COLLATERAL PLEDGE
AND SECURITY AGREEMENT
This COLLATERAL PLEDGE AND SECURITY AGREEMENT (this "PLEDGE
AGREEMENT") is made and entered into as of May 13, 1997 by and among GST
EQUIPMENT FUNDING, INC., a Delaware corporation (the "PLEDGOR"), having its
principal office at 0000 X.X. Xxxxxxxx Xxx, Xxxxxxxxx, Xxxxxxxxxx 00000, in
favor of United States Trust Company of New York ("U.S. TRUST"), a banking and
trust company duly organized and existing under the laws of the State of New
York, having an office at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, X.X. 00000, as trustee
(the "TRUSTEE") for the holders (the "HOLDERS") of the Notes (as defined herein)
issued by the Pledgor under the Indenture referred to below.
W I T N E S S E T H
WHEREAS, the Pledgor, GST Telecommunications, Inc., a
corporation organized under the federal laws of Canada ("GST"), GST USA, Inc., a
Delaware corporation ("GST USA") and the Trustee have entered into that certain
indenture dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the "INDENTURE"), pursuant to which the
Pledgor is issuing $265,000,000 in aggregate principal amount of its 13 1/4%
Senior Secured Notes due 2007 (the "NOTES") on the date hereof (the "OFFERING");
WHEREAS, in consideration for the Pledgor making the financing
from the Offering available to GST USA and for the Pledgor facilitating the
purchase of equipment for GST USA, GST USA has agreed to pay any fees or
expenses incurred by the Pledgor in connection therewith and in support of such
obligations GST USA has issued to Pledgor a $35 million principal amount
promissory note (the "INITIAL NOTE"), guaranteed by GST, which Initial Note
shall be pledged to the Trustee for the benefit of the Holders to secure the
Pledgor's obligations under the Indenture and the Notes;
WHEREAS, the Pledgor is required to apply approximately
$93,800,000 of the net proceeds of the Offering to acquire Collateral
Investments (as defined below) which will be pledged to the Trustee on the
Closing Date, to be held by the Trustee for the benefit of the Holders to secure
the Pledgor's obligations under the Indenture and the Notes;
WHEREAS, the Pledgor is permitted to use the proceeds of the
Collateral Investments (i) from time to time pay the cost (including, without
limitation, the cost of design, development, construction, acquisition,
installation and integration) (the "Acquired
Equipment Cost") of the Acquired Equipment (as defined below) and sell the
Acquired Equipment to GST USA in exchange for indebtedness (the "PLEDGED DEBT")
of GST USA in a principal amount equal to the Acquired Equipment Cost to be
evidenced by one or more Intercompany Notes (as defined below) and (ii) on the
Closing Date to loan up to $50 million to GST USA to refinance indebtedness
("ACQUIRED EQUIPMENT DEBT") secured by Acquired Equipment initially purchased by
GST USA or its affiliates after November 1, 1996, in exchange for Intercompany
Notes in a principal amount equal to the Acquired Equipment Debt (provided that
the principal amount shall not exceed the Acquired Equipment Cost of the
Acquired Equipment securing the Acquired Equipment Debt); all of which
Intercompany Notes shall also be pledged to the Trustee for the benefit of the
Holders to secure the Pledgor's obligations under the Indenture and the Notes;
WHEREAS, the Pledgor is required to (i) purchase or cause the
purchase of Government Securities (as defined below) in an amount that will be
sufficient upon receipt of scheduled interest and principal payments in respect
thereof, in the opinion of a nationally recognized firm of independent
accountants selected by the Pledgor and delivered to the Trustee, to provide for
payment of the first six scheduled interest payments due on the Notes and (ii)
place such Government Securities (or cause them to be placed) in an account held
by the Trustee for the benefit of Holders of the Notes; and
WHEREAS, the Pledgor has opened a securities account (the
"COLLATERAL INVESTMENTS ACCOUNT") with Xxxxxx Xxxxxxx Asset Management, Inc.
("MSAM") at its office at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000,
Account No. 030-815849 in the name of the Pledgor but under the sole dominion
and control of the Trustee and subject to the terms of this Pledge Agreement;
WHEREAS, the Pledgor has opened a securities account (the
"INTEREST ACCOUNT") with USTrust at its office at 000 X. 00xx Xxxxxx, Xxx Xxxx,
XX 00000, Account No. 00000000 in the name of the Pledgor but under the sole
dominion and control of the Trustee and subject to the terms of this Pledge
Agreement; and
WHEREAS, to secure the obligations of the Pledgor now or
hereafter existing under the Indenture and the Notes whether for principal,
premium, interest, fees, expenses or otherwise (the "OBLIGATIONS"), the Pledgor
has agreed to (i) pledge to the Trustee for its benefit and the ratable benefit
of the Holders, a security interest in the Collateral (as hereinafter defined)
and (ii) execute and deliver this Pledge Agreement in order to secure the
payment and performance by the Pledgor of all the Obligations. Capitalized terms
used herein and not otherwise defined herein shall have the meanings given to
such terms in the Indenture.
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AGREEMENT
NOW, THEREFORE, in consideration of the premises herein
contained, and in order to induce the Holders to purchase the Notes, the Pledgor
and the Trustee hereby agree, for the benefit of the Trustee and for the ratable
benefit of the Holders, as follows:
SECTION 1. DEFINITIONS; APPOINTMENT; DEPOSIT AND INVESTMENT.
1.1. DEFINITIONS.
"AMENDED BOOK-ENTRY REGULATIONS" means 31 C.F.R. Part 357 as
amended by the amendments thereto promulgated at 61 Fed. Reg.
43626-43638 (August 23, 1996).
"CASH EQUIVALENTS" means U.S. Government Obligations, as
defined in the Indenture.
"OFFICER'S CERTIFICATE" shall mean a certificate signed by the
Chairman of the Board, the President or any Vice President of the
Pledgor (a)(i) stating (A) the amount of funds needed by the Pledgor to
pay the Acquired Equipment Cost of any Acquired Equipment to be
purchased by the Pledgor and confirming that the cost of design,
development, construction, installation and integration of all Acquired
Equipment will not exceed 50% of the aggregate Acquired Equipment Cost
of such Acquired Equipment; (B) that GST USA has entered into a legally
binding and enforceable agreement (a "PURCHASE AGREEMENT") with the
Pledgor to purchase promptly, but in no event later than the earliest
date such Acquired Equipment can be commercially operational, such
Acquired Equipment in exchange for indebtedness with a principal amount
equal to the Acquired Equipment Cost and that bears interest at 200
basis points above the rate equal to that of the Notes and evidenced by
an Intercompany Note in the form of Exhibit D hereto, guaranteed by GST
under a Guaranty in the form of Exhibit F, and (C) that the Pledgor
will pledge the Intercompany Note to the Trustee for the benefit of the
Holders, and (ii) having attached thereto, an invoice or other
appropriate documentation for the Acquired Equipment stating the
Acquired Equipment Cost to be paid or (b) in connection with the
refinancing on the date hereof of up to $50 million of Acquired
Equipment Debt stating (A) the principal amount of the Acquired
Equipment Debt to be refinanced by the Pledgor and confirming that (x)
the Acquired Equipment securing such Acquired Equipment Debt was
initially purchased by GST USA or its affiliates after November 1, 1996
and (y) the Acquired Equipment Cost of such Acquired Equipment was at
least equal to the principal amount of such Intercompany Notes.
"QUALIFIED FINANCIAL INSTITUTION" shall mean any person
meeting the minimum requirements imposed upon the Trustee pursuant to
Section 7.10 of the Indenture.
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"REVISED ARTICLE 8" has the meaning set forth in ss.357.2 of
the Amended Book- Entry Regulations.
"TRUSTEE" shall mean the Person named as the "Trustee" in the
first paragraph of this Agreement until a successor Trustee shall have
become such, and thereafter "Trustee" shall mean the Person who is then
the Trustee hereunder.
All defined terms used herein without definition shall have
the respective meanings ascribed to them in the Indenture. Unless otherwise
defined herein or in the Indenture, terms used in Articles 8 or 9 of the Uniform
Commercial Code as in effect in the State of New York (the "U.C.C."), Revised
Article 8 and the Amended Book-Entry Regulations are used herein as therein
defined.
1.2. APPOINTMENT OF THE TRUSTEE. The Pledgor hereby appoints
the Trustee as Trustee in accordance with the terms and conditions set
forth herein and the Trustee hereby accepts such appointment.
1.3. PLEDGE AND GRANT OF SECURITY INTEREST. The Pledgor hereby
assigns and pledges to the Trustee for its benefit and the ratable
benefit of the Holders, and hereby grants to the Trustee for its
benefit and the ratable benefit of the Holders a security interest in,
the following (collectively, the "COLLATERAL"):
(a) all of the Pledgor's right, title and interest,
whether now owned or hereafter acquired, in and to all
equipment in all of its forms, wherever located, now or
hereafter existing (including, but not limited to, all
telecommunications equipment of every type), all fixtures and
all parts thereof and all accessions thereto (any and all such
equipment, fixtures, parts and accessions being the "ACQUIRED
EQUIPMENT");
(b) all of the Pledgor's right, title and interest,
whether now owned or hereafter acquired, in and to all
accounts, contract rights, chattel paper, instruments, deposit
accounts, general intangibles and other obligations of any
kind, now or hereafter existing, whether or not arising out of
or in connection with the sale or lease of Acquired Equipment
or other goods or the rendering of services, and all rights
now or hereafter existing in and to all security agreements,
leases and other contracts securing or otherwise relating to
any such accounts, contract rights, chattel paper,
instruments, deposit accounts, general intangibles or
obligations (any and all such accounts, contract rights,
chattel paper, instruments, deposit accounts, general
intangibles and obligations, to the extent not referred to in
clause (d), (e) or (f) below, being the "RECEIVABLES", and any
and all such leases, security agreements and other contracts
being the "RELATED CONTRACTS");
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(c) all of the following (the "SECURITY COLLATERAL"):
(i) the Initial Note and GST's guarantee
thereof, and all interest, cash, instruments and
other property from time to time received, receivable
or otherwise distributed in respect of or in exchange
for the Initial Note;
(ii) the Pledged Debt and the instruments
evidencing the Pledged Debt and GST's guarantee
thereof, and all interest, cash, instruments and
other property from time to time received, receivable
or otherwise distributed in respect of or in exchange
for any or all of the Pledged Debt; and
(iii) all additional indebtedness from time
to time owed to the Pledgor and the instruments
evidencing such indebtedness, and all interest, cash,
instruments and other property from time to time
received, receivable or otherwise distributed in
respect of or in exchange for any or all of such
indebtedness;
(d) all of the Pledgor's right, title and interest in
and to each of the Purchase Agreements entered into by the
Pledgor from time to time, and the Intercompany Security
Agreement, as such agreements may be amended or otherwise
modified from time to time (collectively, the "ASSIGNED
AGREEMENTS"), including, without limitation, (i) all rights of
the Pledgor to receive moneys due and to become due under or
pursuant to the Assigned Agreements, (ii) all claims of the
Pledgor for damages arising out of or for breach of or default
under the Assigned Agreements and (iii) the right of the
Pledgor to terminate the Assigned Agreements, to perform
thereunder and to compel performance and otherwise exercise
all remedies thereunder (all such Collateral being the
"AGREEMENT COLLATERAL");
(e) all of the following (collectively, the "ACCOUNT
COLLATERAL"):
(i) the Collateral Investments Account, all
funds held therein and all certificates and
instruments, if any, from time to time representing
or evidencing the Collateral Investments Account;
(ii) all other deposit accounts of the
Pledgor, all funds held therein and all certificates
and instruments, if any, from time to time
representing or evidencing such deposit accounts;
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(iii) all Collateral Investments (as
hereinafter defined) from time to time and all
certificates and instruments, if any, from time to
time representing or evidencing the Collateral
Investments;
(iv) all notes, certificates of deposit,
deposit accounts, checks and other instruments from
time to time hereafter delivered to or otherwise
possessed by MSAM for or on behalf of the Pledgor in
substitution for or in addition to any or all of the
then existing Account Collateral; and
(v) all interest, dividends, cash,
instruments and other property from time to time
received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then
existing Account Collateral;
(f) all of Pledgor's right, title and interest in, to
and under the following (hereinafter collectively referred to
as the "INTEREST COLLATERAL"), whether characterized as
investment property, general intangibles or otherwise: (i) the
United States Treasury securities identified by CUSIP No. in
ANNEX 1 to EXHIBIT B-2 to this Agreement (the "INTEREST
SECURITIES"), (ii) any and all applicable security
entitlements to such securities, (iii) the Interest Account
established and maintained by the Trustee pursuant to this
Agreement, (iv) any and all related securities accounts in
which security entitlements to the Interest Securities are
carried, (v) all certificates and other evidences of Pledgor's
ownership of or other interests in any of the foregoing
categories of Interest Collateral, and (vi) except as
otherwise provided herein, all proceeds of or other
distributions on or with respect to, any of the foregoing,
including, without limitation, all dividends, interest,
principal payments, cash, options, warrants, rights,
instruments, subscriptions and other property or proceeds from
time to time received, receivable or otherwise distributed or
distributable in respect of or in exchange for any or all of
the Interest Securities or any security entitlement thereto;
and
(g) all proceeds of any and all of the foregoing
Collateral (including, without limitation, proceeds that
constitute property of the types described in clauses (a) -
(f) of this Section 1.3) and, to the extent not otherwise
included, all (i) payments under insurance (whether or not the
Trustee is the loss payee thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral and
(ii) cash.
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1.4. DEPOSIT OF PROCEEDS OF OFFERING. The Pledgor shall
deposit the net proceeds of the Offering and all other cash on hand on the date
hereof into the Collateral Investments Account and direct MSAM to purchase Cash
Equivalents to be held in the Collateral Investments Account and direct the
Trustee to purchase the Interest Securities to be held in the Interest Account.
SECTION 2. SECURITY FOR OBLIGATION. This Pledge Agreement
secures the payment of all Obligations of the Pledgor now or hereafter existing
under the Indenture and the Notes, whether for principal, premium, interest,
fees, expenses or otherwise (all such Obligations being the "SECURED
OBLIGATIONS"). Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts that constitute part of the Secured
Obligations and would be owed by the Pledgor to the Trustee or the Holders under
the Indenture but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding involving
the Pledgor.
SECTION 3. DELIVERY OF COLLATERAL. All certificates or
instruments representing or evidencing the Security Collateral, Account
Collateral or Interest Collateral shall be delivered to and held by or on behalf
of the Trustee pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Trustee or
shall be credited to the Collateral Investments Account. For the better
perfection of the Trustee's rights in and to the Security Collateral, Account
Collateral and Interest Collateral, the Pledgor shall forthwith, upon the pledge
of any Security Collateral, Account Collateral or Interest Collateral hereunder,
cause all such Security Collateral, Account Collateral or Interest Collateral,
including the Collateral Investments Account and all other accounts representing
a security entitlement to or containing any Collateral (including, without
limitation, any Collateral Investments) to be registered in the name "GST
Equipment Funding, Inc. Collateral Account for the benefit of United States
Trust Company of New York, as Trustee," and to be under the sole dominion and
control of the Trustee, which dominion and control shall be agreed to and
acknowledged by MSAM or any other securities intermediary holding any such
account in an acknowledgement in the form of Exhibit B-1 hereto, subject only to
the revocable rights specified in Section 8. In addition, the Trustee or MSAM,
as the case may be, shall have the right at any time to exchange certificates or
instruments representing or evidencing any Security Collateral, Account
Collateral or Interest Collateral for certificates or instruments of smaller or
larger denominations.
SECTION 4. MAINTAINING THE COLLATERAL ACCOUNTS. (a) So long as
any Obligation shall remain unpaid, the Pledgor will maintain the Collateral
Investments Account. So long as the first six scheduled interest payments on the
Notes have not been paid, the Pledgor will maintain the Interest Account.
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(b) It shall be a term and condition of the Collateral
Investments Account and the Interest Account, notwithstanding any term or
condition to the contrary in any other agreement relating to the Collateral
Investments Account or the Interest Account, as the case may be, and except as
otherwise provided by the provisions of Section 7, Section 8 and Section 17,
that no amount (including interest on Collateral Investments or Interest
Collateral) shall be paid or released to or for the account of, or withdrawn by
or for the account of, the Pledgor or any other Person from the Cash Collateral
Account.
(c) The Collateral Investments Account shall be subject to
such applicable laws, and such applicable regulations of the Board of Governors
of the Federal Reserve System and of any other appropriate banking or
governmental authority, as may now or hereafter be in effect.
(d) Notwithstanding the provisions of this Section 4 or any
other term of this Agreement, the Trustee shall relocate the Account Collateral
and Interest Collateral to accounts at a Qualified Financial Institution
designated by the Pledgor upon receipt of the following documentation: (i)
written instructions from a duly authorized officer of the Pledgor (A)
authorizing such relocation of the Collateral; and (B) designating the account
at the Qualified Financial Institution to which the Collateral is to be
relocated; (ii) a letter agreement in the form of Exhibit B-1 or Exhibit B-2, as
appropriate, duly executed by the Qualified Financial Institution; and (iii) an
opinion of counsel to the Pledgor, in form and substance satisfactory to the
Trustee, stating that the Trustee has a valid and perfected first priority
security interest in the Collateral relocated pursuant to this Section 4(d). In
the event of the relocation of an Account Collateral or Interest Collateral
pursuant to this Section 4(d), the accounts to which such Account Collateral or
Interest Collateral is relocated shall for all purposes under this Agreement
thereafter be the Collateral Investment Account and the Interest Account,
respectively.
SECTION 5. INVESTING OF AMOUNTS IN THE COLLATERAL INVESTMENTS
ACCOUNT. The Pledgor will, subject to the provisions of Section 8 and Section
17, from time to time (a) invest amounts on deposit in the Collateral
Investments Account in such Cash Equivalents in the name of the Trustee as the
Pledgor may select and (b) invest interest paid on the Cash Equivalents referred
to in clause (a) above, and reinvest other proceeds of any such Cash Equivalents
that may mature or be sold, in each case in such Cash Equivalents, as the
Pledgor may select (the Cash Equivalents referred to in clauses (a) and (b)
above being collectively "COLLATERAL INVESTMENTS"). Interest and proceeds that
are not invested or reinvested in Collateral Investments as provided above shall
be deposited and held in the Collateral Investments Account.
SECTION 6. DELIVERY OF COLLATERAL INVESTMENTS AND INTEREST
COLLATERAL; FILING. (a) The Trustee shall become the holder of the Interest
Collateral and of any and all security entitlements to the Interest Collateral,
through action by the Federal Reserve Bank of
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New York ("FRBNY") or another securities intermediary, as confirmed (in writing
or electronically or otherwise in accordance with standard industry practice) to
the Trustee by FRBNY or such other securities intermediary (i) indicating by
book-entry that the Interest Collateral or a security entitlement thereto has
been credited to the the Interest Account or (ii) acquiring the Interest
Collateral or a security entitlement thereto for the Trustee and accepting the
same for credit to the the Interest Account as the case may be.
(b) Subject to the other terms and conditions of this Pledge
Agreement, all Collateral Investments and Interest Collateral under this Pledge
Agreement shall be held in the Collateral Investments Account or Interest
Account, as the case may be, subject (except as expressly provided in
subsections 7(a), 7(b), 8(a), 8(b) and 8(c) hereof) to the exclusive dominion
and control of the Trustee and exclusively for the benefit of the Trustee and
for the ratable benefit of the Holders and segregated from all other funds or
other property otherwise held by the Trustee.
(c) All Account Collateral and Interest Collateral shall be
retained in the Collateral Investments Account and Interest Account pending
disbursement pursuant to the terms hereof and upon request from the Pledgor, the
Trustee shall report to the Pledgor the amount and type of assets contained in
each such account.
(d) Concurrently with the execution and delivery of this
Agreement, MSAM is delivering to the Pledgor a duly executed certificate, in the
form of EXHIBIT A-1 hereto, of an officer of MSAM, confirming MSAM's
establishment and maintenance of the Collateral Investment Account and its
receipt and holding of the Collateral Investments or a security entitlement
thereto and the crediting of the Collateral Investments or such security
entitlement to the Collateral Investment Account, all in accordance with this
Pledge Agreement.
(e) Concurrently with the execution and delivery of this
Agreement, the Trustee is delivering to the Pledgor a duly executed certificate,
in the form of EXHIBIT A-2 hereto, of an officer of the Trustee, confirming the
Trustee's establishment and maintenance of the Interest Account, and its receipt
and holding of the Interest Collateral or a security entitlement thereto and the
crediting of the Interest Collateral or such security entitlement to the
Interest Account, all in accordance with this Pledge Agreement.
(f) Concurrently with the execution and delivery of this
Agreement, the Pledgor is delivering to the Trustee duly executed financing
statements, in proper form for filing under the Uniform Commercial Code of the
State of New York and each state listed on Schedule I hereto covering the
Collateral described in this Pledge Agreement.
SECTION 7. DISBURSEMENTS RELATING TO INTEREST COLLATERAL. (a)
Immediately prior to the due date of any of the first six scheduled interest
payments on the Notes, the
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Trustee will release from the Interest Account and pay to the Holders of the
Notes proceeds of Interest Collateral Maturing at such time sufficient to
provide for payment in full of such interest then due on the Notes. The Trustee
will take any action necessary to provide for the payment of the interest on the
Notes in accordance with the payment provisions of the Indenture to the Holders
of the Notes from (and to the extent of) proceeds of the Interest Securities in
the Interest Account. Nothing in this Section 7 shall affect the Trustee's
rights to apply the Collateral to the payments of amounts due on the Notes upon
acceleration thereof.
(b) If at any time the principal of and interest on the
Interest Securities exceeds 100% of the amount sufficient, in the written
opinion of a nationally recognized firm of independent accountants selected by
the Pledgor and delivered to the Trustee, to provide for payment in full of the
first six scheduled interest payments due on the Notes (or, in the event one or
more interest payments have been made thereon, an amount sufficient to provide
for the payment in full of any and all interest payments on the Notes then
remaining, up to and including the sixth scheduled interest payment), the
Pledgor may direct the Trustee to release any such overfunded amount to the
Collateral Investments Account.
SECTION 8. DISBURSEMENTS RELATING TO OTHER COLLATERAL. The
assets in the Collateral Investments Account shall be released only as follows:
(a) Three business days prior to the due date of any scheduled
cash interest payments on the Notes occurring after the sixth such due
date, any Payment Date with respect to an Offer to Purchase the Notes
under the Indenture or a Redemption Date with respect to the Notes, the
Pledgor may, pursuant to written instructions executed by the Pledgor
(an "ISSUER ORDER"), direct the Trustee to direct MSAM to release from
the Collateral Investments Account and, if necessary, to liquidate the
Collateral Investments indicated on the Issuer Order and pay to the
Holders proceeds sufficient to provide for payment in full of such
principal, premium or interest then due on the Notes. Upon receipt of
an Issuer Order, the Trustee will take any action necessary to provide
for the payment of the principal, premium or interest on the Notes in
accordance with the payment provisions of the Indenture to the Holders
from (and to the extent of) proceeds of the Collateral Investments
Account. Nothing in this Section 8 shall affect the Trustee's rights to
apply the Collateral to the payments of amounts due on the Notes upon
acceleration thereof.
(b) Upon receipt by the Trustee of an Issuer Order and an
Officer's Certificate with respect to the payment of any Acquired
Equipment Cost, the Trustee shall direct MSAM to immediately release
proceeds from the Collateral Investments Account and if necessary
liquidate the Collateral Investments indicated in the Officer's
Certificate or Issuer Order in such amount as will be sufficient to
provide for payment in full of the Acquired Equipment Cost. The Pledgor
agrees to use the disbursed
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proceeds to pay such Acquired Equipment Cost on the date of such
release, and any such released funds will be disbursed directly to the
supplier of the Acquired Equipment pursuant to the invoice attached to
the Officer's Certificate.
(c) Upon receipt on the Closing Date by the Trustee of an
Issuer Order and an Officer's Certificate with respect to the
refinancing of up to $50 million principal amount of Acquired Equipment
Debt, the Trustee shall instruct MSAM to release proceeds from the
Collateral Investments Account in an amount equal to the principal
amount of such Acquired Equipment Debt. The Pledgor agrees to use the
disbursed proceeds to repay such Acquired Equipment Debt on the Closing
Date.
(d) Upon receipt by the Trustee of an Issuer Order with
respect to the payment of fees or expenses, the Trustee shall release
proceeds from the Collateral Investments Account, and if necessary
liquidate Collateral Investments indicated in the Issuer Order, in such
amount as will be sufficient to pay fees and expenses incurred by the
Pledgor in connection with the Offering, this Agreement or the purchase
and sale of the Acquired Equipment; provided that in no event may the
aggregate amount of funds released pursuant to this paragraph (c)
exceed $1 million.
(e) Nothing contained in Section 1, Section 5, Section 7, this
Section 8 or any other provision of this Agreement shall (i) afford the
Pledgor any right to issue entitlement orders with respect to any
security entitlement to the Collateral Investments or any securities
account in which any such security entitlement may be carried, or
otherwise afford the Pledgor control of any such security entitlement
or (ii) otherwise give rise to any rights of Pledgor with respect to
the Collateral Investments, any security entitlement thereto or any
securities account in which any such security entitlement may be
carried, other than the Pledgor's rights under this Pledge Agreement as
the beneficial owner of collateral pledged to and subject to the
exclusive dominion and control (except as expressly provided in
Sections 8(a), (b) and (c) hereof) of the Trustee in its capacity as
such (and not as a securities intermediary). The Pledgor acknowledges,
confirms and agrees that the Trustee holds a security entitlement to
the Collateral Investments solely as trustee for the Holders and not as
a securities intermediary.
(f) The Pledgor shall prepare and deliver to the Trustee or
shall provide the Trustee with all information necessary for the
Trustee to prepare and deliver to MSAM, instructions to MSAM for the
release of funds from the Collateral Investments Account in accordance
with the terms of Section 8.
SECTION 9. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby
represents and warrants, and in connection with each purchase or sale of
Acquired Equipment will be deemed to represent and warrant, that:
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(a) The execution and delivery by the Pledgor of, and the
performance by the Pledgor of its obligations under, this Pledge
Agreement will not contravene any provision of applicable law or the
Certificate of Incorporation of the Pledgor or any material agreement
or other material instrument binding upon the Pledgor or any of its
subsidiaries or any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Pledgor or any of its
subsidiaries, or result in the creation or imposition of any Lien on
any assets of the Pledgor, except for the security interests granted
under this Pledge Agreement; no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required (i) for the performance by the Pledgor of its obligations
under this Pledge Agreement, (ii) for the pledge by the Pledgor of the
Collateral pursuant to this Pledge Agreement or (iii) except for any
such consents, approvals, authorizations or orders required to be
obtained by the Trustee (or the Holders) for reasons other than the
consummation of this transaction, for the exercise by the Trustee of
the rights provided for in this Pledge Agreement or the remedies in
respect of the Collateral pursuant to this Pledge Agreement.
(b) The Pledgor is the beneficial owner of the Collateral,
free and clear of any Lien or claims of any person or entity (except
for the security interests granted under this Pledge Agreement). No
financing statement covering the Pledgor's interest in the Collateral
is on file in any public office other than the financing statements, if
any, filed pursuant to this Pledge Agreement. The Pledgor has no trade
names.
(c) This Pledge Agreement has been duly authorized, validly
executed and delivered by the Pledgor and (assuming the due
authorization and valid execution and delivery of this Pledge Agreement
by the Trustee and enforceability of the Pledge Agreement against the
Trustee in accordance with its terms) constitutes a valid and binding
agreement of the Pledgor, enforceable against the Pledgor in accordance
with its terms, except as (i) the enforceability hereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, preference,
reorganization, moratorium or similar laws now or hereafter in effect
relating to or affecting creditors' rights or remedies generally, (ii)
the availability of equitable remedies may be limited by equitable
principles of general applicability and the discretion of the court
before which any proceeding therefor may be brought, and (iii) the
exculpation provisions and rights to indemnification hereunder may be
limited by U.S. federal and state securities laws and public policy
considerations.
(d) Upon the delivery to the Trustee of the certificates or
instruments, if any, representing or evidencing the Collateral, the
filing of financing statements, if any, required by the UCC in the
appropriate offices in the State of New York, and the transfer and
pledge to the Trustee of the Account Collateral and the acquisition by
the Trustee of a security entitlement thereto, in accordance with
Section 3, the pledge
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of and grant of a security interest in the Collateral securing the
payment of the Secured Obligations for the benefit of the Trustee and
the Holders will constitute a first priority perfected security
interest in such Collateral, enforceable as such against all creditors
of the Pledgor (and any persons purporting to purchase any of the
Collateral from the Pledgor).
(e) There are no legal or governmental proceedings pending or,
to the best of the Pledgor's knowledge, threatened to which the Pledgor
or any of its subsidiaries is a party or to which any of the properties
of the Pledgor or any such subsidiary is subject that would materially
adversely affect the power or ability of the Pledgor to perform its
obligations under this Pledge Agreement or to consummate the
transactions contemplated hereby.
(f) The pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by law or governmental regulation
(including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System) applicable to the Pledgor.
(g) All of the Acquired Equipment is or will be located at the
places specified in Schedule I hereto. The chief place of business and
chief executive office of the Pledgor and the office where the Pledgor
keeps its records concerning the Receivables, and the original copies
of each Assigned Agreement and all originals of all chattel paper that
evidence Receivables, are located at the address first specified above
for the Pledgor. Original copies of each Assigned Agreement and all
originals of all chattel paper that evidence Receivables have been
delivered to the Trustee. None of the Receivables or Agreement
Collateral is evidenced by a promissory note or other instrument. The
Pledgor has exclusive possession and control of the Acquired Equipment.
(h) The Initial Note has been duly authorized, executed or
issued and delivered, is the legal, valid and binding obligation of GST
USA and is not in default and each Intercompany Note issued to the
Pledgor hereunder will be duly authorized, executed or issued and
delivered by GST USA and will be the legal, valid and binding
obligation of GST USA.
(i) The guaranty of the Initial Note by GST has been duly
authorized executed and delivered and is the legal valid and binding
obligation of GST and each guaranty of an Intercompany Note issued to
the Pledgor will be duly authorized, executed and delivered by GST and
will be the legal valid and binding obligation of GST.
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(j) The Intercompany Security Agreement, a true and complete
copy of which has been furnished to the Trustee, has been duly
authorized, executed and delivered by all parties thereto, has not been
amended or otherwise modified, is in full force and effect and is
binding upon and enforceable against all parties thereto in accordance
with its terms. GST USA has executed and delivered to the Pledgor a
consent, in substantially the form of Exhibit C, to the assignment of
the Intercompany Security Agreement and all related Agreement
Collateral to the Trustee pursuant to this Agreement.
(k) Each Purchase Agreement delivered to the Pledgor will be
duly authorized, executed and delivered by GST USA and will be the
legal, valid and binding obligation of GST USA enforceable in
accordance with its terms.
(l) No Event of Default (as defined below) exists.
SECTION 10. FURTHER ASSURANCES. The Pledgor will, promptly
upon request by the Trustee (which request the Trustee may submit at the
direction of the Holders of a majority in principal amount of the Notes then
outstanding), execute and deliver or cause to be executed and delivered, or use
its reasonable best efforts to procure, all assignments, instruments and other
documents, all in form and substance reasonably satisfactory to the Trustee,
deliver any instruments to the Trustee and take any other actions that are
necessary or desirable to perfect, continue the perfection of, or protect the
first priority of the Trustee's security interest in and to the Collateral, to
protect the Collateral against the rights, claims, or interests of third persons
(other than any such rights, claims or interests created by or arising through
the Trustee) or to effect the purposes of this Pledge Agreement. The Pledgor
also hereby authorizes the Trustee to file any financing or continuation
statements in the United States with respect to the Collateral without the
signature of the Pledgor (to the extent permitted by applicable law). The
Pledgor will promptly pay all reasonable costs incurred in connection with any
of the foregoing within 45 days of receipt of an invoice therefor. The Pledgor
also agrees, whether or not requested by the Trustee, to take all actions that
are necessary to perfect or continue the perfection of, or to protect the first
priority of, the Trustee's security interest in and to the Collateral, including
the filing of all necessary financing and continuation statements, and to
protect the Collateral against the rights, claims or interests of third persons
(other than any such rights, claims or interests created by or arising through
the Trustee).
SECTION 11. COVENANTS. The Pledgor covenants and agrees with
the Trustee and the Holders that from and after the date of this Pledge
Agreement until the earlier of payment in full in cash of all Secured
Obligations due and owing under the Indenture and the Notes:
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(a) that (i) it will not (and will not purport to) sell or
otherwise dispose of, or grant any option or warrant with respect to,
any of the Collateral and at times will be the sole beneficial owner of
the Collateral, except as contemplated by this Agreement or the
Indenture or (ii) it will not create or permit to exist any Lien upon
or with respect to any of the Collateral (except for the security
interests granted under this Pledge Agreement, the Intercompany
Security Agreement and any Lien created by or arising through the
Trustee under the Indenture); or
(b) that it will not (i) enter into any agreement or
understanding that restricts or inhibits or purports to restrict or
inhibit the Trustee's rights or remedies hereunder, including, without
limitation, the Trustee's right to sell or otherwise dispose of the
Collateral or (ii) fail to pay or discharge any tax, assessment or levy
of any nature with respect to the Collateral not later than five days
prior to the date of any proposed sale under any judgment, writ or
warrant of attachment with respect to the Collateral;
(c) in the event the Pledgor is required to make an Offer to
Purchase the Notes under the Indenture, it will fund such Offer to
Purchase (i) first from funds (or the proceeds of Collateral
Investments) held in the Collateral Investments Account, (ii) second
from the proceeds of Intercompany Offers (as defined in the
Intercompany Notes) under the Intercompany Notes, (iii) third from the
proceeds of an Initial Note Offer (as defined in the Initial Note)
under the Initial Note and (iv) fourth, to the extent the principal and
interest on the Interest Securities would exceed the amount sufficient
to provide for the payment in full of the first six scheduled interest
payments due on the Notes to be outstanding after the Offer to
Purchase, the Interest Collateral held in the Interest Account. The
Pledgor covenants that it will not accept any Intercompany Offer or
Initial Note Offer except and to the extent required to fund an Offer
to Purchase in accordance with the terms of the preceding sentence; and
(d) it will deliver to the Trustee, true and complete copies
of each Purchase Agreement, promptly after each such agreement is
entered into by GST USA and the Pledgor, and will require as a
condition to its entry into any such Purchase Agreement that GST USA
execute and deliver to the Pledgor a consent, in substantially the form
of Exhibit C, to the assignment of the Purchase Agreement and all
related Agreement Collateral to the Trustee pursuant to this Agreement.
SECTION 12. AS TO ACQUIRED EQUIPMENT. (a) The Pledgor shall
keep the Acquired Equipment at the places therefor specified in Section 9(g) or,
upon 30 days' prior written notice to the Trustee, at such other places in a
jurisdiction where all action required by Section 9(g) or 10 or shall have been
taken with respect to the Acquired Equipment to perfect, continue the perfection
of or protect the first priority of the Trustee's security interest in and to
such Collateral.
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(b) The Pledgor shall cause the Acquired Equipment to be
maintained and preserved in the same condition, repair and working order as when
new, ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and shall forthwith, or in the case of any loss or damage to any of the
Acquired Equipment as quickly as practicable after the occurrence thereof, make
or cause to be made all repairs, replacements and other improvements in
connection therewith that are necessary or desirable to such end. The Pledgor
shall promptly furnish to the Trustee a statement respecting any loss or damage
to any of the Acquired Equipment.
(c) The Pledgor shall pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including claims for labor, materials and supplies) against, the
Acquired Equipment.
SECTION 13. INSURANCE. (a) The Pledgor shall, at its own
expense, maintain insurance with respect to the Acquired Equipment in such
amounts, against such risks, in such form and with such insurers, as is
reasonable and customary for persons in the telecommunications business. Each
policy for liability insurance shall provide for all losses to be paid on behalf
of the Trustee and the Pledgor as their interests may appear, and each policy
for property damage insurance shall provide for all losses (except for losses of
less than $1,000,000 per occurrence) to be paid directly to the Trustee. Each
such policy shall in addition (i) name the Pledgor and the Trustee as insured
parties thereunder (without any representation or warranty by or obligation upon
the Trustee) as their interests may appear, (ii) contain the agreement by the
insurer that any loss thereunder shall be payable to the Trustee notwithstanding
any action, inaction or breach of representation or warranty by the Pledgor,
(iii) provide that there shall be no recourse against the Trustee for payment of
premiums or other amounts with respect thereto and (iv) provide that at least 10
days' prior written notice of cancellation or of lapse shall be given to the
Trustee by the insurer. The Pledgor shall deliver to the Trustee original or
duplicate policies of such insurance and, on each anniversary of the Closing
Date, a report of a reputable insurance broker with respect to such insurance.
Further, the Pledgor shall, at the request of the Trustee, duly exercise and
deliver instruments of assignment of such insurance policies to comply with the
requirements of Section 10 and cause the insurers to acknowledge notice of such
assignment.
(b) Reimbursement under any liability insurance maintained by
the Pledgor pursuant to this Section 13 may be paid directly to the Person who
shall have suffered a loss covered by such insurance. In case of any loss
involving damage to Acquired Equipment, the Pledgor shall make or cause to be
made the necessary repairs to or replacements of such Acquired Equipment, and
any proceeds of insurance maintained by the Pledgor which are received by the
Trustee pursuant to this Section 13 shall be paid to the Pledgor as
reimbursement for the costs of such repairs or replacements.
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SECTION 14. POWER OF ATTORNEY. In addition to all of the
powers granted to the Trustee pursuant to the Indenture, the Pledgor hereby
appoints and constitutes the Trustee as the Pledgor's attorney-in-fact (with
full power of substitution) to exercise to the fullest extent permitted by law
all of the following powers upon and at any time after the occurrence and during
the continuance of an Event of Default: (a) collection of proceeds of any
Collateral; (b) conveyance of any item of Collateral to any purchaser thereof;
(c) giving of any notices or recording of any Liens under Section 6 hereof; and
(d) paying or discharging taxes or Liens levied or placed upon the Collateral,
the legality or validity thereof and the amounts necessary to discharge the same
to be determined by the Trustee in its sole reasonable discretion, and such
payments made by the Trustee to become part of the Secured Obligations of the
Pledgor to the Trustee, due and payable immediately upon demand. The Trustee's
authority under this Section 14 shall include, without limitation, the authority
to endorse and negotiate any checks or instruments representing proceeds of
Collateral in the name of the Pledgor, execute and give receipt for any
certificate of ownership or any document constituting Collateral, transfer title
to any item of Collateral, sign the Pledgor's name on all financing statements
(to the extent permitted by applicable law) or any other documents deemed
necessary or appropriate by the Trustee to preserve, protect or perfect the
security interest in the Collateral and to file the same, prepare, file and sign
the Pledgor's name on any notice of Lien, and to take any other actions arising
from or incident to the powers granted to the Trustee in this Pledge Agreement.
This power of attorney is coupled with an interest and is irrevocable by the
Pledgor.
SECTION 15. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The
rights and powers granted to the Trustee hereunder are being granted in order to
preserve and protect the security interest of the Trustee and the Holders in and
to the Collateral granted hereby and shall not be interpreted to, and shall not
impose any duties on the Trustee in connection therewith other than those
expressly provided herein or imposed under applicable law. Except as provided by
applicable law or by the Indenture, the Trustee shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Trustee accords similar property held by the Trustee as
collateral agent or other similar capacity, it being understood that the Trustee
in its capacity as such shall not have any responsibility for (a) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities or
other matters relative to any Collateral, whether or not the Trustee has or is
deemed to have knowledge of such matters, (b) taking any necessary steps to
preserve rights against any parties with respect to any Collateral or (c)
investing or reinvesting any of the Collateral, PROVIDED, HOWEVER, that nothing
contained in this Agreement shall relieve the Trustee of any responsibilities as
a securities intermediary under applicable law. The Trustee shall have no duty
(a) to see to any recording, filing, or depositing of this Agreement, any
Indenture or any agreement referred to herein or therein or any financing
statement or continuation statement evidencing a security interest, or to see to
the maintenance of any such recording or filing or depositing or to any
rerecording, refiling or redepositing of any thereof, (b) to
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see to any insurance or (c) to see to the payment or discharge of any tax
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Collateral.
The Trustee makes no representations as to the validity or sufficiency of any
Collateral, the Indenture or this Agreement. The Trustee shall not be
accountable for the use or application by the Pledgor of any of the proceeds of
the Collateral Investments Account or the Interest Account. The Trustee shall
not be responsible for the legality or validity of this Agreement or the
validity, priority, perfection or sufficiency of the Collateral.
SECTION 16. INDEMNITY. The Pledgor shall indemnify, hold
harmless and defend the Trustee and its directors, officers, agents and
employees, from and against any and all claims, actions, obligations,
liabilities and expenses, including reasonable defense costs, reasonable
investigative fees and costs, and reasonable legal fees and damages arising from
the Trustee's performance as Trustee under this Pledge Agreement, except to the
extent that such claim, action, obligation, liability or expense is directly
attributable to the bad faith, gross negligence or wilful misconduct of such
indemnified person.
SECTION 17. REMEDIES UPON EVENT OF DEFAULT. If any Event of
Default under the Indenture or the Notes or default hereunder (any such Event of
Default or default being referred to in this Pledge Agreement as an "EVENT OF
DEFAULT") shall have occurred and be continuing:
(a) The Trustee and the Holders shall have, in addition to all
other rights given by law or by this Pledge Agreement or the Indenture,
all of the rights and remedies with respect to the Collateral of a
secured party under the UCC in effect in the State of New York at that
time. In addition, with respect to any Collateral that shall then be in
or shall thereafter come into the possession or custody of the Trustee,
the Trustee may sell or cause the same to be sold at any broker's board
or at public or private sale, in one or more sales or lots, at such
price or prices as the Trustee may deem best, for cash or on credit or
for future delivery, without assumption of any credit risk. The
purchaser of any or all Collateral so sold shall thereafter hold the
same absolutely, free from any claim, encumbrance or right of any kind
whatsoever created by or through the Pledgor. Unless any of the
Collateral threatens, in the reasonable judgment of the Trustee, to
decline speedily in value or is or becomes of a type sold on a
recognized market, the Trustee will give the Pledgor reasonable notice
of the time and place of any public sale thereof, or of the time after
which any private sale or other intended disposition is to be made. Any
sale of the Collateral conducted in conformity with reasonable
commercial practices of banks, insurance companies, commercial finance
companies, or other financial institutions disposing of property
similar to the Collateral shall be deemed to be commercially
reasonable. Any requirements of reasonable notice shall be met if such
notice is mailed to the Pledgor as provided in Section 21.1 hereof at
least ten (10) days before
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the time of the sale or disposition. The Trustee or any Holder may, in
its own name or in the name of a designee or nominee, buy any of the
Collateral at any public sale and, if permitted by applicable law, at
any private sale. All expenses (including court costs and reasonable
attorneys' fees, expenses and disbursements) of, or incident to, the
enforcement of any of the provisions hereof shall be recoverable from
the proceeds of the sale or other disposition of the Collateral.
(b) The Pledgor further agrees to use its reasonable best
efforts to do or cause to be done all such other acts as may be
necessary to make such sale or sales of all or any portion of the
Collateral pursuant to this Section 17 valid and binding and in
compliance with any and all other applicable requirements of law. The
Pledgor further agrees that a breach of any of the covenants contained
in this Section 17 will cause irreparable injury to the Trustee and the
Holders, that the Trustee and the Holders have no adequate remedy at
law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 17 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and
agrees not to assert any defenses against the remedy of specific
performance for the breach of any such covenants except for a defense
that no Event of Default has occurred. Any surplus of such cash or cash
proceeds held by the Trustee and remaining after payment in full of all
the Secured Obligations shall be paid over to the Pledgor or to
whomsoever may be lawfully entitled to receive such surplus.
(c) All payments received by the Pledgor in respect of the
Collateral shall be received in trust for the benefit of the Trustee,
shall be segregated from other funds of the Pledgor and shall be
forthwith paid over to the Trustee in the same form as so received
(with any necessary indorsement).
SECTION 18. EXPENSES. The Pledgor will upon demand pay to the
Trustee the amount of any and all reasonable fees and expenses, including,
without limitation, the reasonable fees, expenses and disbursements of its
counsel, experts and agents retained by the Trustee, that the Trustee may incur
in connection with (a) the review, negotiation and administration of this Pledge
Agreement, (b) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (c) the exercise or
enforcement of any of the rights of the Trustee and the Holders hereunder or (d)
the failure by the Pledgor to perform or observe any of the provisions hereof.
SECTION 19. SECURITY INTEREST ABSOLUTE. All rights of the
Trustee and the Holders and security interests hereunder, and all obligations of
the Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto;
19
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any
other amendment or waiver of or any consent to any departure from the
Indenture;
(c) any exchange, surrender, release or non-perfection of any
Liens on any other collateral for all or any of the Secured
Obligations; or
(d) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to,
or a discharge of, the Pledgor in respect of the Secured Obligations or
of this Pledge Agreement.
SECTION 20. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no
Default under the Indenture shall have occurred and be continuing, the Pledgor
shall be entitled to exercise any and all voting and other consensual rights
pertaining to the Security Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Indenture and the Notes;
PROVIDED, HOWEVER, that the Pledgor shall not exercise or refrain from
exercising any such right if such action would have a material adverse effect on
the value of the Security Collateral or any part thereof; and PROVIDED FURTHER
that the Pledgor shall give the Trustee at least five days' written notice of
the manner in which it intends to exercise, or the reasons for refraining from
exercising, any such right.
(b) Upon the occurrence and during the continuance of a
Default under the Indenture: all rights of the Pledgor to exercise or refrain
from exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 20(a) shall, upon notice to the
Pledgor by the Trustee, cease.
(c) All dividends and interest payments that are received by
the Pledgor in respect of Security Collateral shall be received in trust for the
benefit of the Trustee, shall be segregated from other funds of the Pledgor and
shall be forthwith paid over to the Trustee as Security Collateral in the same
form as so received (with any necessary indorsement).
SECTION 21. MISCELLANEOUS PROVISIONS.
21.1. NOTICES. Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail, commercial courier service or telecopier communication, addressed as
follows:
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IF TO THE PLEDGOR:
GST Equipment Funding, Inc.
0000 X.X. Xxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
and
GST Telecommunications Inc.
0000 X.X. Xxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
WITH A COPY TO:
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
IF TO THE TRUSTEE:
United States Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Mr. Xxxxx Xxxxx
21.2. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Pledge Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor or any subsidiary thereof. No such pledge, security or
debt agreement (other than the Indenture) may be used to interpret this Pledge
Agreement.
21.3. SEVERABILITY. The provisions of this Pledge Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Pledge Agreement in any jurisdiction.
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21.4. HEADINGS. The headings in this Pledge Agreement have
been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
21.5. COUNTERPART ORIGINALS. This Pledge Agreement may be
signed in two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement.
21.6. BENEFITS OF PLEDGE AGREEMENT. Nothing in this Pledge
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder, and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Pledge Agreement.
21.7. AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or
waiver of any provision of this Pledge Agreement and any consent to any
departure by the Pledgor from any provision of this Pledge Agreement shall be
effective only if made or duly given in compliance with all of the terms and
provisions of the Indenture, and neither the Trustee nor any Holder shall be
deemed, by any act, delay, indulgence, omission or otherwise, to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of
Default or in any breach of any of the terms and conditions hereof. Failure of
the Trustee or any Holder to exercise, or delay in exercising, any right, power
or privilege hereunder shall not preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. A waiver by the Trustee
or any Holder of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy that the Trustee or such Holder would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
21.8. INTERPRETATION OF AGREEMENT. All terms not defined
herein or in the Indenture shall have the meaning set forth in the applicable
UCC, except where the context otherwise requires. To the extent a term or
provision of this Pledge Agreement conflicts with the Indenture, the Indenture
shall control with respect to the subject matter of such term or provision.
Acceptance of or acquiescence in a course of performance rendered under this
Pledge Agreement shall not be relevant to determine the meaning of this Pledge
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.
21.9. CONTINUING SECURITY INTEREST; TERMINATION; RELEASE. (a)
This Pledge Agreement shall create a continuing security interest in and to the
Collateral and shall, unless otherwise provided in the Indenture or in this
Pledge Agreement, remain in full force and effect until the payment in full in
cash of the Secured Obligations. This Pledge Agreement shall be binding upon the
Pledgor, its transferees, successors and assigns, and shall inure,
22
together with the rights and remedies of the Trustee hereunder, to the benefit
of the Trustee, the Holders and their respective successors, transferees and
assigns.
(b) This Pledge Agreement shall terminate upon the earlier of
(i) the payment in full in cash of the Secured Obligations and (ii) the
assumption by GST USA of all the Obligations of Funding pursuant to Section 4.23
of the Indenture, the execution by GST USA of documentation and the taking of
all other actions necessary to provide the Trustee, for its benefit and the
ratable benefit of the Holders, with a perfected, first priority security
interest (subject only to the liens granted to the Trustee, for its benefit and
the benefit of the Holders, under this Agreement) in the Collateral, including
any collateral securing the Pledged Debt, to secure all of GST USA's obligations
under the Indenture and the Notes and the delivery by counsel to the Pledgor of
an opinion confirming the existence, perfection and priority of such security
interest. At such time, the Trustee shall, pursuant to an Issuer Order, execute
and deliver all documentation necessary or desirable to release its security
interest hereunder and under the Intercompany Security Agreement, reassign and
redeliver to the Pledgor all of the Collateral hereunder that has not been sold,
disposed of, retained or applied by the Trustee in accordance with the terms of
this Pledge Agreement and the Indenture. Such reassignment and redelivery shall
be without warranty by or recourse to the Trustee in its capacity as such,
except as to the absence of any Liens on the Collateral created by or arising
through the Trustee, and shall be at the reasonable expense of the Pledgor.
(c) Upon any sale of Acquired Equipment to GST USA in
accordance with the terms of this Agreement, the Trustee will, at the Pledgor's
expense, execute and deliver to the Pledgor such documents as the Pledgor shall
reasonably request to evidence the release of such item of Acquired Equipment
from the assignment and security interest granted hereby; PROVIDED, HOWEVER,
that (i) at the time of such request and such release no Default shall have
occurred and be continuing, (ii) the Pledgor shall have delivered to the
Trustee, at least five Business Days prior to the date of the proposed release,
a written request for release describing the item of Acquired Equipment together
with a form of release for execution by the Trustee and a certification by the
Pledgor to the effect that the transaction is in compliance with this Agreement
and as to such other matters as the Trustee may request, which written release
shall state that the price to be paid is at least equal to the Acquired
Equipment Cost, payable in the form an Intercompany Note with a principal amount
equal to the Acquired Equipment Cost and bearing interest at a rate at least
equal to the rate of interest on the Notes, and (iii) the Pledgor shall have
pledged and delivered to the Trustee such Intercompany Note and an opinion of
counsel that such Intercompany Note is secured by a perfected first priority
security interest in such Acquired Equipment (subject only to the liens granted
to the Trustee, for its benefit and the benefit of the Holders, under this
Agreement) and an opinion of counsel that the Pledgor has granted a valid and
perfected first priority security interest in the Intercompany Note to the
Trustee for its benefit and the benefit of the Holders.
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21.10. SURVIVAL PROVISIONS. All representations, warranties
and covenants of the Pledgor contained herein shall survive the execution and
delivery of this Pledge Agreement, and shall terminate only upon the termination
of this Pledge Agreement. The obligations of the Pledgor under Section 16 hereof
shall survive the termination of this Agreement.
21.11. WAIVERS. The Pledgor waives presentment and demand for
payment of any of the Secured Obligations, protest and notice of dishonor or
default with respect to any of the Secured Obligations, and all other notices to
which the Pledgor might otherwise be entitled, except as otherwise expressly
provided herein or in the Indenture.
21.12. AUTHORITY OF THE TRUSTEE. (a) The Trustee shall have
and be entitled to exercise all powers hereunder that are specifically granted
to the Trustee by the terms hereof, together with such powers as are reasonably
incident thereto. The Trustee may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. Except as otherwise expressly provided in this
Pledge Agreement or the Indenture, neither the Trustee nor any director,
officer, employee, attorney or agent of the Trustee shall be liable to the
Pledgor for any action taken or omitted to be taken by the Trustee, in its
capacity as Trustee, hereunder, except for its own bad faith, gross negligence
or willful misconduct, and the Trustee shall not be responsible for the
validity, effectiveness or sufficiency hereof or of any document or security
furnished pursuant hereto. The Trustee and its directors, officers, employees,
attorneys and agents shall be entitled to rely on any communication, instrument
or document reasonably believed by it or them to be genuine and correct and to
have been signed or sent by the proper person or persons.
(b) The Pledgor acknowledges that the rights and
responsibilities of the Trustee under this Pledge Agreement with respect to any
action taken by the Trustee or the exercise or non-exercise by the Trustee of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Pledge Agreement shall, as between
the Trustee and the Holders, be governed by the Indenture and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Trustee and the Pledgor, the Trustee shall be conclusively
presumed to be acting as trustee for the Holders with full and valid authority
so to act or refrain from acting, and the Pledgor shall not be obligated or
entitled to make any inquiry respecting such authority.
21.13. FINAL EXPRESSION. This Pledge Agreement, together with
the Indenture and any other agreement executed in connection herewith, is
intended by the parties as a final expression of this Pledge Agreement and is
intended as a complete and exclusive statement of the terms and conditions
thereof.
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21.14. RIGHTS OF HOLDERS. No Holder shall have any independent
rights hereunder other than those rights granted to individual Holders pursuant
to Section 6.07 of the Indenture; PROVIDED that nothing in this subsection shall
limit any rights granted to the Trustee under the Notes or the Indenture.
21.15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL; WAIVER OF DAMAGES. (a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY
AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THE PLEDGOR, THE TRUSTEE AND THE HOLDERS IN CONNECTION WITH
THIS PLEDGE AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR
OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK. NOTWITHSTANDING THE FOREGOING: THE MATTERS IDENTIFIED IN 31 C.F.R. xx.xx.
357.10 AND 357.11 (AS IN EFFECT ON THE DATE OF THIS PLEDGE AGREEMENT) SHALL BE
GOVERNED SOLELY BY THE LAWS SPECIFIED THEREIN.
(b) THE PLEDGOR HAS APPOINTED XXXXXX XXXXXXXX FROME &
XXXXXXXXXX LLP, 000 XXXX XXXXXX, XXX XXXX, XX 00000 AS ITS AGENT FOR SERVICE OF
PROCESS IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AGREEMENT
AND FOR ACTIONS BROUGHT UNDER U.S. FEDERAL OR STATE SECURITIES LAWS BROUGHT IN
ANY FEDERAL OR STATE COURT LOCATED IN THE CITY OF NEW YORK AND AGREES TO SUBMIT
TO THE JURISDICTION OF ANY SUCH COURT.
(c) THE PLEDGOR AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY
AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER, HAVE THE RIGHT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE PLEDGOR OR THE
COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND
HAVING PERSONAL OR IN REM JURISDICTION OVER THE PLEDGOR OR THE COLLATERAL, AS
THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH COLLATERAL, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE
PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS
IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE PLEDGOR WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN THE CITY OF NEW YORK
ONCE THE
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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.
(d) THE PLEDGOR AGREES THAT NEITHER ANY HOLDER NOR (EXCEPT AS
OTHERWISE PROVIDED IN THIS PLEDGE AGREEMENT OR THE INDENTURE) THE TRUSTEE IN ITS
CAPACITY AS TRUSTEE SHALL HAVE ANY LIABILITY TO THE PLEDGOR (WHETHER ARISING IN
TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE PLEDGOR IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED
AND THE RELATIONSHIP ESTABLISHED BY THIS PLEDGE AGREEMENT, OR ANY ACT, OMISSION
OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL
AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH
HOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS ON THE PART OF THE TRUSTEE OR SUCH HOLDERS, AS THE CASE MAY BE,
CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR
WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER
IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO ENFORCE ANY JUDGMENT OR
OTHER COURT ORDER PERTAINING TO THIS PLEDGE AGREEMENT OR ANY RELATED AGREEMENT
OR DOCUMENT ENTERED IN FAVOR OF THE TRUSTEE OR ANY HOLDER, OR TO ENFORCE BY
SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION, THIS PLEDGE AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT BETWEEN
THE PLEDGOR ON THE ONE HAND AND THE TRUSTEE AND/OR THE HOLDERS ON THE OTHER
HAND.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Pledgor, and the Trustee have each
caused this Pledge Agreement to be duly executed and delivered as of the date
first above written.
Pledgor:
GST EQUIPMENT FUNDING, INC.
By /s/ Xxxxxxx Xxxxx
---------------------------------
Name: Xxxxxxx Xxxxx
Title: Senior Vice President
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By:/s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
