Exhibit 4.9
COLLATERAL PLEDGE AND SECURITY AGREEMENT
This COLLATERAL PLEDGE AND SECURITY AGREEMENT (this "PLEDGE
AGREEMENT") is made and entered into as of July 1, 1997 among ECONOPHONE, INC.,
a New York corporation (the "PLEDGOR"), having its principal office at 00 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, The Bank of New York, a New York banking
corporation, having an office at 000 Xxxxxxx Xxxxxx, 00 Xxxx, Xxx Xxxx, Xxx Xxxx
00000 as trustee (the "TRUSTEE") for the holders (the "HOLDERS") of the Notes
(as defined herein) issued by the Pledgor under the Indenture referred to below
and The Bank of New York, as Custodian (the "CUSTODIAN").
W I T N E S S E T H
WHEREAS, the Pledgor and The Bank of New York, as Trustee, have
entered into that certain indenture dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the
"INDENTURE"), pursuant to which the Pledgor is issuing on the date hereof
$155,000,000 aggregate principal amount of 131/2% Senior Notes due 2007 (the
"NOTES"); and
WHEREAS, the Pledgor has agreed, pursuant to the Indenture, to
(i) purchase or cause the purchase of Pledged Securities (as defined herein) in
an amount that will be sufficient upon receipt of scheduled interest and
principal payments in respect thereof to provide for the payment of the first
six scheduled interest payments due on the Notes and (ii) place such Pledged
Securities (as defined herein) (or cause them to be placed) in an account with
the Custodian for the benefit of Holders of the Notes; and
WHEREAS, to secure the obligations of the Pledgor under the Indenture
and the Notes to pay in full each of the first six scheduled interest payments
on the Notes and to secure repayment of the principal, premium (if any) and
interest on the Notes in the event that the Notes become due and payable prior
to such time as the first six scheduled interest payments thereon shall have
been paid in full (the "OBLIGATIONS"), the Pledgor has agreed to (i) pledge to
the Trustee for its benefit and the ratable benefit of the Holders of the Notes,
and grant to the Trustee for its benefit and the ratable benefit of the Holders
of the Notes a security interest in, the Pledged Securities (as defined herein)
and related collateral and (ii) execute and deliver this Pledge Agreement in
order to secure the payment and performance by the Pledgor of all the
Obligations. Capitalized terms used herein and not otherwise defined herein
shall have the meanings given to such terms in the Indenture. Unless otherwise
defined herein or in the Indenture, terms used in Articles 8 or 9 of the Uniform
Commercial Code ("UCC") as in effect in the State of New York are used herein as
therein defined and terms used in Revised Article 8, as such term is defined in
31 C.F.R. Section 357.2, as modified by the amendments promulgated at 61 Fed.
Reg. 43,628 (Aug. 23, 1996) ("Revised Article 8"), are used herein as therein
defined.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises herein
contained, and in order to induce the Holders of the Notes to purchase the
Notes, the Pledgor hereby agrees with the Trustee, for the benefit of the
Trustee and for the ratable benefit of the Holders of the Notes, as follows:
SECTION 1. PLEDGE AND GRANT OF SECURITY INTEREST. The Pledgor hereby
pledges to the Trustee for its benefit and for the ratable benefit of the
Holders of the Notes, and grants to the Trustee for its benefit and for the
ratable benefit of the Holders of the Notes, a continuing first priority
security interest in and to all of the Pledgor's right, title and interest in,
to and under the following (hereinafter collectively referred to as the
"COLLATERAL"), whether characterized as investment property, general intangibles
or otherwise: (a) the United States Treasury securities identified by CUSIP
Number in Annex 1 to Exhibit A to this Pledge Agreement (the "PLEDGED
SECURITIES"), (b) any and all applicable security entitlements to the Pledged
Securities, (c) The Bank of New York custodial account in the name of
"Econophone, Inc. Collateral Pledge Account", Administrative Account No. 103765
(the "PLEDGE ACCOUNT") established and maintained with the Custodian pursuant to
this Pledge Agreement, (d) any and all related securities accounts in which
security entitlements to the Pledged Securities are carried and (e) all proceeds
of any and all of the foregoing Collateral (including, without limitation, all
cash and proceeds that constitute property of the types described in
clauses (a) - (d) of this Section 1).
In the event the Exchange Offer is not consummated and the Shelf
Registration Statement is not declared effective on or prior to January 15,
1998, and the interest rate on the Notes is increased by .5% per annum as
required by the Indenture, the Company shall purchase (or caused to be
purchased) and deliver to the Custodian additional Pledged Securities in such
amount as will be sufficient upon receipt of scheduled interest and/or principal
payments of all Pledged Securities thereafter held in the Pledge Account, in the
opinion of a nationally recognized firm of independent public accountants
selected by the Company, to provide payment for the first six scheduled interest
payments due on the Notes (assuming the additional .5% per annum remains in
effect for the entire period). The additional Pledged Securities shall be
pledged by the Company to the Trustee for the benefit of the Holders of the
Notes and shall be held in the Pledge Account.
SECTION 2. SECURITY FOR OBLIGATIONS. This Pledge Agreement secures
the prompt and complete payment when due (whether at stated maturity, by
acceleration or otherwise) of all the Obligations.
SECTION 3. DELIVERY OF COLLATERAL; PLEDGE ACCOUNT; INTEREST. (a) The
Custodian shall become the holder of a Participant's Security Entitlement (as
defined in 31 C.F.R. Section 357.2 (1997)) to the Pledged Securities, through
action by the Federal Reserve Bank of New York ("FRBNY"), as confirmed (in
writing or electronically or otherwise in accordance with standard industry
practice) to the Custodian by the FRBNY indicating that by book-entry the
Pledged Securities or a Participant's Security Entitlement thereto has been
credited to the Custodian's account on the records of the FRBNY. The Pledgor
shall become the holder of a security
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entitlement to the Pledged Securities, through the Custodian crediting the
Pledged Securities or a security entitlement thereto to the Pledge Account, as
confirmed in writing to the Pledgor and by the Custodian indicating that by
book-entry the Pledged Securities or a security entitlement thereto has been
credited to the Pledge Account on the records of the Custodian, or that the
Custodian has acquired the Pledged Securities or a security entitlement thereto
for the Pledgor and accepting the same for credit to the Pledge Account, subject
to the security interest created hereunder in favor of the Trustee.
(b) Prior to or concurrently with the execution and delivery hereof
and prior to the acquisition by the Pledgor of any security entitlement
thereto, as provided in subsection (a) of this Section 3, the Custodian
shall establish the Pledge Account on its books as an account segregated
from all other custodial or collateral accounts at its office at 000
Xxxxxxx Xxxxxx, 00 Xxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate
Trust Administration. Upon transfer of the Pledged Securities to the
Custodian (or the Custodian's acquisition of a security entitlement
thereto), as confirmed to the Custodian by the FRBNY or another securities
intermediary, the Custodian shall make appropriate book entries indicating
that the Pledged Securities and/or such security entitlement have been
credited to and are held in the Pledge Account. Subject to the other terms
and conditions of this Pledge Agreement, all funds or other property held
by the Custodian pursuant to this Pledge Agreement shall be held in the
Pledge Account subject (except as expressly provided in Sections 4(a), (b)
and (c) hereof) to the exclusive dominion and control of the Trustee and
exclusively for the benefit of the Trustee and for the ratable benefit of
the Holders of the Notes and segregated from all other funds or other
property otherwise held by the Trustee. Notwithstanding anything else in
this Pledge Agreement or any other agreement, the Custodian agrees that it
shall comply with all entitlement orders concerning the Pledged Securities
originated by the Trustee without further consent by and notwithstanding
any direction by the Pledgor.
(c) All Collateral shall be retained in the Pledge Account pending
disbursement pursuant to the terms hereof.
(d) Concurrently with the execution and delivery of this Pledge
Agreement the Custodian is delivering to the Trustee a confirmation, in the
form of EXHIBIT A hereto, confirming the security interest of the Pledgee
is reflected on its books and records as provided in this Pledge Agreement.
(e) Within 30 days of the execution and delivery of this Pledge
Agreement, the Pledgor will deliver to the Trustee acknowledgement copies
or stamped receipt copies of proper financing statements, duly filed under
the UCC of the State of New York, covering the Collateral described in this
Pledge Agreement.
SECTION 4. DISBURSEMENTS. (a) Three business days prior to the
due date of any of the first six scheduled interest payments on the Notes, the
Pledgor may, pursuant to written instructions given by the Pledgor to the
Trustee (an "ISSUER ORDER"), direct the Trustee to cause the release from the
Pledge Account and to pay to the Holders of the Notes proceeds
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sufficient to provide for payment in full of such interest then due on the
Notes. Upon receipt of an Issuer Order, the Trustee will cause the release of
funds in an amount sufficient to provide for the payment of the interest on the
Notes in accordance with the Issuer Order and the payment provisions of the
Indenture to the Holders of the Notes from (and to the extent of) proceeds of
the Pledged Securities in the Pledge Account. Nothing in this Section 4 shall
affect the Trustee's rights to apply the Collateral to the payments of amounts
due on the Notes upon acceleration thereof.
(b) If the Pledgor makes any interest payment or portion of an
interest payment for which the Collateral is security from a source of
funds other than the Pledge Account ("PLEDGOR FUNDS"), the Pledgor may,
after payment in full of such interest payment, direct the Trustee pursuant
to an Issuer Order to cause to be released to the Pledgor or to another
party at the direction of the Pledgor (the "PLEDGOR'S DESIGNEE") proceeds
from the Pledge Account in an amount less than or equal to the amount of
Pledgor Funds applied to such interest payment. Upon receipt by the
Trustee of such Issuer Order and provided the Trustee has received such
interest payment, the Trustee shall promptly cause the payment over to the
Pledgor or the Pledgor's Designee, as the case may be, the requested amount
from proceeds in the Pledge Account.
(c) If at any time the principal of and interest on the Pledged
Securities exceeds 100% of the amount sufficient, in the written opinion of
a nationally recognized firm of independent accountants selected by the
Pledgor and delivered to the Trustee, to provide for payment in full of the
remaining first six scheduled interest payments due on the Notes, the
Pledgor may direct the Trustee to cause to be released any such excess
amount to the Pledgor or to the Pledgor's Designee. Upon receipt of an
Issuer Order (which shall include a certificate from such nationally
recognized firm of independent accountants stating the amount by which the
Pledged Securities exceeds the amount required to be held in the Pledge
Account) the Trustee shall promptly cause the payment over to the Pledgor
or the Pledgor's Designee, as the case may be, any such excess amount.
(d) Upon payment in full of the first six scheduled interest payments
on the Notes, the security interest in the Collateral evidenced by this
Pledge Agreement will automatically terminate and be of no further force
and effect and the Collateral shall promptly be paid over and transferred
to the Pledgor. Furthermore, upon the release of any Collateral from the
Pledge Account in accordance with the terms of this Pledge Agreement,
whether upon release of Collateral to Holders as payment of interest or
otherwise, the security interest evidenced by this Pledge Agreement in such
released Collateral will automatically terminate and be of no further force
and effect.
(e) At least three Business Days prior to the due date of each of the
first six scheduled interest payments on the Notes, the Pledgor shall give
the Trustee notice (by Issuer Order) as to whether such interest payment
will be made pursuant to Section 4(a) or 4(b) hereof and the respective
amounts of interest that will be paid from the Pledge Account and from
Pledgor Funds. Any Pledgor Funds to be used to make any interest
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payment shall be delivered to the Trustee, in immediately available funds,
prior to 10 a.m. on such interest payment date. If no such notice is given
or such Pledgor Funds have not been so delivered, the Trustee will act
pursuant to Section 4(a) hereof as if it had received an Issuer Order
pursuant thereto for the payment in full of the interest then due from the
Pledge Account.
(f) Upon the due date of any of the first six scheduled interest
payments on the Notes, the Trustee will notify the Pledgor if there are
insufficient funds in the Pledge Account to make the scheduled interest
payment.
(g) Nothing contained in Section 1, Section 3, this Section 4 or any
other provision of this Pledge Agreement shall (i) afford the Pledgor any
right to issue entitlement orders with respect to any security entitlement
to the Pledged Securities or any securities account in which any such
security entitlement may be carried, or otherwise afford the Pledgor
control of any such security entitlement or (ii) otherwise give rise to any
rights of the Pledgor with respect to the Pledged Securities, any security
entitlement thereto or any securities account in which any such security
entitlement may be carried, other than the Pledgor's rights under this
Pledge Agreement as the beneficial owner of collateral pledged to and
subject to the exclusive dominion and control (except as expressly provided
in Sections 4(a), (b) and (c) hereof) of the Trustee in its capacity as
such (and not as a securities intermediary).
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby
represents and warrants that:
(a) The execution and delivery by the Pledgor of, and the performance
by the Pledgor of its obligations under, this Pledge Agreement will not
contravene any provision of applicable law or the Certificate of
Incorporation of the Pledgor or any material agreement or other material
instrument binding upon the Pledgor or any of its subsidiaries or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Pledgor or any of its subsidiaries, or result in the
creation or imposition of any Lien on any assets of the Pledgor, except for
the security interests granted under this Pledge Agreement; no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required (i) for the performance by the
Pledgor of its obligations under this Pledge Agreement, (ii) for the pledge
by the Pledgor of the Collateral pursuant to this Pledge Agreement or (iii)
except for any such consents, approvals, authorizations or orders required
to be obtained by the Trustee (or the Holders) for reasons other than the
consummation of the transaction contemplated hereby, for the exercise by
the Trustee of the rights provided for in this Pledge Agreement or the
remedies in respect of the Collateral pursuant to this Pledge Agreement.
(b) The Pledgor is the owner of the Collateral free and clear of any
Lien or claims of any person or entity (except for the security interests
granted under this Pledge Agreement). No financing statement covering the
Pledgor's interest in the Pledged
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Securities is on file in any public office, other than any financing
statements filed pursuant to this Pledge Agreement.
(c) This Pledge Agreement has been duly authorized, validly executed
and delivered by the Pledgor and constitutes a valid and binding agreement
of the Pledgor, enforceable against the Pledgor in accordance with its
terms, except as (i) the enforceability hereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, preference, reorganization,
moratorium or similar laws now or hereafter in effect relating to or
affecting creditors' rights or remedies generally, (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability, (iii) the exculpation provisions and rights to
indemnification hereunder may be limited by U.S. federal and state
securities laws and public policy considerations and (iv) the waiver of
rights and defenses contained in Section 11(b), Section 14.10 and
Section 14.14 hereof may be limited by applicable law.
(d) Upon the confirmation to the Trustee of its security interest
pursuant to Section 3(d) hereof and upon appropriate book-entries in
accordance with this Agreement, the pledge of and grant of a security
interest in the Collateral securing the payment of the Obligations for the
benefit of the Trustee and the Holders of the Notes will constitute a first
priority perfected security interest in such Collateral, enforceable as
such against all creditors of the Pledgor (and any persons purporting to
purchase any of the Collateral from the Pledgor).
(e) There are no legal or governmental proceedings pending or, to the
best of the Pledgor's knowledge, threatened to which the Pledgor or any of
its subsidiaries is a party or to which any of the properties of the
Pledgor or any such subsidiary is subject that would materially adversely
affect the power or ability of the Pledgor to perform its obligations under
this Pledge Agreement or to consummate the transactions contemplated
hereby.
(f) The pledge of the Collateral pursuant to this Pledge Agreement is
not prohibited by law or governmental regulation (including, without
limitation, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System) applicable to the Pledgor.
(g) No Event of Default exists.
SECTION 6. FURTHER ASSURANCES. The Pledgor will, promptly upon
request by the Trustee, execute and deliver or cause to be executed and
delivered, or use its reasonable best efforts to procure and deliver, all
assignments, instruments and other documents, all in form and substance
reasonably satisfactory to the Trustee, to the Trustee and take any other
actions that are necessary or, in the opinion of the Trustee, desirable to
perfect, continue the perfection of, or protect the first priority of the
Trustee's security interest in and to the Collateral, to protect the Collateral
against the rights, claims, or interests of third persons (other than any such
rights, claims or interests created by or arising through the Trustee) or to
effect the purposes of this Pledge Agreement. The Pledgor also agrees, whether
or not requested by the Trustee, to take all
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actions that are necessary to perfect or continue the perfection of, or to
protect the first priority of, the Trustee's security interest in and to the
Collateral, including the filing of all necessary financing and continuation
statements, and to protect the Collateral against the rights, claims or
interests of third persons (other than any such rights, claims or interests
created by or arising through the Trustee).
SECTION 7. COVENANTS. The Pledgor covenants and agrees with the
Trustee and the Holders of the Notes that from and after the date of this Pledge
Agreement until the payment in full in cash of the Obligations:
(a) that (i) it will not (and will not purport to) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Collateral or its beneficial interest therein, and (ii) it will not create
or permit to exist any Lien or other adverse interest in or with respect to
its beneficial interest in any of the Collateral (except for the security
interests granted under this Pledge Agreement); and
(b) that it will not (i) enter into any agreement or understanding
that restricts or inhibits or purports to restrict or inhibit the Trustee's
rights or remedies hereunder, including, without limitation, the Trustee's
right to sell or otherwise dispose of the Collateral or (ii) fail to pay or
discharge any tax, assessment or levy of any nature with respect to its
beneficial interest in the Collateral not later than five days prior to the
date of any proposed sale under any judgment, writ or warrant of attachment
with respect to such beneficial interest.
SECTION 8. POWER OF ATTORNEY. In addition to all of the powers
granted to the Trustee pursuant to the Indenture, the Pledgor hereby appoints
and constitutes the Trustee as the Pledgor's attorney-in-fact (with full power
of substitution) to exercise in accordance with the terms of this Agreement to
the fullest extent permitted by law all of the following powers upon and at any
time after the occurrence and during the continuance of an Event of Default:
(a) collection of proceeds of any Collateral and (b) conveyance of any item of
Collateral to any purchaser thereof. The Trustee's authority under this
Section 8 shall include, without limitation, the authority (i) to endorse and
negotiate any checks or instruments representing proceeds of Collateral in the
name of the Pledgor, execute and give receipt for any certificate of ownership
or any document constituting Collateral, transfer title to any item of
Collateral, sign the Pledgor's name on all financing statements (to the extent
permitted by applicable law) or any other documents deemed necessary or
appropriate by the Trustee to preserve, protect or perfect the Trustee's
security interest in the Collateral and file the same, prepare, file and sign
the Pledgor's name on any notice of Lien, and (ii) to take any other actions
arising from or incident to the powers granted to the Trustee in this Pledge
Agreement, provided that this Section 8 creates no obligation on the part of the
Trustee to perform any of the authorized acts. This power of attorney is
coupled with an interest and is irrevocable by the Pledgor and shall terminate
upon the termination of the security interests created hereunder.
SECTION 9. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Trustee hereunder are being granted in order to preserve
and protect the security
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interest of the Trustee and the Holders of the Notes in and to the Collateral
granted hereby and shall not be interpreted to, and shall not impose any duties
on the Trustee in connection therewith other than those expressly provided
herein or imposed under applicable law. Except as provided by applicable law or
by the Indenture, the Trustee shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the Trustee
accords similar property held by the Trustee for similar accounts, it being
understood that the Trustee in its capacity as such shall not have any
responsibility for (a) except as provided in Section 4 hereof, ascertaining or
taking action with respect to calls, conversions, exchanges, maturities or other
matters relative to any Collateral, whether or not the Trustee has or is deemed
to have knowledge of such matters, (b) taking any necessary steps to preserve
rights against any parties with respect to any Collateral or (c) investing or
reinvesting any of the Collateral or any loss on any investment.
SECTION 10. INDEMNITY. The Pledgor shall indemnify, hold harmless
and defend the Custodian and the Trustee and their respective directors,
officers, agents and employees, from and against any and all claims, actions,
obligations, liabilities and expenses, including reasonable defense costs,
reasonable investigative fees and costs, and reasonable legal fees and damages
arising from the Custodian's or the Trustee's performance under this Pledge
Agreement, except to the extent that such claim, action, obligation, liability
or expense is directly attributable to the bad faith, gross negligence or
willful misconduct of such indemnified person.
SECTION 11. REMEDIES UPON EVENT OF DEFAULT. If any Event of Default
under the Indenture shall have occurred and be continuing:
(a) The Trustee and the Holders of the Notes shall have, in addition
to all other rights given by law or by this Pledge Agreement or the
Indenture, all of the rights and remedies with respect to the Collateral of
a secured party under the UCC in effect in the State of New York at that
time. In addition, with respect to any Collateral that shall then be in or
shall thereafter come into the possession or custody of the Trustee, the
Trustee may sell or cause the same to be sold at any broker's board or at
public or private sale, in one or more sales or lots, at such price or
prices as the Trustee may deem best, for cash or on credit or for future
delivery, without assumption of any credit risk. The purchaser of any or
all Collateral which has been sold in accordance with applicable law shall
thereafter hold the same absolutely, free from any claim, encumbrance or
right of any kind whatsoever created by or through the Pledgor. Unless any
of the Collateral threatens, in the reasonable judgment of the Trustee, to
decline speedily in value or is or becomes of a type sold on a recognized
market, the Trustee will give the Pledgor reasonable notice of the time and
place of any public sale thereof, or of the time after which any private
sale or other intended disposition is to be made. Any sale of the
Collateral conducted in conformity with reasonable commercial practices of
banks, insurance companies, commercial finance companies, or other
financial institutions disposing of property similar to the Collateral
shall be deemed to be commercially reasonable. Any requirements of
reasonable notice shall be met if such notice is mailed to the Pledgor as
provided in Section 14.1 hereof at least ten (10) days before the time of
the sale or disposition. The Trustee or any Holder of Notes may, in its
own name or in
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the name of a designee or nominee, buy any of the Collateral at any public
sale and, if permitted by applicable law, at any private sale. All
expenses (including court costs and reasonable attorneys' fees, expenses
and disbursements) of, or incident to, the enforcement of any of the
provisions hereof shall be recoverable from the proceeds of the sale or
other disposition of the Collateral to the extent permitted by applicable
law.
(b) The Pledgor further agrees to use its reasonable best efforts to
do or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Collateral pursuant to this
Section 11 valid and binding and in compliance with any and all other
applicable requirements of law. The Pledgor further agrees that a breach
of any of the covenants contained in this Section 11 will cause irreparable
injury to the Trustee and the Holders of the Notes, that the Trustee and
the Holders of the Notes have no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in
this Section 11 shall be specifically enforceable against the Pledgor, and
the Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense that
no Event of Default has occurred.
SECTION 12. EXPENSES. The Pledgor will upon demand pay to the
Trustee the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees, expenses and disbursements of its counsel,
experts and agents retained by the Trustee, that the Trustee may incur in
connection with (a) the review, negotiation and administration of this Pledge
Agreement, (b) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (c) the exercise or
enforcement of any of the rights of the Trustee and the Holders of the Notes
hereunder or (d) the failure by the Pledgor to perform or observe any of the
provisions hereof.
SECTION 13. SECURITY INTEREST ABSOLUTE. All rights of the Trustee
and the Holders of the Notes and security interests hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Indenture;
(c) any exchange, surrender, release or non-perfection of any Liens
on any other collateral for all or any of the Obligations; or
(d) to the extent permitted by applicable law, any other circumstance
which might otherwise constitute a defense available to, or a discharge of,
the Pledgor in respect of the Obligations or of this Pledge Agreement.
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SECTION 14. MISCELLANEOUS PROVISIONS.
Section 14.1. NOTICES. Any notice or communication given hereunder
shall be sufficiently given if in writing and delivered in person or mailed by
first class mail, commercial courier service or telecopier communication,
addressed as follows:
IF TO THE PLEDGOR:
Econophone, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Chief Financial Officer
IF TO THE TRUSTEE:
The Bank of New York
000 Xxxxxxx Xxxxxx
00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Corporate Trust Administration
Section 14.2. SEVERABILITY. The provisions of this Pledge Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Pledge Agreement in any jurisdiction.
Section 14.3. HEADINGS. The headings in this Pledge Agreement have
been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 14.4. COUNTERPART ORIGINALS. This Pledge Agreement may be
signed in two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement.
Section 14.5. BENEFITS OF PLEDGE AGREEMENT. Nothing in this Pledge
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder, and the Holders of the Notes, any benefit
or any legal or equitable right, remedy or claim under this Pledge Agreement.
Section 14.6. AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or
waiver of any provision of this Pledge Agreement and any consent to any
departure by the Pledgor from any provision of this Pledge Agreement shall be
effective only if made or duly given in
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compliance with all of the terms and provisions of the Indenture, and neither
the Trustee nor any Holder of Notes shall be deemed, by any act, delay,
indulgence, omission or otherwise, to have waived any right or remedy hereunder
or to have acquiesced in any Default or Event of Default or in any breach of any
of the terms and conditions hereof. Failure of the Trustee or any Holder of
Notes to exercise, or delay in exercising, any right, power or privilege
hereunder shall not preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the Trustee or any
Holder of Notes of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy that the Trustee or such Holder of
Notes would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
Section 14.7. INTERPRETATION OF AGREEMENT. To the extent a term or
provision of this Pledge Agreement conflicts with the Indenture, the Indenture
shall control with respect to the subject matter of such term or provision.
Acceptance of or acquiescence in a course of performance rendered under this
Pledge Agreement shall not be relevant to determine the meaning of this Pledge
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.
Section 14.8. CONTINUING SECURITY INTEREST; TERMINATION. (a) This
Pledge Agreement shall create a continuing security interest in and to the
Collateral and shall, unless otherwise provided in this Pledge Agreement, remain
in full force and effect until the payment in full in cash of the Obligations.
This Pledge Agreement shall be binding upon the Pledgor, its transferees,
successors and assigns, and shall inure, together with the rights and remedies
of the Trustee hereunder, to the benefit of the Trustee, the Holders of the
Notes and their respective successors, transferees and assigns.
(b) This Pledge Agreement (other than the Pledgor's obligations under
Sections 10 and 12) shall terminate upon the payment in full in cash of the
Obligations. At such time, the Trustee shall, pursuant to an Issuer Order,
reassign and redeliver to the Pledgor all of the Collateral hereunder that
has not been sold, disposed of, retained or applied by the Trustee in
accordance with the terms of this Pledge Agreement and the Indenture and
take all actions that are necessary or that the Pledgor may reasonably
request to release the security interest created by this Pledge Agreement
in and to the Collateral, including the execution and delivery of all
termination statements necessary to terminate any financing or continuation
statements filed with respect to the Collateral. Such reassignment and
redelivery shall be without warranty by or recourse to the Trustee in its
capacity as such, except as to the absence of any Liens on the Collateral
created by or arising through the Trustee, and shall be at the reasonable
expense of the Pledgor.
Section 14.9. SURVIVAL OF REPRESENTATIONS AND COVENANTS. All
representations, warranties and covenants of the Pledgor contained herein shall
survive the execution and delivery of this Pledge Agreement, and shall terminate
only upon the termination of this Pledge Agreement.
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Section 14.10. WAIVERS. The Pledgor waives presentment and demand
for payment of any of the Obligations, protest and notice of dishonor or default
with respect to any of the Obligations, and all other notices to which the
Pledgor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
Section 14.11. AUTHORITY OF THE TRUSTEE. (a) The Trustee shall have
and be entitled to exercise all powers hereunder that are specifically granted
to the Trustee by the terms hereof, together with such powers as are reasonably
incident thereto. The Trustee may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel of its selection and to act in reliance upon the
advice of counsel concerning all such matters. Except as otherwise expressly
provided in this Pledge Agreement or the Indenture, neither the Trustee nor any
director, officer, employee, attorney or agent of the Trustee shall be liable to
the Pledgor for any action taken or omitted to be taken by the Trustee, in its
capacity as Trustee, hereunder, except for its own bad faith, gross negligence
or willful misconduct, and the Trustee shall not be responsible for the
validity, effectiveness or sufficiency hereof or of any document or security
furnished pursuant hereto. The Trustee and its directors, officers, employees,
attorneys and agents shall be entitled to rely on any communication, instrument
or document believed by it or them to be genuine and correct and to have been
signed or sent by the proper person or persons.
(b) The Pledgor acknowledges that the rights and responsibilities of
the Trustee under this Pledge Agreement with respect to any action taken by
the Trustee or the exercise or non-exercise by the Trustee of any option,
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Pledge Agreement shall, as between the
Trustee and the Holders of the Notes, be governed by the Indenture and by
such other agreements with respect thereto as may exist from time to time
among them, but, as between the Trustee and the Pledgor, the Trustee shall
be conclusively presumed to be acting as agent for the Holders of the Notes
with full and valid authority so to act or refrain from acting, and the
Pledgor shall not be obligated or entitled to make any inquiry respecting
such authority.
Section 14.12 FINAL EXPRESSION. This Pledge Agreement, together with
the Indenture and any other agreement executed in connection herewith, is
intended by the parties as a final expression of this Pledge Agreement and is
intended as a complete and exclusive statement of the terms and conditions
thereof.
Section 14.13. RIGHTS OF HOLDERS OF THE NOTES. No Holder of Notes
shall have any independent rights hereunder other than those rights granted to
individual Holders of the Notes pursuant to Section 6.07 of the Indenture;
PROVIDED that nothing in this subsection shall limit any rights granted to the
Trustee under the Notes or the Indenture.
Section 14.14. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL; WAIVER OF DAMAGES. (a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY
AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING
OUT OF, CONNECTED WITH, RELATED
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TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE PLEDGOR, THE
TRUSTEE AND THE HOLDERS OF THE NOTES IN CONNECTION WITH THIS PLEDGE AGREEMENT,
AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. NOTWITHSTANDING THE
FOREGOING, THE MATTERS IDENTIFIED IN 31 C.F.R. PART 357, 61 FED. REG. 43626
(AUG. 23, 1996), INCLUDING REVISED ARTICLE 8, SHALL BE GOVERNED SOLELY BY THE
LAWS SPECIFIED THEREIN.
(b) THE PLEDGOR AGREES TO SUBMIT TO THE JURISDICTION OF ANY FEDERAL
OR STATE COURT LOCATED IN THE CITY OF NEW YORK IN ANY SUIT, ACTION OR
PROCEEDING WITH RESPECT TO THIS PLEDGE AGREEMENT AND FOR ACTIONS BROUGHT
UNDER U.S. FEDERAL OR STATE SECURITIES LAWS.
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IN WITNESS WHEREOF, the Pledgor, the Trustee and the Custodian have
each caused this Pledge Agreement to be duly executed and delivered as of the
date first above written.
Pledgor:
ECONOPHONE, INC.
By:_____________________________________
Name: Xxxx X. Xxxx
Title: Chief Operating Officer
and Chief Financial Officer
Trustee:
THE BANK OF NEW YORK,
as Trustee
By:_____________________________________
Name:
Title:
Custodian:
THE BANK OF NEW YORK,
as Custodian
By:_____________________________________
Name:
Title:
Annex I
Schedule of U.S. Government Obligations
Pledged to Pledgee under the Agreement
Designation by Name, Series, Maturity Date and CUSIP Number
Owned by Pledgor as follows:
NAME CUSIP NO. AMOUNT (AT MATURITY) MATURITY DATE
United States Treasury 000000XX0 7,804,000 01/15/98
Xxxxxx Xxxxxx Xxxxxxxx 000000X00 8,885,000 07/15/98
Xxxxxx Xxxxxx Xxxxxxxx 000000X00 9,251,000 01/15/99
Xxxxxx Xxxxxx Xxxxxxxx 000000X00 9,546,000 07/15/99
Xxxxxx Xxxxxx Xxxxxxxx 000000X00 9,850,000 01/15/00
Xxxxxx Xxxxxx Xxxxxxxx 000000X00 10,164,000 06/30/00
