the proper person, and
shall have no responsibility or duty to make inquiry as to or to determine the
genuineness, accuracy or validity thereof (or any signature appearing thereon),
or of the authority of the Person signing or presenting the same. With respect
to any matter arising hereunder or under any of the Security Documents, the
Collateral Agent may consult counsel satisfactory to it, including in-house
counsel, and the opinion or advice of such counsel in any instance shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it in good faith and in accordance with such opinion or
advice. Any permissive right or power granted to the Collateral Agent hereunder
or under any Security Document shall not be construed to be a duty.
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5.2.1. NO OBLIGATION TO ACT. If the Collateral Agent has been
requested by the Required Noteholders or, if after the occurrence of an
Actionable Default, the Demand Noteholders, to take any specific action
pursuant to any provision of this Agreement, the Collateral Agent shall not
be under any obligation to exercise any of the rights or powers vested in
it by this Agreement in the manner so requested unless, if so requested by
the Collateral Agent, it shall have been provided indemnity satisfactory to
it against the costs, expenses and liabilities which may be incurred by it
in compliance with such request or direction.
5.2.2. DISPUTES. If any dispute or disagreement shall arise as to the
allocation of any sum of money received by the Collateral Agent hereunder
or under any Security Document, the Collateral Agent shall have the right
to deliver such sum to a court of competent jurisdiction and therein
commence an action for interpleader.
5.3. RESIGNATION AND REMOVAL OF THE COLLATERAL AGENT.
5.3.1 RESIGNATION.
The Collateral Agent may at any time resign by giving written notice
thereof to each Secured Party and the Companies, PROVIDED that no
resignation shall be effective until a successor for the Collateral Agent
is appointed. Upon notice of such resignation, the Required Noteholders
shall have the right to appoint a successor Collateral Agent. If no
successor Collateral Agent shall have been so appointed by the Required
Noteholders and shall have accepted such appointment within 30 days after
the retiring Collateral Agent's giving of notice of resignation, then the
retiring Collateral Agent may, on behalf of the Secured Parties, appoint a
successor Collateral Agent, which shall be a financial institution having a
capital and surplus of at least One Hundred Million Dollars ($100,000,000).
Upon the acceptance of any appointment as Collateral Agent hereunder by a
successor Collateral Agent, such successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Collateral Agent, and the retiring Collateral Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Collateral Agent's resignation, the provisions of this Agreement
and the Security Documents shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was
acting as Collateral Agent (including with respect to the payment of
Secured Obligations that may be owing to it). Any corporation or entity
into which the Collateral Agent may be merged, or with which it may be
consolidated, or any corporation or entity resulting from any merger or
consolidation to which the Collateral Agent shall be a party, shall be a
Collateral Agent under this Agreement and the Security Documents without
the execution or filing of any paper or any further act on the part of the
parties hereto.
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5.3.2 REMOVAL.
Upon not less than thirty (30) days notice to The Bank of New York,
the Required Noteholders may remove The Bank of New York as Collateral
Agent hereunder for cause and appoint a successor Collateral Agent. Upon
the acceptance of any appointment as Collateral Agent hereunder by a
successor Collateral Agent, such successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Collateral Agent, and the retiring Collateral Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Collateral Agent's removal, the provisions of this Agreement and
the Security Documents shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as
Collateral Agent (including with respect to the payment of Secured
Obligations that may be owing to it).
5.4. EXPENSES AND INDEMNIFICATION BY THE COMPANIES. By countersigning this
Agreement, the Companies jointly and severally agree (i) to reimburse the
Collateral Agent the amounts set forth on SCHEDULE 1 attached hereto, and, on
demand, for any reasonable costs, expenses and disbursements incurred by the
Collateral Agent, including reasonable counsel fees and disbursements and
compensation of agents, arising out of, in any way connected with, or as a
result of, the execution or delivery of this Agreement or any Security Document
or any agreement or instrument contemplated hereby or thereby or the performance
by the parties hereto or thereto of their respective obligations hereunder or
thereunder or in connection with the enforcement or protection of the rights of
the Collateral Agent and the Secured Parties hereunder or under the Security
Documents, and (ii) to indemnify and hold harmless the Collateral Agent and its
directors, officers, employees and agents, on demand, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including reasonable attorneys fees and costs) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Collateral Agent in its capacity as the Collateral
Agent or any of them in any way relating to or arising out of this Agreement or
any Security Document or any action taken or omitted by them under this
Agreement or any Security Document; PROVIDED that the Companies shall not be
liable to the Collateral Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or willful misconduct of the
Collateral Agent or any of its directors, officers, employees or agents. The
provisions of this Section 5.4 shall survive the termination of this Agreement
and the removal of any Collateral Agent.
6. REPRESENTATIONS AND WARRANTIES.
Each of the Collateral Agent, the Noteholders and, by countersigning this
Agreement, the Companies, represents and warrants to the other parties hereto
that (i) the execution, delivery and performance of this Agreement (A) have been
duly authorized by all requisite corporate action on its part and (B) do not
conflict with or result in any breach or contravention of any provision of law,
statute, rule or regulation to which it is subject or any judgment, order, writ,
injunction, license or permit applicable to it and will not conflict with any
provision of its corporate charter or bylaws or any agreement or other
instrument binding
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upon it; and (ii) this Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms.
7. CERTAIN INTERCREDITOR ARRANGEMENTS.
7.1. TURNOVER OF COLLATERAL. If any Secured Party acquires custody, control
or possession of any Collateral or proceeds therefrom (other than deposit
accounts of the Borrowers and amounts on deposit therein), other than pursuant
to the terms of this Agreement, such Secured Party shall promptly cause such
Collateral or proceeds to be delivered to or put in the custody, possession or
control of the Collateral Agent or, if the Collateral Agent shall so designate,
an agent of the Collateral Agent (which agent may be a branch or affiliate of
the Collateral Agent) in the same form of payment received, with appropriate
endorsements for distribution in accordance with the provisions of Section 4.
Until such time as the provisions of the immediately preceding sentence have
been complied with, such Secured Party shall be deemed to hold such Collateral
and proceeds in trust for the Collateral Agent. Notwithstanding the foregoing,
none of the Noteholders shall be required to deliver to the Collateral Agent or
such agent of the Collateral Agent, any amounts received by such Noteholders
prior to receipt by the Collateral Agent of Notice of Actionable Default to the
extent that such amounts constitute payments of principal on the New Secured
Notes required to be made pursuant to the Indenture and due and paid prior to
such date or regular payments of interest on such New Secured Notes due and paid
prior to such date.
7.2. PRO RATA SHARING.
If the Collateral Agent's security interest hereunder and under the
Security Documents is enforced with respect to some, but not all, of the Secured
Obligations then outstanding, the Collateral Agent shall nonetheless apply the
proceeds of a Company's Collateral for the benefit of the holders of all Secured
Obligations of such Company in the proportions (and in the priority) specified
herein. To the extent that the Collateral Agent distributes proceeds collected
with respect to Secured Obligations held by one holder to or on behalf of
Secured Obligations held by a second holder, the first holder shall be deemed to
have purchased a participation in the Secured Obligations held by the second
holder, or shall be subrogated to the rights of the second holder to receive any
subsequent payments and distributions made with respect to the portion thereof
paid or to be paid by the application of such proceeds.
7.3. PARI PASSU.
Each of the Collateral Agent and each of the Noteholders acknowledges that
the Collateral is being provided hereunder for the benefit of the Noteholders on
a pari passu basis as set forth herein without any priority to one Noteholder
over the other with respect to such Collateral (subject to the priority of
payments to the Collateral Agent pursuant to Section 4 hereof ).
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8. RELEASE OR SUBORDINATION OF COLLATERAL; FREEDOM TO DEAL.
8.1. RELEASE OF COLLATERAL. Subject to the provisions of the Intercreditor
Agreement, the Collateral Agent is hereby authorized to release Collateral and
to provide such releases and termination statements with respect to any
Collateral (a) upon receipt of instructions from the Required Noteholders, (b)
upon a sale of assets by the Companies, or (c) as required pursuant to the
Intercreditor Agreement.
8.2. SUBORDINATION OF LIEN. The Collateral Agent may, in its discretion,
subordinate by written instrument the Lien on all or any portion of the
Collateral to the Senior Lender in connection with the Credit Agreements.
8.3. LEGALLY REQUIRED RELEASES. Whether or not so instructed by all of the
Noteholders, the Collateral Agent may release any Collateral and may provide any
release, termination statement or instrument of subordination required by order
of a court of competent jurisdiction or otherwise required by applicable law.
9. AMENDMENT OF THIS AGREEMENT.
9.1. GENERAL. No waiver, modification or amendment of this Agreement or the
Security Documents shall be effective unless the same shall be in writing and
signed by the Required Noteholders (and, in the case of any Security Documents,
subject to any applicable requirements set forth therein); PROVIDED, HOWEVER,
(i) no amendment or waiver shall adversely affect any present or former
Collateral Agent's rights, immunities or rights to indemnification hereunder or
under any of the Security Documents or expand its duties or reduce any amount
payable to such Collateral Agent hereunder or under any Security Documents
without the written consent of such Collateral Agent,; and (ii) no amendment to
Section 5.4 of this Agreement shall be effective without the written consent of
each of the Companies.
9.2. WAIVER. No waiver of any provision of this Agreement and no consent to
any departure by any party hereto from the provisions hereof shall be effective
unless such waiver or consent shall be set forth in a written instrument
executed by the party against which it is sought to be enforced, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on any party hereto in any case
shall entitle such party to any other or further notice or demand in the same,
similar or other circumstances.
-12-
10. MISCELLANEOUS.
10.1. FURTHER ASSURANCES, ETC. The Collateral Agent, the Noteholders, and,
by countersigning this Agreement, the Companies agree to execute and deliver
such other documents and instruments, (in form and substance reasonably
satisfactory to the Collateral Agent, in the case of any request made to or by
the Collateral Agent) and shall take such other action, in each case as the
Collateral Agent or any Secured Party may reasonably request (and reasonably
acceptable to the Collateral Agent in the case of any request made to or by the
Collateral Agent, and subject to any reimbursement requirements set forth herein
or in any of the applicable Credit Documents, the cost and expense of which the
Companies, by countersigning this Agreement, agree to pay), to effectuate and
carry out the provisions of this Agreement including, without limitation, by
recording or filing in such places as the requesting party may deem desirable,
this Agreement or such other appropriate documents or instruments.
10.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and inure
to the benefit of the Collateral Agent, each of the Noteholders and their
respective successors and permitted assigns and shall be binding on the
Companies and their successors and permitted assigns.
10.3. NOTICES. All notices and other communications made or required to be
given pursuant to this Agreement shall be in writing and shall be delivered to
the addresses set forth in Section 13.2 of the Security Agreements.
Any such notice and other communications shall be deemed to have been duly given
or made and to have become effective (i) if delivered by hand, overnight courier
or facsimile to a responsible officer of the party to which it is directed, at
the time of the receipt thereof by such officer or the sending of such facsimile
and (ii) if mailed, sent by registered or certified first class mail postage
prepaid, on the third Business Day following the mailing thereof; PROVIDED,
HOWEVER, that a Notice of Actionable Default or any other notice to be delivered
to the Collateral Agent pursuant to the terms of this Agreement shall not be
deemed to have been received by the Collateral Agent until the Collateral Agent
actually receives such notice.
10.4. TERMINATION. Upon (i) receipt by the Collateral Agent from each
Noteholder of notice that either (A) the Noteholder Debt has been indefeasibly
paid in full in cash or defeased in accordance with the terms of the Indenture
and the New Secured Notes or (B) the Noteholder Debt no longer constitutes
Secured Obligations under the Security Documents and (ii) payment in full in
cash of all Secured Obligations payable to the Collateral Agent pursuant to this
Agreement or any applicable Credit Document, any remaining Liens created by the
Security Documents shall terminate forthwith and all right, title and interest
in the Collateral shall revert to the Companies and their successors and
assigns.
-13-
10.5. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO CONFLICT
OF LAWS) AND SHALL BE A SEALED INSTRUMENT UNDER SUCH LAWS. THE PARTIES AGREE
THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE PARTIES BY MAIL AT THE ADDRESSES SPECIFIED IN Section 10.3.
THE PARTIES HEREBY WAIVE ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
10.6. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER,
OR THE PERFORMANCE OF ANY SUCH RIGHTS AND OBLIGATIONS. Except as prohibited by
law, each of the parties hereto hereby waive any right which it may have to
claim or recover in any litigation referred to in the preceding sentence any
special, exemplary, punitive or consequential damages or any damages other than,
or in addition to, actual damages. Each of the parties hereto (i) certifies that
neither the Collateral Agent or the Noteholders nor any representative, agent or
attorney of the Collateral Agent or the Noteholders has represented, expressly
or otherwise, that the Collateral Agent would not, in the event of litigation,
seek to enforce the foregoing waivers, and (ii) acknowledges that, in entering
into this Agreement, the Collateral Agent and the Noteholders are relying upon,
among other things, the waivers and certifications contained in this Section
10.6.
10.7. WAIVER OF RIGHTS. Neither any failure nor any delay on the part of
any party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, and a single or partial exercise thereof shall not
preclude any other or further exercise or the exercise of any other right, power
or privilege.
10.8. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provision.
10.9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument.
10.10. SECTION HEADINGS. The section headings used herein are for
convenience of reference only and are not to affect the construction of or be
taken into consideration in interpreting this Agreement.
-14-
10.11. COMPLETE AGREEMENT. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all prior representations, negotiations, writings, memoranda and
agreements. To the extent any provision of this Agreement conflicts with any
Security Document, as among the Secured Parties the provisions of this Agreement
shall be controlling. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than the parties hereto and the Secured
Parties any rights or remedies under or by reason of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Collateral Agent, the Noteholders and the Companies
have caused this Agreement to be duly executed by their duly authorized
officers, all as of the day and year first above written.
THE BANK OF NEW YORK,
in its capacity as Collateral Agent
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
THE NOTEHOLDERS:
GREYWOLF CAPITAL OVERSEAS FUND
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Chief Operating Officer
GREYWOLF CAPITAL PARTNERS II LP
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Chief Operating Officer
TEJAS SECURITIES GROUP, INC. 401K PLAN
& TRUST
▇▇▇▇ ▇▇▇▇▇▇ TTEE UAD 1/1/96 FBO ▇▇▇▇
▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Trustee
Signature Page to Collateral Agency Agreement
-▇-
▇▇▇▇▇▇▇▇▇▇▇▇ QUALIFIED ASSOCIATES
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Managing Member of the General
Partner
LC CAPITAL MASTER FUND, LTD.
By: /s ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Member of the Advisor
SINGER CHILDREN'S MANAGEMENT
TRUST
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Investment Advisor
LOEB PARTNERS CORP.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
JMG TRITON OFFSHORE FUND LIMITED
BY ITS INVESTMENT MANAGER, PACIFIC ASSETS
MANAGEMENT, LLC
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Member Manager
Signature Page to Collateral Agency Agreement
-3-
JMG CAPITAL PARTNERS
BY ITS GENERAL PARTNER, JMG CAPITAL
MANAGEMENT, LLC
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Member Manager
WINDWARD CAPITAL, L.P.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Portfolio Manager
Signature Page to Collateral Agency Agreement
ACCEPTED AND AGREED TO:
THE BORROWER:
iBASIS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
THE SUBSIDIARY GUARANTORS:
iBASIS GLOBAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
iBASIS SECURITIES CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
Signature Page to Collateral Agency Agreement
iBASIS HOLDINGS, INC.
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Presiden and Chief Executive Officer
Signature Page to Collateral Agency Agreement
SCHEDULE I
AMOUNTS OWED TO COLLATERAL AGENT
(SEE ATTACHED.)