1
EXHIBIT 4.16
COMPANY CONVERTIBLE NOTE SECURITY AND PLEDGE AGREEMENT
THIS COMPANY CONVERTIBLE NOTE SECURITY AND PLEDGE AGREEMENT (the
"Security Agreement") is made and entered into as of May 31, 1996 by PETERSBURG
LONG DISTANCE INC., an Ontario corporation (the "Company"), in favor of THE BANK
OF NEW YORK, a New York banking corporation, as trustee (in such capacity, the
"Convertible Note Trustee") under the Convertible Note Indenture (as defined
herein) for the holders of the Convertible Notes (as hereinafter defined), THE
BANK OF NEW YORK, a New York banking corporation, as trustee (in such capacity,
the "Senior Note Trustee") under the Senior Note Indenture (as defined herein)
for the holders of the Senior Notes (as defined herein), and THE BANK OF NEW
YORK, as collateral agent (in such capacity, the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, the Company, as issuer, the Convertible Note Trustee, and NWE
Capital (Cyprus) Limited, a Cypriot corporation ("NWE Cyprus"), PLD Asset
Leasing Limited, a Cypriot corporation ("PLD Leasing"), PLD Capital Limited, a
Cypriot corporation ("PLD Capital", together with PLD Leasing, the "Leasing
Companies"), Wireless Technology Corporations Limited, a British Virgin Islands
company ("WTC"), and Baltic Communications Limited, a Russian joint stock
company of the closed type ("BCL"), as guarantors (the "Convertible Note
Guarantors"), have entered into an indenture dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Convertible Note Indenture") pursuant to which the Company is issuing
$26,500,000 in aggregate principal amount of its 9% Convertible Subordinated
Notes due 2006 (the "Convertible Notes"); and
WHEREAS, the Company, as issuer, the Senior Note Trustee, and NWE
Cyprus, the Leasing Companies, WTC and BCL, as guarantors (the "Senior Note
Guarantors" and, together with the Convertible Note Guarantors, the
"Guarantors"), have entered into an indenture dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Senior Note Indenture") pursuant to which the Company is issuing
$123,000,000 in aggregate principal amount at Stated Maturity of its 14% Senior
Discount Notes due 2004 (the "Senior Notes"); and
WHEREAS, to secure its obligations under the Convertible Note Indenture
and the Convertible Notes and the other Convertible Note Collateral Documents
(as defined in the Senior Note Indenture) (together with the Convertible Note
Guarantors' obligations under the Convertible Note Indenture, the Guarantees
contained therein (the "Convertible Note Guarantees") and the Convertible Note
Collateral Documents, the "Convertible Note Obligations") and to secure its
obligations under the Senior Note Indenture and the Senior Notes and the other
Senior Collateral Documents (as defined in the Convertible Note Indenture)
(together with the Senior Note Guarantors' obligations under the Senior Note
Indenture, the guarantees contained therein (the "Senior Note Guarantees") and
the Senior Note Collateral Documents, the "Senior Note Obligations"), the
Company has agreed (i) to grant to the
2
Collateral Agent for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes and for the benefit
of the Senior Note Trustee and for the equal and ratable benefit of the Holders
of the Senior Notes, Liens and security interests in and to the Collateral (as
defined herein) and (ii) to execute and deliver this Security Agreement in order
to secure the payment and performance by the Company and the Guarantors of the
Convertible Note Obligations and the Senior Note Obligations (collectively, the
"Obligations").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and in order to induce
the Holders of the Convertible Notes to purchase the Convertible Notes and the
Holders of the Senior Notes to purchase the Senior Notes, the Company hereby
agrees with the Collateral Agent, with the Convertible Note Trustee for its
benefit and the equal and ratable benefit of the Holders of the Convertible
Notes and with the Senior Note Trustee for its benefit and the equal and ratable
benefit of the Holders of the Senior Notes as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Convertible
Note Indenture. In addition to any other defined terms used herein, the
following terms shall constitute defined terms for the purposes of this Security
Agreement:
"Default" means a "Default" as defined in Section 1.1 of the
Convertible Note Indenture until the Convertible Notes are no longer
outstanding and the Convertible Note Indenture has been satisfied and
discharged, in which case a "Default" means a "Default" as defined in
Section 1.1 of the Senior Note Indenture.
"Event of Default" means an "Event of Default" as defined in
Section 1.1 of the Convertible Note Indenture until the Convertible
Notes are no longer outstanding and the Convertible Note Indenture has
been satisfied and discharged, in which case "Event of Default" means
an "Event of Default" as defined in Section 1.1 of the Senior Note
Indenture.
"Permitted Liens" means "Permitted Liens" as defined in
Section 1.1 of the Convertible Note Indenture until the Convertible
Notes are no longer outstanding and the Convertible Note Indenture has
been satisfied and discharged, in which case "Permitted Liens" means
"Permitted Liens" as defined in Section 1.1 of the Senior Note
Indenture.
"Trustees" means, collectively, the Senior Note Trustee and
the Convertible Note Trustee.
SECTION 2. CREATION OF SECURITY INTEREST. The Company hereby grants to
the Collateral Agent for the benefit of the Convertible Note Trustee and for the
equal and ratable benefit of the Holders of the Convertible Notes and for the
benefit of the Senior Note Trustee and for the equal and ratable benefit of the
Holders of the Senior Notes, Liens and a
2
3
continuing security interest in and to the collateral described in Section 3
hereof (the "Collateral") in order to secure the payment and performance of all
Obligations.
SECTION 3. COLLATERAL. The Collateral is:
(a) Technocom Preferred Stock. (i) All Technocom Preferred Stock,
whether now owned or hereafter acquired, including those shares of Capital Stock
of Technocom listed on Schedule A attached hereto, (ii) all other securities
that the Company may, with the prior written approval of the Convertible Note
Trustee and the Holders of the Convertible Notes, unless specifically permitted
by the Convertible Note Indenture, substitute for any and all of the shares
referred to in clause (i) of this Section 3(a) or any securities substituted for
any substituted securities; (iii) all other securities, warrants, options,
rights to purchase securities, instruments, rights, moneys, proceeds and
property whatsoever, including without limitation, all dividends or other
distributions and interest paid or payable thereon, which may at any time be,
derived from, accrue on or be offered in respect of, any of the Technocom
Preferred Stock and the securities referred to in clause (ii) above, whether by
way of sale, transfer, assignment, redemption, exchange, conversion, option,
rights, bonus, preference, capital reorganization, merger, combination,
dissolution, liquidation or other termination of existence or otherwise
howsoever; and references to Technocom Preferred Stock and the securities
referred to in clause (ii) above shall include references to all existing and
future certificates evidencing title and relating thereto; and references to
Technocom Preferred Stock and the securities referred to in clause (ii) above
include references to any part or kind thereof, provided, that the Technocom
Preferred Stock and the securities referred to in clause (ii) above shall not
include the single Ordinary Share of Technocom into which the Technocom
Preferred Stock held by the Company may be converted under the terms existing on
the Issue Date governing such Technocom Preferred Stock;
(b) Qualified Investments. All Qualified Investments, whether now
or hereafter acquired by the Company, including those Qualified Investments
listed on Schedule B attached hereto, made with dividends, distributions and
payments constituting Technocom Preferred Stock, including all products and
proceeds thereof, and with all funds or Eligible Cash Equivalents in the Company
Convertible Note Escrow Account, and the certificates, agreements, documents,
notes, collateral documents and instruments representing or relating to such
Qualified Investments, all contract rights, instruments, general intangibles and
other obligations or other receivables of any kind relating to such Qualified
Investments, all Liens relating to or securing such Qualified Investments and
the related collateral documents which grant such Liens and all products and
proceeds of such Qualified Investments, including without limitation, all
dividends, options, warrants, rights, subscriptions, all interest and principal
payments, and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of the
Qualified Investments;
(c) Company Convertible Note Escrow Account. The Company
Convertible Note Escrow Account and all funds contained therein and all
Investments made by the Escrow Agent
3
4
(as defined in the Company Convertible Note Escrow Account Agreement) therewith
(whether or not constituting Eligible Cash Equivalents) and all proceeds
thereof;
(d) Intercompany Notes. All Intercompany Notes, whether executed on
the Issue Date or thereafter, from any Restricted Subsidiary (or substitutes,
replacements and proceeds thereof) evidencing loans or advances made by the
Company with dividends, distributions, payments on or otherwise with Technocom
Preferred Stock, including all products and payments thereof, and all funds and
Eligible Cash Equivalents in the Company Convertible Note Escrow Account or
other Collateral, all Liens securing such Intercompany Notes and the related
collateral documents, and the instruments representing such Intercompany Notes,
and, except as otherwise provided herein, all products and proceeds of such
Intercompany Notes, including, without limitation, all interest and principal
payments, instruments, and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for the Intercompany
Notes; and
(e) After-acquired Collateral and Proceeds. All items described in
this Section 3 (other than those items specifically excluded), whether now owned
or hereafter at any time acquired by the Company and wherever located, including
(except as otherwise provided herein) all replacements, additions, accessions,
substitutions, repairs, proceeds and products relating thereto or therefrom, and
all documents, ledger sheets, files, books and records of the Company relating
thereto. Proceeds hereunder include (i) whatever is now or hereafter received by
the Company upon the sale, exchange, collection or other disposition of any item
of Collateral; (ii) any property of the type or types described in subsections
(a), (b) or (d) now or hereafter acquired by the Company with any proceeds of
Collateral hereunder; and (iii) any payments under any insurance or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral.
SECTION 4. DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of the Collateral Agent 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 Agent, and shall be accompanied by any required transfer tax
stamps. Upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right, at any time in its discretion and
without notice to the Company, but subject to its compliance with the
requirements of applicable law, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Collateral. In
addition, upon the occurrence and during the continuance of an Event of Default,
but subject to its compliance with the requirements of applicable law, the
Collateral Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Technocom Preferred Stock or Qualified
Investments constituting Collateral for certificates or instruments of smaller
or larger denominations.
4
5
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants to the Collateral Agent and the Trustees that, except as
specified in Schedule C attached hereto:
(a) Legal Power. The execution, delivery and performance by the
Company of this Security Agreement are within the Company's legal powers, have
been duly authorized by all necessary corporate action, require no action by or
in respect of, or filing with (except for any filings provided for hereunder),
any governmental authority, require no consent of any other Person and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the articles of incorporation or bylaws of the Company or of
any agreement (after giving effect to the use of proceeds of the issuance of the
Convertible Notes), judgment, injunction, order, decree or other instrument
binding upon the Company or result in the creation or imposition of any Lien on
any asset of the Company (other than the Liens created by this Security
Agreement, the Company Convertible Note Escrow Account Agreement and the other
Convertible Note Collateral Documents) and the Liens created by the Senior Note
Indenture and the Senior Note Collateral Documents.
(b) Technocom Preferred Stock. The Technocom Preferred Stock has
been duly authorized and validly issued and is fully paid and non-assessable.
The Technocom Preferred Stock represents and will at all times represent all of
the Preferred Stock of Technocom owned by the Company.
(c) Title to Collateral. The Company is the legal, record and
beneficial owner of the Technocom Preferred Stock, and any Intercompany Notes
existing on the Issue Date (the "Existing Collateral"), free and clear of any
Lien or claims of any person except for the Liens listed on Schedule D attached
hereto and the Liens created by this Security Agreement, the Company Convertible
Note Escrow Account Agreement and any of the other Convertible Note Collateral
Documents.
(d) Enforceability. This Security Agreement has been duly executed
and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally or general principles of equity and
commercial reasonableness and except that a Canadian court will only render
judgment in Canadian currency.
(e) Perfection; Priority. Upon the execution and delivery of the
Company Convertible Note Escrow Account Agreement, which is being done
contemporaneously with the execution and delivery of this Security Agreement,
the delivery to the Collateral Agent of the Existing Collateral and the filing
of the Convertible Note Collateral Documents relating to the Existing Collateral
and the documents listed on Schedule E attached hereto, to the extent such
security interests are created under applicable federal and New York laws, the
security interest in the Collateral created pursuant to this Security Agreement
and the Company Convertible Note
5
6
Escrow Account Agreement are valid and perfected first priority Liens and
security interests, subject to the Liens listed on Schedule D attached hereto in
the Existing Collateral, securing the payment of the Obligations for the benefit
of the Convertible Note Trustee and for the equal and ratable benefit of the
Holders of the Convertible Notes and for the benefit of the Senior Note Trustee
and for the equal and ratable benefit of the Holders of the Senior Notes, and
enforceable as such against all creditors of the Company and any Persons
purporting to purchase any of the Existing Collateral from the Company other
than as permitted by the Convertible Note Indenture; as of the date hereof (and
after giving effect to the use of proceeds of the issuance of the Convertible
Notes), there are no other security interests in or Liens on the Existing
Collateral or any portion thereof, and no financing statement, pledge, notice of
Lien, assignment or collateral assignment, mortgage or deed of trust covering
the Existing Collateral or any portion thereof ("Lien Notice") exists or is on
file in any public office, except with respect to Liens listed on Schedule E
attached hereto, the Liens created by this Security Agreement and the other
Convertible Note Collateral Documents and Liens to be released in connection
with the use of proceeds of the issuance of the Convertible Notes.
(f) Offices. The Company's chief executive offices are located at
the address shown as the chief executive office in Schedule F attached hereto
("Chief Executive Office"), and the Company has no places of business other than
those set forth in such Schedule F, except as permitted hereafter by Section
6(c) hereof.
(g) Business Names. The Company has not conducted its businesses
under any corporate, partnership or fictitious name during the five (5) years
preceding the date hereof, other than those names set forth on Schedule G
attached hereto.
(h) No Consents. No consent of any other person and no consent,
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required either (i) for the
granting of the Liens by the Company on the Collateral pursuant to this Security
Agreement or for the execution, delivery or performance of this Security
Agreement by the Company (except for filings listed on Schedule E attached
hereto, the filings and/or other actions necessary to maintain the perfection of
the Liens on the Existing Collateral and perfect Liens on after-acquired
Collateral or the proceeds of the Collateral) or (ii) for the exercise by the
Collateral Agent of the voting or other rights provided for in this Security
Agreement or the remedies in respect of the Collateral pursuant to this Security
Agreement, except, in each case,as may be required in connection with any such
disposition by laws affecting the offering and sale of the Technocom Preferred
Stock and the Qualified Investments constituting Collateral.
(i) Litigation. No litigation, investigation or proceeding of or
before any arbitrator or governmental authority is pending or, to the knowledge
of the Company, threatened by or against the Company with respect to this
Security Agreement or any of the transactions contemplated hereby.
6
7
(j) Accurate Information. As of the date hereof, all information
set forth herein relating to the Existing Collateral is accurate and complete in
all respects.
SECTION 6. COVENANTS.
(a) Lien Notices. The Company will defend its interest in the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest therein, and the Company will not permit any Lien
Notices with respect to the Collateral or any portion thereof to exist or be on
file in any public office for more than 30 days after the Company shall have
notice thereof, except with respect to Permitted Liens or if the Convertible
Notes are no longer outstanding and the Convertible Note Indenture has been
satisfied and discharged, Liens otherwise permitted by Section 4.11 of the
Senior Note Indenture. The Company will advise the Collateral Agent and the
Trustees promptly, in reasonable detail, at the addresses specified in Section
17(a) of this Agreement, of any Lien (other than Permitted Liens) on, or claim
asserted against, any of the Collateral.
(b) Location of Collateral. The Company will keep all of its
Collateral now held or subsequently acquired by it at the locations specified on
Schedule H hereto, or at locations hereafter established in compliance with
Section 6(c) hereof (except for Collateral held by the Collateral Agent, a
Trustee or the Escrow Agent), unless the Company shall have given the Collateral
Agent and the Trustees prior written notice thereof and shall have in advance
executed and caused to be filed and/or delivered to the Collateral Agent and the
Trustees any financing statements or other documents required by the Trustees or
the Collateral Agent in order to perfect, protect and preserve the Liens and
security interest created hereby, all in form and substance satisfactory to the
Collateral Agent and the Trustees.
(c) Location of Offices; Corporation Name; Legal Structure. The
Company will not change the location of its chief executive office or establish
any place of business other than those set forth on Schedule F attached hereto,
or voluntarily or involuntarily change its name, identity or legal structure,
including without limitation any continuance, amalgamation, merger,
consolidation or sale of substantially all of its assets, unless the Company
shall have given the Collateral Agent and the Trustees at least 30 days prior
written notice thereof and shall have in advance executed and caused to be filed
and or delivered to the Collateral Agent and the Trustees any financing
statements or other Convertible Note Collateral Documents required by the
Collateral Agent and the Trustees in order to perfect, protect and preserve the
Liens and security interest created hereby, all in form and substance
satisfactory to the Trustees and the Collateral Agent. Each Trustee and the
Collateral Agent waives such notice of the proposed name change of the Company
to PLD Telekom Inc. to be put to a vote of shareholders on June 26, 1996. The
Company will promptly give notice to the Trustees and the Collateral Agent of a
favorable vote of its shareholders to such proposed name change.
(d) Additional Collateral; Further Assurances. The Company agrees
that immediately upon becoming the beneficial owner of any additional securities
constituting Collateral (whether or not constituting Technocom Preferred Stock),
additional Qualified
7
8
Investments constituting Collateral or additional Intercompany Notes
constituting Collateral, it will pledge and deliver to the Collateral Agent for
the benefit of the Convertible Note Trustee and the equal and ratable benefit of
the Holders of the Convertible Notes and for the benefit of the Senior Note
Trustee and for the equal and ratable benefit of the Holders of the Senior
Notes, the certificates, instruments and documents representing such Technocom
Preferred Stock, Qualified Investments and Intercompany Notes (as well as duly
executed instruments of transfer or assignment in blank), and grant to the
Collateral Agent for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes and for the benefit
of the Senior Note Trustee and for the equal and ratable benefit of the Holders
of the Senior Notes pursuant to appropriate and necessary Convertible Note
Collateral Documents, a continuing first priority security interest in and Liens
on such additional securities Technocom Preferred Stock, Qualified Investments
or Intercompany Notes, all in form and substance satisfactory to the Trustees.
The Company shall also promptly (and in any event within five (5) Business Days
after receipt thereof), subject to its compliance with the requirements of
applicable law, deliver to the Collateral Agent any other documents of title,
promissory notes, certificates or instruments representing Collateral which it
holds. The Company further agrees that it will promptly (and in any event within
5 Business Days after such acquisition) deliver to the Collateral Agent and the
Trustees an amendment, duly executed by the Company, in substantially the form
of Schedule I hereto (an "Additional Collateral Amendment"), with respect to the
additional Collateral that is to be pledged pursuant to this Security Agreement.
The Company hereby authorizes the Collateral Agent and the Trustees to attach
each Additional Collateral Amendment to this Security Agreement and agrees that
any stock, notes or other forms of Investment listed on any Additional
Collateral Amendment delivered to the Collateral Agent or the Trustees shall for
all purposes hereunder be considered Collateral. The Company will promptly, (i)
execute and deliver, cause to be executed and filed, or use its best efforts to
give any notices, in all appropriate jurisdictions (including Canada, Ireland,
Cyprus, the Russian Federation and Kazakstan) or procure any financing
statements, assignments, pledges or other documents, (ii) xxxx any chattel paper
constituting Collateral and deliver any certificates, chattel paper or
instruments constituting Collateral to the Collateral Agent or the Trustees,
(iii) execute and deliver or cause to be executed and delivered all stock
powers, proxies, assignments, instruments and other documents, and (iv) take any
other actions, in each such case as necessary or, in the reasonable opinion of
the Collateral Agent and the Trustees, desirable to perfect or continue the
perfection and the priority of the Collateral Agent's security interest and
Liens in the Collateral, to protect the Collateral against the rights, claims,
or interests of third Persons other than holders of Permitted Liens or Liens
otherwise permitted by Section 4.11 of the Senior Note Indenture or to effect
the purposes of this Security Agreement. The Company also hereby authorizes the
Collateral Agent to file any financing or continuation statements with respect
to the Collateral without the signature of the Company to the extent permitted
by applicable law.
(e) Disposition of Collateral. The Company will not sell, transfer,
assign, pledge, collaterally assign, exchange or otherwise dispose of, or grant
any option or warrant with respect to, any of the Collateral except as permitted
by the Convertible Note Indenture and the Senior Note Indenture. If the proceeds
of any sale of any Collateral are notes, instruments, documents of title,
standby letters of credit or chattel paper, such proceeds shall be promptly
delivered to
8
9
the Collateral Agent to be held as Collateral hereunder. If the Collateral, or
any part thereof, is sold, transferred, assigned, exchanged, or otherwise
disposed of in violation of these provisions, the security interest and Liens of
the Collateral Agent shall continue in such Collateral or part thereof
notwithstanding such sale, transfer, assignment, exchange or other disposition,
and the Company will hold the proceeds thereof in a separate account for the
benefit of the Convertible Note Trustee and further equal and ratable benefit of
the Holders of the Convertible Notes and the benefit of the Senior Note Trustee
and further equal and ratable benefit of the Holders of the Senior Notes and
transfer such proceeds to the Collateral Agent or the Trustee in kind to be held
as Collateral hereunder.
(f) Restrictive Agreements. The Company agrees that, except for
existing agreements set forth on Schedule J attached hereto, it will not (i)
enter into any agreement or understanding that purports to or may restrict or
inhibit the Collateral Agent's or the Trustees' rights or remedies hereunder,
including, without limitation, the Collateral Agent's or the Trustees' right to
sell or otherwise dispose of the Collateral or amend or modify in any manner
materially adverse to the Trustees the existing agreements set forth as Schedule
J attached hereto, (ii) permit Technocom to continue, merge, amalgamate or
consolidate, unless all outstanding Capital Stock owned by the Company of the
surviving corporation is, upon such continuance, merger, amalgamation or
consolidation, pledged hereunder to the Collateral Agent or (iii) fail to pay or
discharge any tax, assessment or levy of any nature not later than five days
prior to the date of any proposed sale under any judgment, writ or warrant of
attachment with regard to the Collateral.
(g) Rights of Collateral Agent and Trustees. Upon the occurrence
and during the continuance of an Event of Default, the Collateral Agent and the
Convertible Note Trustee (or the Senior Note Trustee, if the Convertible Notes
are no longer outstanding and the Convertible Note Indenture has been satisfied
and discharged) shall have the right at any time to make any payments and do any
other acts as the Collateral Agent or the applicable Trustee may deem necessary
to protect the Liens and security interest of the Collateral Agent in the
Collateral, including, without limitation, the rights to pay, purchase, contest
or compromise any Lien which, in the judgment of the Collateral Agent or such
Trustee, appears to be prior to or superior to the Liens and security interest
granted hereunder, and challenge any action or proceeding purporting to affect
its Liens and security interest in the Collateral. The Company hereby agrees to
reimburse the Collateral Agent and the Trustees for all payments made and
expenses incurred under this Security Agreement including reasonable fees,
expenses and disbursements of attorneys and paralegals acting for the Trustees,
including any of the foregoing payments under or acts taken to perfect or
protect its Liens and security interest in the Collateral, which amounts shall
be secured under this Security Agreement, and agrees that it shall be bound by
any payment made or act taken by the Collateral Agent or the Trustees hereunder.
Neither the Collateral Agent nor the Trustees shall have any obligation to make
any of the foregoing payments or perform any of the foregoing acts.
(h) Records. The Company will keep and maintain at its own cost and
expense satisfactory and complete records of the Collateral.
9
10
(i) Access. On reasonable notice to the Company, except at any time
during the Continuation of Default in an Event of Default, both the Collateral
Agent and the Trustees shall at all times have full and free access during
normal business hours to all the books, correspondence and records of the
Company relating to the Collateral, and the Collateral Agent and its
representatives, and the Trustees and their respective representatives, may
examine the same, take extracts therefrom and make photocopies thereof, and the
Company agrees to render to the Collateral Agent and/or the applicable Trustee,
at the Company's cost and expense, such clerical and other assistance, at all
times and in such manner as may be requested with regard thereto. On reasonable
notice to the Company, except at any time during the Continuation of Default in
an Event of Default, the Collateral Agent and its representatives, and the
Trustees and their respective representatives, shall at all times also have the
right to enter, during normal business hours, into and upon any premises where
any of the Collateral is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein.
(j) Taxes. The Company shall pay all taxes, assessments and
government charges and all claims as and to the extent required by Section 4.6
of each of the Convertible Note Indenture and the Senior Note Indenture;
provided that the Company shall in any event pay such taxes, assessments or
levies not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment with regard to any Collateral of the
Company entered or filed against the Company as a result of the failure to make
such payment.
(k) Demand Obligations. The Company agrees that it will cause each
of the Restricted Subsidiaries that is obligated on any Intercompany Note
constituting Collateral that constitutes a demand obligation, within the meaning
of Section 3-108 of the Uniform Commercial Code of the State of New York, to
execute and deliver to the Collateral Agent and/or the Trustee a new instrument
extending, renewing and replacing such demand obligation not later than the
second anniversary of the date of original issue thereon and on each succeeding
second anniversary thereof.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing, the Company shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Technocom Preferred Stock and the
Qualified Investments constituting Collateral or any part thereof for any
purpose not inconsistent with the terms of this Security Agreement, the
Convertible Note Indenture or any other Convertible Note Collateral Document or
the Senior Note Indenture or any Senior Note Collateral Document; provided that
the Company shall not exercise or shall refrain from exercising any such right
if such action would be inconsistent with or violate any provisions of this
Security Agreement, the Convertible Note Indenture or any other Convertible Note
Collateral Document or the Senior Note Indenture or any Senior Note Collateral
Document.
(b) All payments made from time to time on, or with respect to,
Technocom Preferred Stock or other securities constituting Collateral and
Qualified Investments constituting
10
11
Collateral and Intercompany Notes held by the Company constituting Collateral,
whether interest, principal, dividends, distributions or otherwise, shall be
delivered to the applicable Trustee for deposit in the Company Convertible Note
Escrow Account or the Company Senior Note Escrow Account if the Company
Convertible Note Escrow Account Agreement has been terminated.
(c) The Collateral Agent and/or the Convertible Note Trustee (or
the Senior Note Trustee if the Convertible Notes are no longer outstanding and
the Convertible Note Indenture has been satisfied and discharged) shall execute
and deliver (or cause to be executed and delivered) to the Company all such
proxies and other instruments as the Company may reasonably request for the
purpose of enabling the Company to exercise the voting and other rights that it
is entitled to exercise pursuant to Sections 7(a) through (c) above.
(d) Upon the occurrence and during the continuance of an Event of
Default, (i) all rights of the Company to exercise the voting and other
consensual rights that it would otherwise be entitled to exercise pursuant to
Section 7(a) shall cease, and all such rights shall thereupon become vested in
the Collateral Agent on behalf of, or if necessary, directly in, the Convertible
Note Trustee (or the Senior Note Trustee if the Convertible Notes are no longer
outstanding and the Convertible Note Indenture has been satisfied and
discharged), which shall thereupon have the sole right to exercise such voting
and other consensual rights, and (ii) all interest, principal payments,
dividends or other distributions payable or other payments made on or in respect
of the Collateral shall constitute Collateral and shall be paid to the
Collateral Agent and all such payments shall be deposited in the Company
Convertible Note Escrow Account or the Company Senior Note Escrow Account, if
the Company Convertible Note Escrow Account has been terminated.
(e) Upon the occurrence and during the continuance of an Event of
Default, the Company shall execute and deliver (or cause to be executed and
delivered) to the Collateral Agent and/or the Convertible Note Trustee (or the
Senior Note Trustee if the Convertible Notes are no longer outstanding and the
Convertible Note Indenture has been satisfied and discharged) all such proxies
and other instruments as the Collateral Agent and/or the applicable Trustee may
reasonably request for the purpose of enabling the Collateral Agent and/or the
applicable Trustee to exercise or cause the exercise of the voting and other
rights that it is entitled to exercise pursuant to Section 7(d) above.
(f) All interest and principal payments, all dividends and
distributions and all other payments that are received by the Company contrary
to the provisions of this Section 7 shall be received in trust for the
Collateral Agent for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes and for the benefit
of the Senior Note Trustee and for the equal and ratable benefit of the Holders
of the Senior Notes, be segregated from the other property or funds of the
Company and be forthwith delivered to the Collateral Agent as Collateral in the
same form as so received (with any necessary endorsements or other instruments
of transfer or assignment in blank), and all such payments shall be deposited in
the Company Convertible Note Escrow Account or the Company Senior
11
12
Note Escrow Account if the Company Convertible Note Escrow Account Agreement has
been terminated.
(g) So long as no Event of Default shall have occurred and be
continuing, neither the Collateral Agent nor the Trustees shall be under any
obligation to collect, attempt to collect, protect or enforce the Collateral,
which the Company agrees and undertakes to do at the Company's expense; provided
that the Collateral Agent and the Trustees shall cooperate with the Company and
take all such action as the Company may reasonably request to permit the Company
to collect, protect or enforce the Collateral. All reasonable expenses
(including, without limitation, attorneys' fees and legal expenses) actually
incurred or paid by the Collateral Agent and the Trustees in connection with or
incident to any such collection or attempt to collect, protect or enforce the
Collateral shall be borne by the Company or reimbursed by the Company to the
Collateral Agent or the applicable Trustee upon demand.
(h) At the Collateral Agent's or the applicable Trustee's option,
exercisable upon and during the continuance of any Event of Default, either the
Collateral Agent or the Convertible Note Trustee (or the Senior Note Trustee if
the Convertible Notes are no longer outstanding and the Convertible Note
Indenture has been satisfied and discharged) may notify the obligors of the
Intercompany Notes constituting Collateral, Technocom and the issuers or other
obligors of the Qualified Investments constituting Collateral that any and all
payments and distributions to be made on such Intercompany Notes, the Technocom
Preferred Stock and such Qualified Investments shall be made directly to the
Collateral Agent or the applicable Trustee, and the Company hereby directs the
obligors of such Intercompany Notes, Technocom and the issuers or other obligors
of such Qualified Investments to pay and deliver over to the Collateral Agent or
the Convertible Note Trustee (or the Senior Note Trustee if the Convertible
Notes are no longer outstanding and the Convertible Note Indenture has been
satisfied and discharged) all payments and distributions to be made on such
Intercompany Notes, the Technocom Preferred Stock and such Qualified
Investments, until Technocom and such obligors or issuers are notified in
writing by the Collateral Agent or the applicable Trustee, as the case may be,
to discontinue making such payments to it; and such obligors and issuers shall
not be required to see to the application of said proceeds by the Trustees or
the Collateral Agent. All such payments shall be deposited by such Trustee or
the Collateral Agent into the Company Convertible Note Escrow Account (or the
Company Senior Note Escrow Account if the Company Convertible Note Escrow
Account Agreement has been terminated) and held as additional Collateral for the
Obligations. If at any time the Collateral Agent or a Trustee shall have
notified Technocom, the obligors of the Intercompany Notes constituting
Collateral or the issuers or other obligors of Qualified Investments
constituting Collateral to make all payments directly to the Collateral Agent
and if any at any time thereafter all Events of Default shall have been cured or
waived in accordance with the terms of the Convertible Note Indenture (or the
Senior Note Indenture if the Convertible Notes are no longer outstanding and the
Convertible Note Indenture has been satisfied and discharged), the Collateral
Agent or a Trustee may notify such obligors to make all payments directly to the
Company or as the Company may otherwise direct.
12
13
SECTION 8. POWER OF ATTORNEY. In addition to all of the powers granted
to the Convertible Note Trustee pursuant to Article VI of the Convertible Note
Indenture and the Senior Note Trustee pursuant to Article VI of the Senior Note
Indenture, the Company hereby appoints and constitutes the Collateral Agent and
the Trustees, whether acting separately or jointly, as the Company's
attorneys-in-fact to exercise all of the following powers upon and at any time
after the occurrence and during the continuance of an Event of Default: (i)
collection of proceeds of any Collateral; (ii) conveyance of any item of
Collateral to any purchaser thereof; (iii) giving of any notices or recording of
the security interest and the Liens under Section 6(d) hereof; (iv) making of
any payments or taking any acts under Section 9 hereof and (v) paying or
discharging taxes or Liens levied or placed upon the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by the Collateral Agent in its sole discretion, and such payments
made by the Collateral Agent to become the Obligations of the Company to the
Collateral Agent, due and payable immediately upon demand. The Collateral
Agent's authority hereunder shall include, without limitation, the authority to
endorse and negotiate any checks or instruments representing proceeds of
Collateral in the name of the Company, to execute and give receipt for any
certificate of ownership or any document constituting Collateral, to transfer
title to any item of Collateral, to sign the Company's name on all financing
statements (to the extent permitted by applicable law) or any other Convertible
Note Collateral Documents or other documents deemed necessary or appropriate by
the Collateral Agent to preserve, protect or perfect the Liens in the Collateral
and to file the same, to prepare, file and sign the Company's name on any notice
of Lien, and to prepare, file and sign the Company's name on a proof of claim in
bankruptcy or similar document against any customer of, or person obligated upon
any Collateral to, the Company, and to take any other actions arising from or
incident to the powers granted to the Collateral Agent in this Security
Agreement. This power of attorney is coupled with an interest in the Trustees
and in the Collateral Agent as agent on behalf of the Trustees and is
irrevocable by the Company.
SECTION 9. COLLATERAL AGENT OR TRUSTEES MAY PERFORM. If the Company
fails to perform any covenant or agreement contained herein, the Collateral
Agent or either Trustee may, but shall not be obligated to, itself perform, or
cause performance of, such covenant or agreement, and the reasonable expenses of
the Collateral Agent or the Trustees incurred in connection therewith shall be
payable by the Company under Section 17(p) hereof.
SECTION 10. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Collateral Agent or the Trustees hereunder are being
granted in order to preserve and protect the Collateral Agent's Liens and
security interest in and to the Collateral granted hereby and shall not be
interpreted to, and shall not, impose any duties on the Collateral Agent or the
Trustees in connection therewith. Each of the Collateral Agent and the Trustees
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 Collateral Agent or such Trustee
accords similar property in similar situations, it being understood that the
Collateral Agent and the Trustees shall not have any responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Collateral Agent or either Trustee
13
14
has or is deemed to have knowledge of such matters, (ii) taking any necessary
steps to preserve rights against any parties with respect to any Collateral, or
(iii) inquiring into or verifying that the Company has complied or will comply
with its duty to furnish additional items of Collateral to the Collateral Agent
and/or the Trustees pursuant to Section 6(d) hereof. Absent knowledge to the
contrary, the Collateral Agent and the Trustees may assume that the items of
Collateral actually delivered to it are all items required to be so delivered
and may assume that no other such items need be so delivered.
SECTION 11. SUBSEQUENT CHANGES AFFECTING COLLATERAL. The Company
represents to the Collateral Agent, the Convertible Note Trustee and the Holders
of the Convertible Notes, and the Senior Note Trustee and the Holders of the
Senior Notes that the Company has made its own arrangements for keeping informed
of changes or potential changes affecting the Collateral (including, but not
limited to, rights to convert, rights to subscribe, payment of dividends,
payments of interest and/or principal, reorganization or other exchanges, tender
offers and voting rights), and the Company agrees that the Collateral Agent, the
Convertible Note Trustee and the Holders of the Convertible Notes, and the
Senior Note Trustee and the Holders of the Senior Notes shall have no
responsibility or liability for informing the Company of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereof. Except as not prohibited by the Convertible Note Indenture or,
if the Convertible Notes are no longer outstanding and the Convertible Note
Indenture has been satisfied and discharged, the Senior Note Indenture, the
Company covenants that it will not, without the prior written consent of the
applicable Trustee, vote to enable, or take any other action to permit,
Technocom to issue any Capital Stock or other securities or to sell or otherwise
dispose of, or grant any option with respect to, any of the Collateral or create
or permit to exist any Lien upon or with respect to any of the Collateral,
except for Liens permitted by Section 4.11 of the Senior Note Indenture,
Permitted Liens, and the Liens granted under this Agreement and the other
Convertible Note Collateral Documents. The Company will defend the right, title
and interest of the Collateral Agent, the Convertible Note Trustee and the
Holders of the Convertible Notes, and the Senior Note Trustee and the Holders of
the Senior Notes in and to the Collateral against the claims and demands of all
persons.
14
15
SECTION 12. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may, subject to the provisions of the Convertible
Note Indenture or of the Senior Note Indenture if the Convertible Notes are no
longer outstanding and the Convertible Note Indenture has been satisfied and
discharged, this Agreement, and the Collateral Agent's and the Trustee's
compliance with any requirements of law (including, without limitation, the
applicable Uniform Commercial Code and the Personal Property Security Act
(Ontario)) applicable to the action to be taken, without notice to or demand
upon the Company except as required by the Convertible Note Indenture, the
Senior Note Indenture, this Agreement or applicable law, do any one or more of
the following:
(i) exercise any or all of the rights and remedies provided
for by the applicable Uniform Commercial Code and the Personal Property Security
Act (Ontario), specifically including, without limitation, the right to recover
the reasonable fees and expenses incurred by the Collateral Agent or the
Trustees in the enforcement of this Security Agreement or in connection with the
Company's redemption of the Collateral, including reasonable fees, expenses and
disbursements of attorneys, paralegals and agents;
(ii) at its option, transfer or register, and the Company
shall register or cause to be registered upon request therefor by the Collateral
Agent or the Trustees, the Collateral or any part thereof on the books of the
Restricted Subsidiaries to which an intercompany loan evidenced by an
Intercompany Note has been made, the Issuers or the Persons in whom Qualified
Investments are made, into the name of the Collateral Agent or the Collateral
Agent's nominee(s);
(iii) personally, or by agents or attorneys, immediately
retake possession of the Collateral, or any part thereof, from the Company or
any other Person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon the Company's
premises where any of the Collateral is located and remove the same and use in
connection with such removal any and all services, supplies, aids and other
facilities of the Company;
(iv) sell, assign or otherwise liquidate, or direct the
Company to sell, assign or otherwise liquidate, any or all of the Collateral or
any part thereof, and take possession of the proceeds of any such sale or
liquidation;
(v) require the Company to assemble the Collateral or any part
thereof and make it available at one or more places as the Collateral Agent or
the Trustees may designate and to deliver possession of the Collateral or any
part thereof to the Collateral Agent or the Trustees;
15
16
(vi) use, in connection with any assembly, use or disposition
of the Collateral, any intellectual property, intangibles or other technical
knowledge or process used or utilized from time to time by the Company;
(vii) 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 Collateral Agent may deem best, for cash or on credit or for
future delivery, without assumption of any credit; and the purchaser of any or
all Collateral so sold shall thereafter hold the same absolutely, free from any
claim, encumbrance or right of any kind whatsoever;
(viii) enforce one or more remedies hereunder, successively or
concurrently, and such action shall not operate to estop or prevent the
Collateral Agent from pursuing any other or further remedy which it may have,
and any repossession or retaking or sale of the Collateral pursuant to the terms
hereof shall not operate to release the Company until full and final payment of
any deficiency has been made in cash;
(ix) in connection with any public or private sale under the
applicable Uniform Commercial Code, the Personal Property Security Act (Ontario)
or other applicable legislation, the Collateral Agent shall give the Company at
least fifteen (15) Business Days' prior written notice of the time and place of
any public sale of its Collateral or of the time after which any private sale or
other intended disposition thereof may be made, which shall be deemed to be
reasonable notice of such sale or other disposition. Such notice may be given to
the Company in accordance with the provisions of Section 17(a) hereof;
(x) proceed by an action or actions at law or in equity to
recover the Obligations or to foreclose this Security Agreement and sell the
Collateral, or any portion thereof, pursuant to a judgment or decree of a court
or courts of competent jurisdiction;
(xi) exercise any other rights and remedies provided by
applicable law and the other Convertible Note Collateral Documents; and
(xii) if the Collateral Agent recovers possession of all or
any part of the Collateral pursuant to a writ of possession or other judicial
process, whether prejudgment or otherwise, the Collateral Agent may thereafter
retain, sell or otherwise dispose of such Collateral in accordance with this
Security Agreement or the applicable Uniform Commercial Code, the Personal
Property Security Act (Ontario) or other applicable legislation, and following
such retention, sale or other disposition, the Collateral Agent may voluntarily
dismiss without prejudice the judicial action in which such writ of possession
or other judicial process was issued. The Company hereby consents to the
voluntary dismissal by the Collateral Agent of such judicial action, and the
Company further consents to the exoneration of any bond that the Collateral
Agent files in such action.
(b) If the Collateral Agent shall determine, or shall be directed
by the Convertible Note Trustee (or the Senior Note Trustee if the Convertible
Notes are no longer outstanding and
16
17
the Convertible Note Indenture has been satisfied and discharged), to exercise
its right to sell any or all of the Technocom Preferred Stock or the Qualified
Investments constituting Collateral pursuant to Section 12(a) above, and if in
the opinion of counsel for the Collateral Agent it is necessary, or if in the
opinion of the Collateral Agent or such Trustee it is advisable, after such
consultation with investment bank(s), broker-dealer(s) or other experts selected
by them, as the Collateral Agent or such Trustee deems advisable or appropriate,
to have the Technocom Preferred Stock, Qualified Investments constituting
Collateral or other securities constituting Collateral or that portion thereof
to be sold, registered under the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), the Company will (i) use its best efforts to
cause Technocom or other issuer or obligor to execute and deliver, and to cause
such Person's directors and officers to execute and deliver, all at the
Company's own expense, all such instruments and documents, and to do or cause to
be done all such other acts and things as may be necessary or, in the opinion of
the Collateral Agent or such Trustee, after such consultation with investment
bank(s), broker-dealer(s) or other experts selected by them, as the Collateral
Agent or such Trustee deems advisable or appropriate, advisable to register such
Technocom Preferred Stock, Qualified Investments constituting Collateral or
other securities constituting Collateral under the provisions of the Securities
Act, (ii) use its best efforts to cause the registration statement relating
thereto to become effective and to remain effective for a period of 180 days
from the date of the first public offering of such Technocom Preferred Shares or
Qualified Investments or other securities constituting Collateral, or that
portion thereof to be sold and (iii) make all amendments thereto and/or to the
related prospectus that are necessary, in the opinion of the Collateral Agent or
such Trustee, are advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. The Company agrees to use its best efforts to
cause Technocom or other issuer or obligor to comply with the provisions of the
securities or "Blue Sky" laws of any jurisdiction that the Collateral Agent or
the Convertible Note Trustee (or the Senior Note Trustee if the Convertible
Notes are no longer outstanding and the Convertible Note Indenture has been
satisfied and discharged) shall designate for the sale of such Technocom
Preferred Stock or Qualified Investments and to make available to the security
holders of Technocom or such issuer or obligor, as the case may be, as soon as
practicable, an earnings statement (which need not be audited) that will satisfy
the provisions of Section 11(a) of the Securities Act. The Company will cause
Technocom or other issuer or obligor, as the case may be, to furnish to the
Collateral Agent and the Trustees such number of copies as the Collateral Agent
and the Trustees may reasonably request of each preliminary prospectuses and
prospectuses, to notify promptly the Collateral Agent and the Trustees of the
happening of any event as a result of which any then effective prospectus
includes an untrue statement of any material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of then existing circumstances and cause the
Collateral Agent and the Trustees to be furnished with such number of copies as
the Collateral Agent or the Trustees may request of such supplement to or
amendment of such prospectus as is necessary to eliminate such untrue statement
or supply such omission. The Company will cause Technocom or such other issuer
or obligor, as the case may be, to the extent permitted by law, to indemnify,
defend and hold harmless the Collateral Agent, the Convertible Note Trustee and
the Holders of the Convertible Notes, and the Senior Note Trustee and the
Holders of the Senior Notes from and
17
18
against all losses, liabilities, expenses or claims (including reasonable costs
of investigation) that the Collateral Agent, the Convertible Note Trustee and
the Holders of the Convertible Notes, and the Senior Note Trustee and the
Holders of the Senior Notes may incur under the Securities Act or otherwise,
insofar as such losses, liabilities, expenses or claims arise out of or are
based upon any alleged untrue statement of a material fact contained in such
registration statement (or any amendment thereto) or in any preliminary
prospectus or prospectus (or any amendment or supplement thereto), or arise out
of or are based upon any alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except to the extent that any such losses, liabilities, expenses or claims arise
solely out of or are based solely upon any such alleged untrue statement made or
such alleged omission to state a material fact included or excluded on the
written direction of the Collateral Agent or the Convertible Note Trustee. The
Company will bear, or will cause Technocom or such other issuer or obligor, as
the case may be, to bear, all costs and expenses of carrying out its or their
obligations hereunder. The provisions of this Section 12(b) shall in no way
impose upon either Trustee or the Collateral Agent any duty to execute any
Registration Statement under the Securities Act with respect to the Technocom
Preferred Stock or any Qualified Investment.
(c) In view of the fact that federal, state and foreign securities
laws may impose certain restrictions on the method by which a sale of the
Collateral may be effected after an Event of Default, the Company agrees that
upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent may cause, from time to time, the sale of all or any part of
the Collateral by means of a private placement, restricting the prospective
purchasers to those who will represent and agree that they are purchasing for
investment only and not for distribution. In so doing, the Collateral Agent may
solicit, or may cause an investment manager to solicit, offers to buy the
Collateral, or any part of it, for cash, from a limited number of investors who
might be interested in purchasing the Collateral. The Company acknowledges and
agrees that any such private sale may result in prices and terms less favorable
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner. The Collateral Agent shall be under no
obligation to delay a sale of any of the Collateral for the period of time
necessary to permit the Company to cause Technocom or other such issuer or
obligor to register such securities for public sale under the Securities Act, or
under applicable state or foreign securities laws, even if the Company could
cause Technocom or such other issuer or obligor, as the case may be, to do so.
(d) The Company further agrees to use its 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 12 valid
and binding and in compliance with any and all other applicable requirements of
applicable law. The Company further agrees that a breach of any of the covenants
contained in this Section 12 will cause irreparable injury to the Convertible
Note Trustee and the Holders of the Convertible Notes, and the Senior Note
Trustee and the Holders of the Senior Notes, that the Collateral Agent, the
Convertible Note Trustee and the Holders of the Convertible Notes, and the
Senior Note Trustee and the Holders of the Senior Notes, have no adequate remedy
at law in respect of such breach and, as a consequence, that each and every
18
19
covenant contained in this Section 12 shall be specifically enforceable against
the Company, and the Company 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 and is continuing.
(e) Any cash held by the Collateral Agent as Collateral and all
cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
shall be applied by the Collateral Agent:
First, to the payment of the costs and expenses of such sale,
including, without limitation, reasonable expenses of the
Collateral Agent and its agents including the fees and expenses of
its counsel, and all expenses, liabilities and advances made or
incurred by the Collateral Agent in connection therewith or
pursuant to Section 17(p) hereof;
Next, to the Convertible Note Trustee for the payment in full
of all amounts due under Section 7.7 of the Convertible Note
Indenture;
Next, to the Convertible Note Trustee, for distribution to the
Holders of the Convertible Notes, for the payment in full of the
remaining Convertible Note Obligations;
Next, to the Senior Note Trustee for the payment of all
amounts due under Section 7.7 of the Senior Note Indenture;
Next, to the Senior Note Trustee, for the distribution to the
Holders of the Senior Notes for the payment in full of the
remaining Senior Note Obligations; and
Finally, after payment in full of all of the Obligations, to
the payment to the Company, or its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same as a court
of competent jurisdiction may direct.
(f) If any sale or other disposition of Collateral by the
Collateral Agent or any other action of the Collateral Agent or the Trustees
hereunder results in reduction of the Obligations, such action will not release
the Company from its liability for any unpaid Obligations, including costs,
charges and expenses incurred in the liquidation of Collateral, together with
interest thereon, and the same shall be immediately due and payable to the
Collateral Agent, the Convertible Note Trustee and the Holders of the
Convertible Notes as provided for in the Convertible Note Indenture, or if
applicable, the Senior Note Trustee and the Holders of the Senior Notes as
provided for in the Senior Note Indenture.
(g) The Collateral Agent may enforce its rights hereunder without
prior judicial process or judicial hearing, and to the extent permitted by law
the Company expressly waives
19
20
any and all legal rights which might otherwise require the Collateral Agent to
enforce its right by judicial process.
(h) The existence and/or exercise of any or all of the rights and
remedies given to the Collateral Agent and/or either Trustee under this Section
12 shall be subject in all cases to compliance with any mandatory requirements
of applicable law, particularly the laws of jurisdictions other than the United
States.
SECTION 13. IRREVOCABLE AUTHORIZATION AND INSTRUCTIONS TO TECHNOCOM.
The Company hereby authorizes and instructs Technocom or other applicable issuer
or obligor to comply with any instructions received by it or such other issuer
or obligor, as the case may be, from the Collateral Agent or the Convertible
Note Trustee (or the Senior Note Trustee if the Convertible Notes are no longer
outstanding and the Convertible Note Indenture has been satisfied and
discharged) that (i) states that an Event of Default has occurred and (ii) is
otherwise in accordance with the terms of this Security Agreement, without any
other or further instructions from the Company, and the Company agrees that
Technocom and the other applicable issuers and obligors shall be fully protected
in so complying.
SECTION 14. ESCROW ACCOUNTS. All money received by the Company and
required to be deposited in the Company Convertible Note Escrow Account, or the
Company Senior Note Escrow Account if the Company Convertible Note Escrow
Account Agreement has been terminated, shall be promptly and without commingling
remitted to the Collateral Agent or the Convertible Note Trustee (or the Senior
Note Trustee if the Convertible Notes are no longer outstanding and the
Convertible Note Indenture has been satisfied and discharged) for deposit
therein. Amounts held in the Company Convertible Note Escrow Account shall be
applied or disposed of only in a manner not prohibited by the Convertible Note
Indenture.
SECTION 15. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent, the Convertible Note Trustee and the Holders of the Convertible Notes,
and the Senior Note Trustee and the Holders of the Senior Notes and the Liens or
security interests hereunder, and all obligations of the Company hereunder,
shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Convertible Note
Indenture, any Convertible Note Collateral Document, any Convertible Note
Guarantee, the Senior Note Indenture, any Senior Note Collateral Document, any
Senior Note Guarantee 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 department from the Convertible Note Indenture
or the Convertible Note Collateral Documents or from the Senior Note Indenture
or the Senior Note Collateral Documents;
(c) any exchange, surrender, release or non-perfection of any Liens
on any other collateral, or any release or amendment or waiver of or consent to
departure from any
20
21
Convertible Note Guarantee, any Senior Note Guarantee or other guarantee, for
all or any of the Obligations; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Company in respect of the
Obligations or of this Security Agreement.
SECTION 16. WAIVERS.
(a) Except as may be required under the provisions of the
Convertible Note Indenture or of the Senior Note Indenture if the Convertible
Notes are no longer outstanding and the Convertible Note Indenture has been
satisfied and discharged, and to the fullest extent permitted under applicable
law, neither the Collateral Agent nor the Convertible Note Trustee (or the
Senior Note Trustee if the Convertible Notes are no longer outstanding and the
Convertible Note Indenture has been satisfied and discharged) shall be under any
duty whatsoever to make or give any presentment, notice of dishonor, protest,
demand for performance, notice of non-performance, notice of intent to
accelerate, notice of acceleration, or other notice or demand in connection with
any Collateral or the Obligations, or to take any steps reasonably necessary to
preserve any rights against any Obligor or other Person. The Company waives to
the fullest extent permitted under applicable law any right of marshalling in
respect of any and all Collateral, and waives to the fullest extent permitted
under applicable law any right to require the Collateral Agent or the applicable
Trustee to proceed against any Obligor or other Person, exhaust any Collateral
or enforce any other remedy which the Collateral Agent or the applicable Trustee
now has or may hereafter have against any Obligor or other Person.
(b) The Company waives to the fullest extent permitted under
applicable law (i) any and all notices of acceptance, creation, modification,
rearrangement, renewal or extension for any period of any instrument executed by
any obligor in connection with the Obligations and (ii) any defense of any
Obligor by reason of disability, lack of authorization, cessation of the
liability of any Obligor or for any other reason. The Company authorizes the
Collateral Agent to the fullest extent permitted under applicable law, without
notice or demand and without any reservation of rights against the Company and
without affecting the Company's liability hereunder or on the Obligations, from
time to time to (w) take and hold other Property, other than the Collateral, as
security for the Obligations, and exchange, enforce, waive and release any or
all of the Collateral, (x) after the occurrence and during the continuance of an
Event of Default and the acceleration of the Convertible Notes, apply the
Collateral in the manner permitted by this Security Agreement or the Convertible
Note Indenture, (y) after the occurrence and during the continuance of an Event
of Default and the acceleration of the Senior Notes if the Convertible Notes are
no longer outstanding and the Convertible Note Indenture has been satisfied and
discharged, apply the Collateral in the manner permitted by this Security
Agreement or the Senior Note Indenture and (z) after the occurrence and during
the continuance of an Event of Default renew, extend for any period, accelerate,
amend or modify, supplement, enforce, compromise, settle, waive or release the
obligations of any obligor on, or any instrument or agreement of such other
Person with respect to any or all of, the Collateral.
21
22
SECTION 17. MISCELLANEOUS PROVISIONS.
(a) Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered to the Company at its address as set forth in Section
15.2 of the Convertible Note Indenture and Section 13.2 of the Senior Note
Indenture and the Convertible Note Trustee at its address, as set forth in
Section 15.2 of the Convertible Note Indenture, to the Senior Note Trustee at
its address as set forth in Section 13.2 of the Senior Note Indenture and to the
Collateral Agent at The Bank of New York, 000 Xxxxxxx Xxxxxx, Xxxxx 00 Xxxx, Xxx
Xxxx, Xxx Xxxx 00000.
(b) Sales of Collateral. No sales of Collateral may be made in
contravention of the terms of the Convertible Note Indenture or the Senior Note
Indenture and the cash proceeds of the sale of any Collateral shall be promptly
and without commingling remitted to the Collateral Agent or the Convertible Note
Trustee for deposit in the Company Convertible Note Escrow Account or to the
Collateral Agent or the Senior Note Trustee for deposit in the Company Senior
Note Escrow Account if the Company Convertible Note Escrow Account Agreement has
been terminated.
(c) No Adverse Interpretation of Other Agreements. This Security
Agreement may not be used to interpret another pledge, security or debt
agreement of the Company or any Subsidiary of the Company. No such pledge,
security or debt agreement may be used to interpret this Security Agreement.
(d) Severability. The provisions of this Security 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
Security Agreement in any jurisdiction.
(e) Headings. The headings in this Security 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.
(f) Counterpart Originals. This Security 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.
(g) Benefits of Security Agreement. Nothing in this Security
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder and the Holders of the Convertible Notes
and the Convertible Note Guarantors and the Holders of the Senior Notes and the
Senior Note Guarantors, any benefit or any legal or equitable right, remedy or
claim under this Security Agreement.
22
23
(h) Amendments, Waivers and Consents. Any amendment or waiver of
any provision of this Security Agreement and any consent to any departure by the
Company from any provision of this Security Agreement shall be effective only if
made or given in compliance with all of the terms and provisions of the
Convertible Note Indenture and the Senior Note Indenture and neither the
Collateral Agent or the Convertible Note Trustee nor any Holder of any
Convertible Note or the Senior Note Trustee or any Holder of any Senior Note
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 Collateral Agent or the Trustees to exercise, or delay in
exercising, any right, power or privilege hereunder shall not operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Collateral Agent, the
Convertible Note Trustee or any Holder of any Convertible Note or the Senior
Note Trustee or any Holder of any Senior Note of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy that
the Collateral Agent, either Trustee or any such Holder would otherwise have on
any future occasion. The right and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
(i) Interpretation of Security Agreement. All terms not defined
herein or in the Convertible Note Indenture shall have the meaning set forth in
the applicable Uniform Commercial Code of the State of New York, except where
the context otherwise requires. To the extent a term or provision of this
Security Agreement conflicts with the Convertible Note Indenture, the
Convertible Note 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 Security Agreement shall not be relevant in determining the
meaning of this Security Agreement even though the accepting or acquiescing
party had knowledge of the nature of the performance and opportunity for
objection.
(j) Continuing Security Interest; Transfer of Collateral. This
Security Agreement shall create a continuing Lien and security interest in the
Collateral and shall (i) unless otherwise provided in the Convertible Note
Indenture, the Senior Note Indenture or this Security Agreement, remain in full
force and effect until payment in full of (A) the Convertible Notes under the
terms of the Convertible Note Indenture, (B) all Obligations then due and owing
under the Convertible Note Indenture, the Convertible Note Guarantees and the
Convertible Note Collateral Documents, (C) the Senior Notes under the terms of
the Senior Note Indenture and (D) all Obligations then due and owing under the
Senior Note Indenture, the Senior Note Guarantees and the Senior Note Collateral
Documents; provided, however, that after receipt from the Company by the
Collateral Agent of a request for a release of any Collateral permitted under
the Convertible Note Indenture and the Senior Note Indenture upon the sale,
transfer, assignment, exchange or other disposition of such Collateral not
prohibited by the Convertible Note Indenture and the Senior Note Indenture and
(upon receipt by the Collateral Agent of all proceeds of such sale, transfer,
assignment, exchange or other disposition required to be remitted to the
Collateral Agent or the Convertible Note Trustee (or the Senior Note Trustee if
the
23
24
Convertible Notes are no longer outstanding and the Convertible Note Indenture
has been satisfied and discharged) and any such Collateral constituting the
proceeds of such sale, transfer, assignment, exchange or other disposition being
made subject to a Lien and security interest in favor of the Collateral Agent
for the benefit of the Senior Note Trustee and the equal and ratable benefit of
the Holders of the Senior Notes and for the benefit of the Convertible Note
Trustee and the equal and ratable benefit of the Holders of the Convertible
Notes, which Lien has the same priority as had the Lien on such Collateral being
sold, assigned or otherwise disposed of, such Collateral shall be released from
the Lien and security interest created hereunder and no longer constitute
Collateral. Upon the payment in full of (A) the Convertible Notes under the
terms of the Convertible Note Indenture, (B) all Obligations then due and owing
under the Convertible Note Indenture, the Convertible Note Guarantees and the
Convertible Note Collateral Documents, (C) the Senior Notes under the terms of
the Senior Note Indenture and (D) all Obligations then due and owing under the
Senior Note Indenture, the Senior Note Guarantees and the Senior Note Collateral
Documents, the Company shall be entitled to the return, upon its request and at
its expense, of such of the Collateral pledged by it as shall not have been sold
or otherwise applied pursuant to the terms hereof. This Security Agreement shall
be binding upon the Company, its successors and assigns, and inure, together
with the rights and remedies of the Trustees hereunder, to the benefit of the
Collateral Agent, the Convertible Note Trustee and the Holders of the
Convertible Notes, and the Senior Note Trustee and the Holders of the Senior
Notes and their respective successors, transferees and assigns.
(k) Reinstatement. This Security Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by the Collateral Agent, the Convertible Note Trustee or any Holder of
a Convertible Note or the Senior Note Trustee or any Holder of a Senior Note in
respect of the Obligations is rescinded or must otherwise be restored or
returned by the Collateral Agent, the Convertible Note Trustee or any Holder of
a Convertible Note or the Senior Note Trustee or any Holder of a Senior Note
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization or
the Company or upon the appointment of any receiver, intervenor, conservator,
trustee or similar official for the Company or upon the appointment of any
receiver, intervenor, conservator, trustee or similar official for the Company
or any substantial part of its assets, or otherwise, all as though such payments
had not been made.
(l) Survival of Provisions. All representations, warranties and
covenants of the Company contained herein shall survive the execution and
delivery of this Security Agreement, and shall terminate only upon the full and
final payment and performance by the Company of the Obligations.
(m) Authority of Collateral Agent and Trustees. Both the Collateral
Agent and the Trustees shall have and be entitled to exercise all powers
hereunder that are specifically granted to the Collateral Agent and the Trustees
by the terms hereof, together with such powers as are reasonably incident
thereto. The Collateral Agent and the Trustees may perform any of their
respective duties hereunder or in connection with the Collateral by or through
agents or employees and shall be entitled to retain counsel and to act in
reliance upon the advice of
24
25
counsel concerning all such matters. None of the Collateral Agent, any director,
officer, any attorney or agent of the Collateral Agent, the Convertible Note
Trustee, any director, officer, employee, attorney or agent of the Convertible
Note Trustee, the Holders of the Convertible Notes, the Senior Note Trustee, any
director, officer, employee, attorney or agent of the Senior Note Trustee and
the Holders of the Senior Notes shall be liable to the Company for any action
taken or omitted to be taken by it or them hereunder, except for its or their
own negligence or willful misconduct, nor shall the Collateral Agent or the
Trustees be responsible for the validity, effectiveness or sufficiency hereof or
of any document or security furnished pursuant hereto. The Collateral Agent and
its directors, officers, employees, attorneys and agents, the Convertible Note
Trustee and its directors, officers, employees, attorneys and agents and the
Senior Note 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. Neither the Collateral Agent nor the Trustees shall be
required to, and shall not, expend or risk any of its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder.
The Company acknowledges that the rights and responsibilities
of the Collateral Agent and/or the Trustees under this Security Agreement with
respect to any action taken by the Collateral Agent and/or the Trustees or the
exercise or non-exercise by the Collateral Agent and/or the Trustees of any
option, right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Security Agreement shall, as among the
Collateral Agent and/or the Convertible Note Trustee and the Holders of the
Convertible Notes and/or the Senior Note Trustee and the Holders of the Senior
Notes, be governed by the Convertible Note Indenture or the Senior Note
Indenture, as applicable, and by such other agreements with respect thereto as
may exist from time to time among them, but, as between the Collateral Agent
and/or the Trustees and the Company, the Collateral Agent and/or the Trustees
shall be conclusively presumed to be acting as agent for the Holders of the
Convertible Notes or the Holders of the Senior Notes, as the case may be, with
full and valid authority so to act or refrain from acting, and the Company shall
not be obligated or entitled to make any inquiry respecting such authority.
In any case in which the Collateral Agent shall be required or
permitted to make any determination as to the extent to which the security
interest or Liens under their Security Agreement secures any obligations, the
Collateral Agent is authorized, without any direction from, or requirement for
consent of or authorization by, the Convertible Note Trustee (or the Senior Note
Trustee if the Convertible Notes are no longer outstanding and the Convertible
Note Indenture has been satisfied and discharged), to institute proceedings in a
court of competent jurisdiction for the obtaining of any authoritative
determination of such matter. If the Collateral Agent institutes any such
proceeding, it shall give prompt written notice thereof to the Trustees and
shall afford each of them the opportunity to participate in such proceeding.
(n) Limitation by Law. All rights, remedies and powers provided
herein may be exercised only to the extent that they will not render this
Security Agreement not entitled to be recorded, registered or filed under
provisions of any applicable law.
25
26
(o) Release; Termination of Security Agreement.
(i) Subject to the provisions of Section 17(k) hereof, this
Security Agreement shall terminate upon payment in full of (A) the Convertible
Notes under the terms of the Convertible Note Indenture, (B) all Obligations
then due and owing under the Convertible Note Indenture, the Convertible Note
Guarantees and the Convertible Note Collateral Documents, (C) the Senior Notes
under the terms of the Senior Note Indenture and (D) all Obligations then due
and owing under the Senior Note Indenture, the Senior Note Guarantees and the
Senior Note Collateral Documents, except that the provisions of Section 17(p)
hereof shall survive.
(ii) The Company agrees that it will not sell or dispose of
any of the Collateral in violation of the Convertible Note Indenture or the
Senior Note Indenture; provided, however, that if the Company shall sell or
otherwise dispose of any of the Collateral in accordance with the terms of the
Convertible Note Indenture and/or the Senior Note Indenture, the Collateral
Agent shall, and the Trustees shall cause, at the request of the Company,
release or cause to be released the Collateral subject to such sale or
disposition free and clear of the Liens and security interest under this
Security Agreement.
(iii) Upon any termination of this Security Agreement or
release of any Collateral as permitted by the Convertible Note Indenture (or the
Senior Note Indenture if the Convertible Notes are no longer outstanding and the
Convertible Note Indenture has been satisfied and discharged), the Collateral
Agent and the Trustees will, at the expense of the Company, execute and deliver
to the Company such documents and take such other actions as the Company shall
reasonably request to evidence the termination of this Security Agreement or the
release of such Collateral, as the case may be. Any such action taken by the
Collateral Agent or the Trustees shall be without warranty by or recourse to the
Collateral Agent or the Trustees, except as to the absence of any prior
assignments by the Collateral Agent or the Trustees of its interests in the
Collateral, and shall be at the expense of the Company. The Collateral Agent and
the Trustees may conclusively rely on any certificate delivered to it by the
Company stating that the execution of such documents and release of the
Collateral is in accordance with and permitted by the terms of this Security
Agreement and the Convertible Note Indenture (or the Senior Note Indenture if
the Convertible Notes are no longer outstanding and the Convertible Note
Indenture has been satisfied and discharged).
(p) Payment of Fees and Expenses and Indemnity. The Company will
upon demand pay to the Collateral Agent and the Trustees, without duplication,
the amount of any and all fees and expenses, including, without duplication, the
fees and disbursements of its counsel and of any experts and agents, that the
Collateral Agent and the Trustees may incur in connection with (i)
administration of this Security Agreement, (ii) the custody, preservation, use
or operation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent and the Trustees hereunder or (iv) the failure by the Company
to perform or observe any of the provisions hereof. The Company shall be liable
for and shall reimburse and indemnify both Trustees and the Collateral Agent and
hold both Trustees and the Collateral Agent harmless from and against any
26
27
and all claims, losses, liabilities, costs, damages or expenses (including
reasonable attorneys' fees and expenses) (collectively, "Losses") arising from
or in connection with or related to this Agreement or being a Trustee or
Collateral Agent hereunder (including but not limited to Losses incurred by such
Trustee or Collateral Agent in connection with its successful defense, in whole
or in part, of any claim of negligence or willful misconduct on its part),
provided, however, that nothing contained herein shall require the Trustees and
the Collateral Agent to be indemnified for Losses caused by their respective
negligence or willful misconduct.
(q) Final Expression. This Security Agreement, together with the
Convertible Note Indenture, the Senior Note Indenture and any other agreement
executed in connection herewith or therewith, is intended by the parties as a
final expression of this Security Agreement and is intended as a complete and
exclusive statement of the terms and conditions hereof.
(r) Company Remain Liable. Anything herein to the contrary
notwithstanding, (a) the Company shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Security Agreement had not been executed, (b) the exercise by the
Collateral Agent or the Trustees of any of the rights hereunder shall not
release the Company from any of its duties or obligations under the contracts
and agreements included in the Collateral and (c) the Collateral Agent and the
Trustees shall not have any obligation or liability under any contracts and
agreements included in the Collateral by reason of this Security Agreement, nor
shall the Collateral Agent or the Trustees be obligated to perform any of the
obligations or duties of the Company thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
(s) Indentures. This Security Agreement is subject to the terms,
conditions and provisions of the Convertible Note Indenture or, if the
Convertible Notes are no longer outstanding and the Convertible Note Indenture
has been satisfied and discharged, of the Senior Note Indenture. When the
provisions of this Security Agreement are inconsistent with the provisions of
the Convertible Note Indenture, the provisions of the Convertible Note Indenture
shall prevail; and if the Convertible Notes are no longer outstanding and the
Convertible Note Indenture has been satisfied and discharged, when the
provisions of this Security Agreement are inconsistent with the provisions of
the Senior Note Indenture, the provisions of the Senior Note Indenture shall
prevail.
(t) Rights of Holders. No Holder of a Convertible Note or of a
Senior Note shall have any independent rights hereunder other than those rights
granted to individual Holders pursuant to Section 6.7 of the Convertible Note
Indenture or Section 6.7 of the Senior Note Indenture, as the case may be;
provided that nothing in this subsection (t) shall limit any rights granted to
the Convertible Note Trustee under the Convertible Notes, the Convertible Note
Indenture or the Convertible Note Collateral Documents or the Senior Note
Trustee under the Senior Notes, the Senior Note Indenture or the Senior Note
Collateral Documents.
27
28
(u) No Personal Liability of Directors, Officers, Employees and
Stockholders. No past, present or future director, officer, employee,
incorporator or stockholder of the Company or of any subsidiary of the Company,
as such, shall have any liability for any obligations of the Company under this
Security Agreement or for any claim based on, in respect of, or by reason of,
such obligations or their creation.
(v) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.
(i) THIS SECURITY 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 TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE COMPANY, THE COLLATERAL AGENT, THE CONVERTIBLE NOTE TRUSTEE AND THE
HOLDERS OF THE CONVERTIBLE NOTES AND THE SENIOR NOTE TRUSTEE AND THE HOLDERS OF
THE SENIOR NOTES IN CONNECTION WITH THIS SECURITY AGREEMENT, AND WHETHER ARISING
IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF
THE STATE OF NEW YORK.
(ii) THE COMPANY AGREES THAT THE COLLATERAL AGENT SHALL, IN
ITS CAPACITY AS COLLATERAL AGENT OR IN THE NAME AND ON BEHALF OF THE CONVERTIBLE
NOTE TRUSTEE AND ANY HOLDERS OF CONVERTIBLE NOTES AND THE SENIOR NOTE TRUSTEE
AND ANY HOLDERS OF SENIOR NOTES, AND THE CONVERTIBLE NOTE TRUSTEE SHALL, IN ITS
CAPACITY AS CONVERTIBLE NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDERS
OF CONVERTIBLE NOTES AND THE SENIOR NOTE TRUSTEE SHALL, IN ITS CAPACITY AS
SENIOR NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDERS OF SENIOR NOTES,
HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST
THE COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN
GOOD FAITH TO ENABLE THE COLLATERAL AGENT OR THE TRUSTEES TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE
COLLATERAL AGENT OR EITHER TRUSTEE. THE COMPANY AGREES THAT IT WILL NOT ASSERT
ANY COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE
COLLATERAL AGENT OR SUCH TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE COLLATERAL AGENT OR SUCH TRUSTEE.
THE COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
IN WHICH EITHER TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS.
28
29
(iii) TO, THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY,
THE COLLATERAL AGENT AND THE TRUSTEES EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS SECURITY
AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
(iv) THE COMPANY AGREES THAT NONE OF THE COLLATERAL AGENT, THE
CONVERTIBLE NOTE TRUSTEE, ANY HOLDER OF A CONVERTIBLE NOTE, THE SENIOR NOTE
TRUSTEE AND ANY HOLDER OF A SENIOR NOTE SHALL HAVE ANY LIABILITY TO THE COMPANY
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE
COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS SECURITY
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS
BINDING ON THE COLLATERAL AGENT, SUCH TRUSTEE OR SUCH NOTEHOLDER, AS THE CASE
MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE
COLLATERAL AGENT, THE CONVERTIBLE NOTE TRUSTEE OR SUCH HOLDER OF A CONVERTIBLE
NOTE OR THE SENIOR NOTE TRUSTEE OR ANY HOLDER OF A SENIOR NOTE, AS THE CASE MAY
BE, CONSTITUTING NEGLIGENCE OR WILLFUL MISCONDUCT.
(v) THE COMPANY WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY THE CONVERTIBLE NOTE TRUSTEE OR ANY HOLDER OF A
CONVERTIBLE NOTE OR THE SENIOR NOTE TRUSTEE OR ANY HOLDER OF A SENIOR NOTE OF
ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE
COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS. THE COMPANY WAIVES THE POSTING
OF ANY BOND OTHERWISE REQUIRED OF THE COLLATERAL AGENT, THE CONVERTIBLE NOTE
TRUSTEE OR ANY HOLDER OF A CONVERTIBLE NOTE OR THE SENIOR NOTE TRUSTEE OR ANY
HOLDER OF A SENIOR NOTE IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO
OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY
FOR THE OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF THE COLLATERAL AGENT, THE CONVERTIBLE NOTE TRUSTEE OR ANY HOLDER OF A
CONVERTIBLE NOTE OR THE SENIOR NOTE TRUSTEE OR ANY HOLDER OF A SENIOR NOTE, OR
TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY
OR PERMANENT INJUNCTION THIS SECURITY AGREEMENT OR ANY
29
30
OTHER AGREEMENT OR DOCUMENT AMONG THE COMPANY ON THE ONE HAND AND THE COLLATERAL
AGENT, THE CONVERTIBLE NOTE TRUSTEE AND/OR THE HOLDERS OF THE CONVERTIBLE NOTES
OR THE SENIOR NOTE TRUSTEE AND/OR ANY HOLDER OF A SENIOR NOTE ON THE OTHER HAND.
(w) Appointment of Collateral Agent. Pursuant to, and subject to
the provisions of, Section 7.12 of the Convertible Note Indenture and of Section
7.12 of the Senior Note Indenture, the Trustees hereby appoint the Collateral
Agent, and the Collateral Agent accepts appointment, as collateral agent under
the terms of this Security Agreement. The Collateral Agent may resign at any
time by giving written notice thereof to the Trustees and may be removed at any
time with or without cause by the Trustees acting together. Prior to the
effectiveness of any such resignation or removal, the Trustees acting together
shall have the right to appoint a successor Collateral Agent which shall be a
commercial bank organized or chartered under the laws of the United States of
America or any state thereof having combined capital and surplus of at least
$50,000,000. If no successor Collateral Agent shall have been so appointed by
the Trustees acting together, and shall have accepted such appointment within 30
days after the retiring Collateral Agent's giving of notice of resignation or a
Trustees' removal of the retiring Collateral Agent, then the retiring Collateral
Agent shall, prior to the effectiveness of its resignation or removal, on behalf
of the Senior Note Trustee, the Holders of the Senior Notes, the Convertible
Note Trustee and the Holders of the Convertible Notes, appoint a successor
Collateral Agent, which shall be a commercial bank organized under the laws of
the United States of America or any State thereof having a combined capital and
surplus of at least $50,000,000. 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
under this Security Agreement. After any retiring Collateral Agent's resignation
or removal hereunder as Collateral Agent, the provisions of this Security
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Collateral Agent under this Security Agreement. Any
corporation into which the Collateral Agent may be merged, or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Collateral Agent shall be a party, shall be Collateral Agent under
this Security Agreement without the execution or filing of any paper or any
further act on the part of the parties hereto.
[SIGNATURE PAGE FOLLOWS]
30
31
IN WITNESS WHEREOF, the Company has caused this Security Agreement to
be duly executed and delivered as of the day and year first above written.
PETERSBURG LONG DISTANCE INC.
By: /s/ Xxxxx Xxxx
--------------------------------
Name: Xxxxx Xxxx
Title: Chairman
By its acceptance hereof, as of the day and year first above written,
the Collateral Agent, the Senior Note Trustee and the Convertible Note Trustee
agree to be bound by the provisions hereof.
THE BANK OF NEW YORK, as Collateral Agent,
Senior Note Trustee and Convertible Note Trustee
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name: XXXXXX X. XXXXXXXX
Title: Assistant Treasurer
32
SCHEDULE A
to Company
Convertible Note
Security and
Pledge Agreement
PLEDGED STOCK
1. 1000 shares of Preferred Stock of US $1 per share, of Technocom
Limited.
33
SCHEDULE B
to Company
Convertible Note
Security and
Pledge Agreement
QUALIFIED INVESTMENTS
None.
34
SCHEDULE C
to Company
Convertible Note
Security and
Pledge Agreement
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
See Schedule D.
35
SCHEDULE D
to Company
Convertible Note
Security and
Pledge Agreement
LIENS ON EXISTING COLLATERAL
The consent of Xxxx Xxxxxx is required for the pledge of Technocom Preferred
Stock, which consent has been obtained pursuant to Written Resolutions of the
Shareholders of Technocom Limited dated June 12, 1996.
36
SCHEDULE E
to Company
Convertible Note
Security and
Pledge Agreement
FILINGS
1. UCC-1 financing statements filed with the Secretary of State of the
State of New York.
2. UCC-1 financing statements filed with the City Registers Office, New
York County, New York.
3. Financing statements filed in Ontario under the Personal Property
Security Act (Ontario).
4. The Agreement Accompanying Legal Mortgage of Shares dated June 12th,
1996 between Petersburg Long Distance Inc. and Bavalla Limited and
Share Transfer Form create, on their terms, a security interest upon
notation of such in the Technocom share register.
37
SCHEDULE F
to Company
Convertible Note
Security and
Pledge Agreement
CHIEF EXECUTIVE OFFICES
Petersburg Long Distance Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxx X0X 0X0
XXXXXX
38
SCHEDULE G
to Company
Convertible Note
Security and
Pledge Agreement
BUSINESS NAMES
1. Ventech Healthcare Corporation Inc.
2. NWE Capital Corp.
39
SCHEDULE H
to Company
Convertible Note
Security and
Pledge Agreement
LOCATION OF COLLATERAL
The Company's chief executive offices (see Exhibit F).
40
SCHEDULE I
to Company
Convertible Note
Security and
Pledge Agreement
FORM OF ADDITIONAL COLLATERAL AMENDMENT
This Additional Collateral Amendment, dated _____________, 19__, is
delivered pursuant to Section 6(a) of the Security Agreement referred to below.
The undersigned hereby pledges to the Collateral Agent for the benefit of the
Convertible Note Trustee and the equal and ratable benefit of the Holders of the
Convertible Notes and for the benefit of the Senior Note Trustee and the equal
and ratable benefit of the Holders of the Senior Notes, and grants to the
Convertible Note Trustee for its benefit and the equal and ratable benefit of
the Holders of the Convertible Notes and for the benefit of the Senior Note
Trustee and the equal and ratable benefit of the Holders of the Senior Notes,
continuing Liens and security interest in all of its rights, title and interest
in the Collateral listed below.
The undersigned hereby agrees that this Additional Collateral Amendment
may be attached to the Company Security and Pledge Agreement, dated as of May
31, 1996, between the undersigned and The Bank of New York, as Convertible Note
Trustee, Senior Note Trustee and as Collateral Agent (the "Security Agreement");
capitalized terms used herein and not otherwise defined herein shall have the
meanings given to such terms in the Security Agreement; and the Collateral
listed on this Additional Collateral Amendment shall be deemed to be part of the
Collateral, and shall become part of the Collateral and shall secure all
Obligations.
PETERSBURG LONG DISTANCE INC.
By:
Name:
Title:
41
INTERCOMPANY NOTES:
Description Name of Restricted Original
Item of Subsidiary Principal
Number Indebtedness (Obligor) Date Amount
OTHER COLLATERAL:
Description of
Qualified Investment
or other Collateral Evidenced By Obligor Date
42
SCHEDULE J
to Company
Convertible Note
Security and
Pledge Agreement
RESTRICTIVE AGREEMENTS
1. Unanimous shareholder approval of Technocom is required to effect major
dispositions of assets of Technocom. Ordinary share transfers are
subject to approval of 75% of the shareholders and a right of first
refusal of the non-transferring shareholders, except for transfers to a
"holding company" (as defined therein), a subsidiary of a shareholder
or any subsidiary of such holding company.
2. Pursuant to the Subscription and Shareholder Agreement Relating to
Technocom Limited, the approval of Elite International Limited and
Plicom Limited is required before Technocom may make any distribution
or pay any dividend other than dividends payable to holders of
Technocom Preferred Stock.
3. The By-Laws of MTR-Sviaz require that, subject to certain procedures, a
majority of equity holders of the joint venture present at a meeting
must approve any transfer of equity interests in the joint venture.
4. The Teleport-TP charter and foundation agreement provide a right of
first refusal for the issuance of new shares and a right of first
refusal in the event of a transfer of shares.
