Exhibit 10.2
THIRD AMENDED AND RESTATED PLEDGE AGREEMENT
THIS THIRD AMENDED AND RESTATED PLEDGE AGREEMENT (as further
amended, amended and restated, supplemented or otherwise modified from time to
time, this "PLEDGE AGREEMENT"), dated as of September 12,13, 2002 is made by
CHOICE ONE COMMUNICATIONS INC., a Delaware corporation (the "COMPANY"), each
Subsidiary who, as a Pledgor, executes this Pledge Agreement or a Joinder
Agreement (collectively with the Company, the "PLEDGORS", each individually, a
"PLEDGOR"), and the Issuers designated herein in favor of WACHOVIA INVESTORS,
INC. (formerly known as First Union Investors, Inc.) , as administrative agent
(the "ADMINISTRATIVE AGENT") for the ratable benefit of itself and the financial
institutions (the "LENDERS") as are, or may from time to time become, parties to
the Credit Agreement (as defined below).
STATEMENT OF PURPOSE
Pursuant to the Pledge Agreement dated as of October 14, 1998
(as previously amended, restated or otherwise modified, the "INITIAL PLEDGE
AGREEMENT"), the Company, the Pledgors and the Issuers party thereto granted a
security interest in the collateral referred to therein in order to secure the
obligations under the Initial Credit Agreement.
Pursuant to the First Amended and Restated Credit Agreement,
the Pledgors and the Issuers party thereto entered into the Amended and Restated
Pledge Agreement dated as of November 3, 1999 (the "FIRST AMENDED AND RESTATED
PLEDGE AGREEMENT"), whereby the parties thereto agreed to modify the Initial
Pledge Agreement in certain respects as reflected in therein.
Pursuant to the Second Amended and Restated Credit Agreement,
the Pledgors and the Issuers party thereto entered into the Second Amended and
Restated Pledge Agreement dated as of August 1, 2000 (the "SECOND AMENDED AND
RESTATED PLEDGE AGREEMENT"), whereby the parties thereto agreed to modify the
First Amended and Restated Pledge Agreement in certain respects as reflected in
therein.
Pursuant to the Third Amended and Restated Credit Agreement of
even date herewith (as further amended, amended and restated, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"), by and among
Choice One Communications Inc., as Guarantor, its Subsidiaries party thereto, as
Borrowers, the Lenders, the Administrative Agent and the other Agents party
thereto, the Lenders agreed to modify the Second Amended and Restated Credit
Agreement as more specifically described in the Credit Agreement. The Credit
Facilities described in the Credit Agreement represent a continuation of the
existing credit facilities provided to the Borrowers pursuant to the Initial
Credit Agreement, the First Amended and Restated Credit Agreement and the Second
Amended and Restated Credit Agreement, subject to the addition of two term loan
facilities and certain other amendments as provided in the Credit Agreement.
The Credit Facilities have been and continue to be secured by,
among other things, the Initial Pledge Agreement, as amended and restated by the
First Amended and Restated Pledge Agreement and as further amended and restated
by the Second Amended and Restated Pledge Agreement. The Pledgors, the
Administrative Agent and the Lenders have determined to modify the Second
Amended and Restated Pledge Agreement in certain respects, and for ease of
reference have elected to incorporate such modifications in this Pledge
Agreement which is an amendment and restatement of such Second Amended and
Restated Pledge Agreement. This Pledge Agreement continues the pledge and grant
of security interests under the Initial Pledge Agreement as reaffirmed by the
First Amended and Restated Pledge Agreement and by the Second Amended and
Restated Pledge Agreement, pursuant to the terms amended and restated in certain
respects as set forth below.
The Pledgors are the legal and beneficial owners of (a) the
shares of Pledged Stock (as hereinafter defined), (b) the Pledged Debt (as
hereinafter defined) and (c) the Partnership/LLC Interests (as hereinafter
defined), in each case issued by the issuers (the "ISSUERS"), as specified on
SCHEDULE 1 hereto.
NOW, THEREFORE, in consideration of these premises and the
mutual agreements set forth herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and to induce the
Administrative Agent and the Lenders to enter into and make available Extensions
of Credit pursuant to the Credit Agreement, the Pledgors and Issuers hereby
agree with the Administrative Agent for the ratable benefit of itself and the
Lenders as follows:
Section 1. DEFINITIONS. Unless otherwise defined herein, capitalized
terms used herein have the meanings assigned thereto in the Credit Agreement,
and the following terms shall have the following meanings:
"COLLATERAL" means the Pledged Stock, the Pledged Debt,
Partnership/LLC Interests and all Proceeds therefrom.
"PARTNERSHIP/LLCS" means the partnerships and limited
liability companies listed on SCHEDULE 1 hereto.
"PARTNERSHIP/LLC INTERESTS" means the entire partnership or
membership interest of the Pledgors in each Partnership/LLC listed on SCHEDULE 1
hereto, including, without limitation, the Pledgors' capital accounts, their
interest as partners or members in the net cash flow, net profit and net loss,
and items of income, gain, loss, deduction and credit of the Partnerships/LLCs,
their interests in all distributions made or to be made by the Partnerships/LLCs
to the Pledgors and all of the other economic rights, titles and interests of
the Pledgors as partners or members of the Partnerships/LLCs, whether set forth
in the partnership agreement or membership agreement of the Partnerships/LLCs,
by separate agreement or otherwise.
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"PLEDGED DEBT" means the indebtedness evidenced by the notes
made by each Issuer listed on SCHEDULE 1 hereto, together with all rights of any
nature whatsoever that may be issued or granted by such Issuer while this Pledge
Agreement is in effect, and all Proceeds therefrom.
"PLEDGED STOCK" means the shares of capital stock of each
Issuer listed on SCHEDULE 1 hereto, together with all stock certificates,
options or rights of any nature whatsoever that may be issued or granted by such
Issuer to the Pledgors while this Pledge Agreement is in effect.
"PROCEEDS" means all "proceeds" as defined in the UCC and, in
any event, shall include, without limitation, all dividends or other income from
the Pledged Stock and the Partnership/LLC Interests, collections thereon,
proceeds of sale thereof or distributions with respect thereto.
"SECURED OBLIGATIONS" means, with respect to each Pledgor
other than the Company, the Obligations as defined in the Credit Agreement and
any renewals or extensions of any of such Obligations and, with respect to the
Company as Pledgor, the Guaranteed Obligations as defined in the Credit
Agreement and any renewals or extensions of any of such Guaranteed Obligations.
"UCC" means the Uniform Commercial Code as in effect, from
time to time, in the State of New York; PROVIDED that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
or priority of any security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
"UCC" means the Uniform Commercial Code as in effect, from time to time, in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection or priority.
To the extent any amendment, revision or other modification of
the UCC after the date hereof results in the renumbering of specific sections,
revision of the order of specific sections or other changes in the organization
of the UCC in effect as of the date hereof, all references herein to specific
section s of the UCC in effect as of the date hereof shall be deemed to refer to
such new section or sections which correspond to such original sections.
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Section 2. PLEDGE AND GRANT OF SECURITY INTERESTS. To the extent not previously
delivered, each Pledgor hereby delivers to the Administrative Agent in the State
of New York, for the ratable benefit of itself and the Lenders, all of the
Pledged Stock of such Pledgor and all originally executed promissory notes
evidencing the Pledged Debt and hereby grants and acknowledges its previous
grant to the Administrative Agent, for the ratable benefit of itself and the
Lenders, a first priority security interest in such Pledged Stock, Pledged Debt,
Partnership/LLC Interests and all other Collateral, as collateral security for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Secured Obligations.
Section 3. STOCK POWERS; LIABILITY. (a) Concurrently with the execution or
authentication of this Agreement and delivery to the Administrative Agent of
each certificate representing one or more shares of Pledged Stock and each
promissory note evidencing the Pledged Debt, the Pledgors shall deliver an
undated stock power with respect to each such certificate and, if requested by
the Administrative Agent, an undated transfer instrument with respect to each
such note, in each case, duly executed in blank by the Pledgors.
(b) Notwithstanding anything herein to the contrary, (a) the Pledgors shall
remain liable to perform all of their duties and obligations as partners or
members of the Partnerships/LLCs to the same extent as if this Pledge Agreement
had not been executed, (b) the exercise by the Administrative Agent or any
Lender of any of its rights hereunder shall not release the Pledgors from any of
their duties or obligations as partners or members of the Partnerships/LLCs, and
(c) neither the Administrative Agent nor any Lender shall have any obligation or
liability as a partner or member of the Partnerships/LLCs by reason of this
Pledge Agreement.
Section 4. REPRESENTATIONS AND WARRANTIES. To induce the Administrative Agent
and the Lenders to execute the Credit Agreement, provide the Extensions of
Credit thereunder and accept the security contemplated hereby, each Pledgor
hereby represents and warrants that:
(a) such Pledgor has the corporate power, authority and legal right to execute
and deliver, to perform its obligations under, and to grant the Lien on the
Collateral pursuant to, this Pledge Agreement and has taken all necessary
corporate action to authorize its execution, delivery and performance of, and
grant of the Lien on the Collateral pursuant to, this Pledge Agreement;
(b) this Pledge Agreement constitutes a legal, valid and binding obligation of
each Pledgor enforceable against such Pledgor in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies;
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(c) the execution, delivery and performance of this Pledge Agreement will not
violate any provision of any Applicable Law or contractual obligation of such
Pledgor and will not result in the creation or imposition of any Lien on any of
the properties or revenues of such Pledgor pursuant to any Applicable Law or
contractual obligation, except as contemplated hereby;
(d) except as contemplated by Section 11 hereof, no consent or authorization of,
filing with, or other act by or in respect of, any arbitrator or Governmental
Authority and no consent of any other Person (including, without limitation, any
equity holder or creditor of such Pledgor or any Issuer), is required in
connection with the execution, delivery, performance, validity or enforceability
against such Pledgor of this Pledge Agreement;
(e) no litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of any Pledgor,
threatened by or against such Pledgor or against any of its properties or
revenues with respect to this Pledge Agreement or any of the transactions
contemplated hereby;
(f) the shares of Pledged Stock and the Partnership/LLC Interests listed on
SCHEDULE 1 constitute all the issued and outstanding equity of each of the
Subsidiaries of such Pledgor; and SCHEDULE I accurately reflects each Pledgor's
Partnership/LLC Interest in each of the Partnerships/LLCs and the
Partnership/LLC Interests pledged by such Pledgor constitute all of the
outstanding ownership interests in which such Pledgor has any right, title or
interest in each Partnership/LLC;
(g) all the shares of the Pledged Stock have been duly and validly issued and
are fully paid and nonassessable and all of the Partnership/LLC Interests have
been duly and validly issued;
(h) the Pledged Debt has been duly authorized, authenticated, issued and
delivered, and is the legal, valid and binding obligation of the issuers
thereof, and is not in default;
(i) the Pledged Debt constitutes all of the outstanding Debt of the respective
Issuers thereof owed to such Pledgor and is outstanding in the principal amount
indicated on SCHEDULE 1;
(j) such Pledgor is the record and beneficial owner of, and has good and
marketable title to, the Pledged Stock, Pledged Debt and Partnership/LLC
Interests listed on SCHEDULE 1, free of any and all Liens or options in favor
of, or claims of, any other Person, except the Lien created by this Pledge
Agreement; and
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(k) upon (i) delivery to the Administrative Agent in the State of New York of
the stock certificates evidencing the Pledged Stock, (ii) the delivery to the
Administrative Agent of the promissory note evidencing the Pledged Debt, (iii)
the filing of Form UCC-1 financing statements in all jurisdictions set forth in
the Perfection Certificate (as defined in the Security Agreement), and (iv)
taking actions necessary to obtain control of Collateral constituting
uncertificated securities as provided in Section 9-106 of the UCC, the Lien
granted pursuant to this Pledge Agreement will constitute a valid, perfected
first priority Lien on the Collateral, enforceable as such against all creditors
of the Pledgors and any Persons purporting to purchase any of the Pledged Stock,
Pledged Debt or Partnership/LLC Interests from the Pledgors.
Section 5. CERTAIN COVENANTS. Each Pledgor covenants and agrees with the
Administrative Agent for the ratable benefit of itself and the Lenders that,
from and after the date of this Pledge Agreement until the Secured Obligations
are paid in full and the Commitments are terminated:
(a) If such Pledgor shall, as a result of its ownership of the Collateral,
become entitled to receive or shall receive any stock certificate (including,
without limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Collateral, or otherwise in respect thereof, such
Pledgor shall accept the same as the agent of the Administrative Agent, hold the
same in trust for the Administrative Agent and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Pledgor
to the Administrative Agent if required, together with an undated stock power
covering such certificate duly executed in blank by such Pledgor and with, if
the Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Secured Obligations. In addition, any sums paid upon or in
respect of the Collateral upon the liquidation or dissolution of any Issuer
shall be held by the Administrative Agent as additional collateral security for
the Secured Obligations. If any sums of money or property so paid or distributed
in respect of any Collateral shall be received by any Pledgor, such Pledgor
shall, until such money or property is paid or delivered to the Administrative
Agent, hold such money or property in trust for the Administrative Agent,
segregated from other funds of such Pledgor, as additional collateral securing
the Secured Obligations;
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(b) Without the prior written consent of the Administrative Agent, such Pledgor
will not (i) vote to enable, or take any other action to permit, any Issuer to
issue any stock or other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any stock or other equity securities of any nature of such Issuer unless, in
each case, such stock or other security becomes "Pledged Stock", "Pledged Debt"
or "Partnership/LLC Interests" hereunder, (ii) sell, assign, transfer, exchange,
or otherwise dispose of, or grant any option with respect to, the Collateral
(except as expressly permitted by the Credit Agreement), (iii) create, incur or
permit to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Collateral, or any interest therein, except for the Lien
provided for by this Pledge Agreement or expressly permitted by the Credit
Agreement or (iv) accept a surrender of any partnership agreement or operating
agreement of any of the Partnerships/LLCs or waive any breach of or default
under any partnership agreement or operating agreement of any of the
Partnerships/LLCs by any other party thereto (other than with respect to any
Inactive Subsidiary). Such Pledgor will defend the right, title and interest of
the Administrative Agent in and to the Collateral against the claims and demands
of all Persons whomsoever;
(c) Upon the written request of the Administrative Agent, and at the sole
expense of such Pledgor, such Pledgor will promptly and duly execute and deliver
such further instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purposes of obtaining or
preserving the full benefits of this Pledge Agreement and of the rights and
powers herein granted. If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any promissory note not delivered
hereunder, other instrument or chattel paper, such note, instrument or chattel
paper shall be promptly delivered to the Administrative Agent, duly endorsed in
a manner satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Pledge Agreement;
(d) Such Pledgor agrees to pay, and to hold the Administrative Agent and the
Lenders harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other similar
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Pledge Agreement;
(e) On or prior to the formation or acquisition of any Subsidiary of such
Pledgor, such Pledgor agrees to execute or authenticate such amendments and
supplements to this Pledge Agreement as may be required by Section 9.12 of the
Credit Agreement, including without limitation, to execute this Pledge Agreement
or a Joinder Agreement such that such Subsidiary shall become an Issuer under
this Pledge Agreement (and if applicable, the parent of such Subsidiary shall
become a Plegdor under this Pledge Agreement), and such other documents and
instruments and to take any reasonable actions, all as shall be necessary, in
the reasonable judgment of the Administrative Agent, to pledge such Pledgors'
interest therein to the Administrative Agent for the ratable benefit of itself
and the Lenders;
(f) Such Pledgor shall cause each of the partners and members of each of the
Partnerships/LLCs to execute this Pledge Agreement as Issuers evidencing the
consent of such partners and members to the pledge of the Partnership/LLC
Interests pursuant to this Pledge Agreement; and
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(g) Such Pledgor agrees that as partners or members in the Partnerships/LLCs it
will use its commercially reasonable best efforts to abide by, perform and
discharge each and every obligation, covenant and agreement to be abided by,
performed or discharged by such Pledgor under the terms of the partnership
agreements and operating agreements, as applicable, of the Partnerships/LLCs, at
no cost or expense to the Administrative Agent and the Lenders.
Section 6. CASH DIVIDENDS; VOTING RIGHTS. Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given notice
to the Pledgors of the Administrative Agent's intent to exercise its rights
pursuant to Section 7 below, the Pledgors shall be permitted to receive (a) all
payments of principal and interest and other amounts payable pursuant to the
Pledged Debt and paid in accordance with the terms of the Credit Agreement and
(b) all cash dividends paid in accordance with the terms of the Credit Agreement
in respect of the Pledged Stock and to exercise all voting and corporate rights
with respect to the Pledged Stock; provided, that no vote shall be cast or
corporate right exercised or other action taken which would impair the
Collateral or which would be inconsistent with or result in any violation of any
provision of the Credit Agreement, the Notes, any other Loan Documents or this
Pledge Agreement.
Section 7. RIGHTS OF THE ADMINISTRATIVE AGENT. (a) If an Event of Default shall
occur and be continuing and the Administrative Agent shall (subject to Section
12.2 of the Credit Agreement) give notice of its intent to exercise such rights
to the Pledgors, (i) the Administrative Agent shall have the right to receive
any and all cash dividends paid in respect of the Pledged Stock and all payments
and other distributions with respect to the Pledged Debt or the Partnership/LLC
Interests and make application thereof to the Secured Obligations, in the order
set forth in Section 5.5 of the Credit Agreement and (ii) all shares of the
Pledged Stock or the Partnership/LLC Interests shall be registered in the name
of the Administrative Agent or its nominee, and the Administrative Agent or its
nominee may thereafter exercise (A) all voting, corporate and other rights
pertaining to such shares of the Pledged Stock or to the Partnership/LLC
Interests at any meeting of shareholders or members of the applicable Issuer or
otherwise and (B) any and all rights of conversion, exchange, subscription and
any other rights, privileges or options pertaining to such shares of the Pledged
Stock or the Partnership/LLC Interests as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any and
all of the Pledged Stock or the Partnership/LLC Interests upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of the applicable Issuer, or upon the exercise by the
Pledgors or the Administrative Agent of any right, privilege or option
pertaining to such shares of the Pledged Stock or the Partnership/LLC Interests,
and in connection therewith, the right to deposit and deliver any and all of the
Pledged Stock or the Partnership/LLC Interests with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as it may determine), all without liability except to account for
property actually received by it, but the Administrative Agent shall have no
duty to the Pledgors to exercise any such right, privilege or option and shall
not be responsible for any failure to do so or delay in so doing.
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(b) The rights of the Administrative Agent and the Lenders hereunder shall not
be conditioned or contingent upon the pursuit by the Administrative Agent or any
Lender of any right or remedy against the Pledgors or against any other Person
which may be or become liable in respect of all or any part of the Secured
Obligations or against any collateral security therefor, guarantee therefor or
right of offset with respect thereto. Neither the Administrative Agent nor any
Lender shall be liable for any failure to demand, collect or realize upon all or
any part of the Collateral or for any delay in doing so, nor shall the
Administrative Agent be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgors or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof.
(c) Pursuant to Section 9-509 of the UCC and any other applicable law, each
Pledgor authorizes the Administrative Agent to file or record financing
statements and other filings or recording documents or instruments with respect
to the Collateral without the signature of such Pledgor in such form and in such
offices as the Administrative Agent determines appropriate to perfect the
security interests of the Administrative Agent under this Agreement. A
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction.
Section 8. REMEDIES. If an Event of Default shall occur and be continuing, with
the consent of the Required Lenders, the Administrative Agent may, and upon the
request of the Required Lenders, the Administrative Agent shall, exercise on
behalf of itself and the Lenders, all rights and remedies granted in this Pledge
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, and in addition thereto, all rights and
remedies of a secured party under the UCC. Without limiting the generality of
the foregoing with regard to the scope of the Administrative Agent's remedies,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Pledgors, any Issuer or any
other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, assign, give option or options to purchase or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), in one or more parcels at public or private sale or
sales, in the over-the-counter market, at any exchange, broker's board or office
of the Administrative Agent or any Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Administrative Agent or any Lender shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in the Pledgors, which right or equity is
hereby waived or released. The Administrative Agent shall apply any Proceeds
from time to time held by it and the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred in respect thereof or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Administrative Agent and the
Lenders hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel thereto, to the payment in whole or in part of the
Secured Obligations, in the order set forth in Section 5.5 of the Credit
Agreement, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law,
including, without limitation, Section 9-615 of the UCC, need the Administrative
Agent account for the surplus, if any, to the Pledgors. To the extent permitted
by applicable law, the Pledgors waive all claims, damages and demands they may
acquire against the Administrative Agent or any Lender arising out of the
exercise by them of any rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition.
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Section 9. REGISTRATION RIGHTS; PRIVATE SALES. (a) If the Administrative Agent
shall determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 8 hereof, and if in the reasonable opinion of the
Administrative Agent it is necessary or advisable to have the Pledged Stock, or
that portion thereof to be sold, registered under the provisions of the
Securities Act of 1933, as amended (the "Securities Act"), the Pledgors will
cause the applicable Issuer to (i) execute and deliver, and cause the directors
and officers of the applicable Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may
be, in the reasonable opinion of the Administrative Agent, necessary or
advisable to register the Pledged Stock, or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) to use its best efforts to
cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public
offering of the Pledged Stock, or that portion thereof to be sold, and (iii) to
make all amendments thereto and/or to the related prospectus which, in the
opinion of the Administrative Agent, are necessary or 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
Pledgors agree to cause the applicable Issuer to comply with the provisions of
the securities or "Blue Sky" laws of any and all jurisdictions which the
Administrative Agent shall designate and to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of the Securities
Act.
(b) The Pledgors recognize that the Administrative Agent may be unable to effect
a public sale of any or all the Pledged Stock, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Pledgors acknowledge and
agree that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that, in the event the Administrative Agent is unable to
effect a public sale, any such private sale shall be deemed to have been made in
a commercially reasonable manner. The Administrative Agent shall be under no
obligation to delay a sale of any of the Pledged Stock for the period of time
necessary to permit the applicable Issuer to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if the applicable Issuer would agree to do so.
(c) The Pledgors further agree to use their commercially 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 9
valid and binding and in compliance with any and all other Applicable Laws. The
Pledgors further agree that a breach of any of the covenants contained in this
Section 9 will cause irreparable injury to the Administrative Agent and the
Lenders not compensable in damages, that the Administrative Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 9 shall be
specifically enforceable against the Pledgors, and the Pledgors hereby waive and
agree 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 under
the Credit Agreement.
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Section 10. AMENDMENTS, ETC. WITH RESPECT TO THE SECURED OBLIGATIONS. The
Pledgors shall remain obligated hereunder, and the Collateral shall remain
subject to the Lien granted hereby, notwithstanding that, without any
reservation of rights against the Pledgors, and without notice to or further
assent by the Pledgors, any demand for payment of any of the Secured Obligations
made by the Administrative Agent or any Lender may be rescinded by the
Administrative Agent or such Lender, and any of the Secured Obligations
continued, and the Secured Obligations, or the liability of the Pledgors or any
other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered, or released by the Administrative Agent or any
Lender, and the Credit Agreement, the Notes, any other Loan Documents and any
other documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or part, as the Lenders (or the
Required Lenders, as the case may be) may deem advisable from time to time, and
any guarantee, right of offset or other collateral security at any time held by
the Administrative Agent or any Lender for the payment of the Secured
Obligations may be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any other Lien at any time held by it as security for
the Secured Obligations or any property subject thereto. The Pledgors waive any
and all notice of the creation, renewal, extension or accrual of any of the
Secured Obligations and notice of or proof of reliance by the Administrative
Agent or any Lender upon this Pledge Agreement; the Secured Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Pledge Agreement; and all dealings between the
Pledgors, on the one hand, and the Administrative Agent and the Lenders, on the
other, shall likewise be conclusively presumed to have been had or consummated
in reliance upon this Pledge Agreement. The Pledgors waive diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Pledgors with respect to any of the Secured Obligations.
Section 11. REGULATORY APPROVAL. If an Event of Default shall have occurred and
be continuing, upon the request of the Administrative Agent, the Pledgors will,
at their expense, promptly execute and deliver, or cause the execution and
delivery of, all applications, certificates, instruments, registration
statements and all other documents and papers the Administrative Agent may
reasonably request or as may be required by law in connection with the obtaining
of any consent, approval, registration, qualification or authorization of the
FCC and any applicable PUC (collectively, the "Regulatory Authorities") or of
any other Person necessary or reasonably appropriate for the effective exercise
of any rights under this Pledge Agreement. Without limiting the generality of
the foregoing, if an Event of Default shall have occurred and be continuing, the
Pledgors shall take any action which the Administrative Agent may reasonably
request in order to transfer and assign to the Administrative Agent or to such
one or more third parties as the Administrative Agent may designate, or to a
combination of the foregoing, each Communications License. To enforce the
provisions of this Section, upon the occurrence and during the continuance of an
Event of Default, the Administrative Agent is empowered to request the
appointment of a receiver from any court of competent jurisdiction.
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Such receiver shall be instructed to seek from the Regulatory Authorities an
involuntary transfer of control of each such Communications License for the
purpose of seeking a bona fide purchaser to whom control will ultimately be
transferred. The Pledgors hereby agree to authorize such an involuntary transfer
of control upon the request of the receiver so appointed and, if the Pledgors
shall refuse to authorize the transfer, their approval may be required by the
court. Upon the occurrence and during the continuance of an Event of Default,
the Pledgors shall further use their best efforts to assist in obtaining
approval of the Regulatory Authorities, if required, for any action or
transactions contemplated by this Pledge Agreement including, without
limitation, the preparation, execution and filing with the Regulatory
Authorities of the assignor's or transferor's portion of any application or
applications for consent to the assignment of any Communications License or
transfer of control necessary or reasonably under the rules and regulations of
the Regulatory Authorities for the approval of the transfer or assignment of any
portion of the Collateral, together with any Communications License. The
Pledgors acknowledge that the assignment or transfer of each Communications
License is integral to the Administrative Agent's and the Lenders' realization
of the value of the Collateral, that there is no adequate remedy at law for
failure by the Pledgors to comply with the provisions of this Section and that
such failure would cause irreparable injury not adequately compensable in
damages, and therefore agree that each and every covenant contained in this
Section may be specifically enforced, and the Pledgors hereby waive and agree
not to assert any defenses against an action for specific performance of such
covenants.
Section 12. LIMITATION ON DUTIES REGARDING COLLATERAL. The Administrative
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the UCC
or otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar securities and property for its own account. Neither
the Administrative Agent, any Lender nor any of their respective directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Pledgors or otherwise (except with respect to any Person if such
liability arises as a result of the gross negligence or willful misconduct of
such Person).
Section 13. POWERS COUPLED WITH AN INTEREST. All authorizations and
agencies herein contained with respect to the Collateral constitute irrevocable
powers coupled with an interest.
Section 14. SEVERABILITY. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 15. PARAGRAPH HEADINGS. The paragraph headings used in this
Pledge Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
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Section 16. NO WAIVER; CUMULATIVE REMEDIES. Neither the Administrative Agent nor
any Lender shall by any act (except by a written instrument pursuant to Section
17 hereof) be deemed 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. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall 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 Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender 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
other rights or remedies provided by law.
Section 17. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS; GOVERNING LAW. None
of the terms or provisions of this Pledge Agreement may be amended, supplemented
or otherwise modified except by a written instrument executed by the Pledgors
and the Administrative Agent; provided that any consent by the Administrative
Agent to any waiver, amendment, supplement or modification hereto shall be
subject to approval thereof by the Lenders or Required Lenders, as applicable,
in accordance with Section 15.11 of the Credit Agreement. This Pledge Agreement
shall be binding upon the successors and assigns of the Pledgors and shall inure
to the benefit of the Administrative Agent and the Lenders and their respective
successors and assigns. This Pledge Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
Section 18. NOTICES. All notices and communications hereunder shall be
given to the addresses and otherwise in accordance with Section 15.1 of the
Credit Agreement.
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Section 19. CONTROL AGREEMENT; ACKNOWLEDGEMENT BY ISSUERS. (a) The Pledgors
hereby authorize and instruct each Issuer to comply, and each Issuer hereby (i)
consents in all respects to the pledge and assignment to the Administrative
Agent of its equity interests under this Pledge Agreement to the Administrative
Agent (ii) acknowledges that the relevant Pledgor has provided it with notice of
the right of the Administrative Agent in the exercise of its rights and remedies
under the Pledge Agreement to make all demands, give all notices, take all
actions and exercise all rights of the Pledgor relating to the Collateral, and
(iii) agrees to so comply, with any instruction received thereby from the
Administrative Agent in accordance with the terms of this Pledge Agreement with
respect to the Collateral, without any consent or further instructions from the
Pledgor (or other registered owner), and the Pledgor agrees that such Issuer
shall be fully protected in so complying. Each Issuer agrees that its agreement
set forth in the preceding sentence shall be sufficient to create in favor of
the Administrative Agent, for the benefit of the Lenders, "control" of any
Partnership/LLC Interests within the meaning of such term under Section 8-106(c)
of the UCC. (Notwithstanding the foregoing, nothing in this Agreement is
intended or shall be construed to mean or imply that the Partnership/LLC
Interests constitute "securities" within the meaning of such term under Section
8-102(a)(15) of the UCC or otherwise to limit or modify the application of
Section 8-103(c) of the UCC. Rather, the Administrative Agent has requested that
this provision be included in this Agreement solely out of an abundance of
caution in the event the Partnership/LLC Interests are, nevertheless, deemed to
constitute "securities" under the UCC.)
(b) Each Issuer acknowledges receipt of a copy of this Agreement and agrees to
be bound thereby and to comply with the terms thereof insofar as such terms are
applicable to it. Each Issuer agrees to notify the Administrative Agent promptly
in writing of the occurrence of any of the events described in Section 6(c) of
this Agreement. Each Issuer further agrees that the terms of Section 9 of this
Agreement shall apply to it with respect to all actions that may be required of
it under or pursuant to or arising out of Section 9 of this Agreement.
Section 20. AUTHORITY OF ADMINISTRATIVE AGENT. The Pledgors acknowledge that the
rights and responsibilities of the Administrative Agent under this Pledge
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Pledge Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Administrative Agent and the Pledgors, the
Administrative Agent shall be conclusively presumed to be acting as agent for
itself and the Lenders with full and valid authority so to act or refrain from
acting, and neither the Pledgors nor any Issuer shall be under any obligation,
or entitlement, to make any inquiry respecting such authority.
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Section 21. CONSENT TO JURISDICTION. Each Pledgor and each Issuer hereby
irrevocably consents to the personal jurisdiction of the state and federal
courts located in New York County, New York, in any action, claim or other
proceeding arising out of or any dispute in connection with this Pledge
Agreement, any rights or obligations hereunder, or the performance of such
rights and obligations. Each Pledgor and each Issuer hereby irrevocably consents
to the service of a summons and complaint and other process in any action, claim
or proceeding brought by the Administrative Agent or any Lender in connection
with this Pledge Agreement, any rights or obligations hereunder, or the
performance of such rights and obligations, on behalf of themselves or their
property, in the manner provided in Section 15.1 of the Credit Agreement.
Nothing in this Section 21 shall affect the right of the Administrative Agent or
any Lender to serve legal process in any other manner permitted by Applicable
Law or affect the right of the Administrative Agent or any Lender to bring any
action or proceeding against the Pledgors or their properties in the courts of
any other jurisdictions. Each of the parties hereto irrevocably waives, to the
fullest extent permitted by Applicable Law, any objection that it may now or
hereafter have to the laying of venue of any such proceeding brought in any
court specified above and any claim that any such proceeding brought in any such
court has been brought in an inconvenient forum.
Section 22. WAIVER OF JURY TRAIL; INJUNCTIVE RELIEF; PUNITIVE DAMAGES(a) .JURY
TRIAL. THE PARTIES HERETO AND TO THE OTHER LOAN DOCUMENTS HEREBY ACKNOWLEDGE
THAT THEY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT
TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE (AS
HEREINAFTER DEFINED) IN CONNECTION WITH THIS PLEDGE AGREEMENT AND THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS
OR OBLIGATIONS. FOR THE PURPOSE OF THIS PLEDGE AGREEMENT, "DISPUTE" MEANS ANY
DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF, CONNECTED WITH OR RELATING TO THIS
PLEDGE AGREEMENT OR ANY OTHER LOAN DOCUMENT. DISPUTES MAY INCLUDE, WITHOUT
LIMITATION, TORT CLAIMS, COUNTERCLAIMS, CLAIMS BROUGHT AS CLASS ACTIONS, CLAIMS
ARISING FROM LOAN DOCUMENTS EXECUTED IN THE FUTURE, DISPUTES AS TO WHETHER A
MATTER IS SUBJECT TO ARBITRATION, OR CLAIMS CONCERNING ANY ASPECT OF THE PAST,
PRESENT OR FUTURE RELATIONSHIPS ARISING OUT OF OR CONNECTED WITH THE LOAN
DOCUMENTS.
(b) INJUNCTIVE RELIEF. Each party hereto recognizes that, in the event any such
Person fails to perform, observe or discharge any of its obligations or
liabilities under this Pledge Agreement, any remedy of law may prove to be
inadequate relief to the Administrative Agent and the Lenders. Therefore, each
Pledgor and each Issuer agrees that the Administrative Agent and the Lenders, at
the their option, shall be entitled to temporary and permanently injunctive
relief in any such case without the necessity of proving actual damages.
(c) PUNITIVE DAMAGES. Each party hereto and to the other Loan Documents agrees
that it shall not have a remedy of punitive or exemplary damages against any
other party hereto or any other Loan Document in any Dispute and hereby waives
any right or claim to punitive or exemplary damages such party has now or which
may arise in the future in connection with any Dispute, whether such Dispute is
resolved by arbitration or judicially.
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IN WITNESS WHEREOF, the undersigned have caused this Pledge
Agreement to be duly executed and delivered as of the date first above written.
PLEDGORS:
CHOICE ONE COMMUNICATIONS INC.
CHOICE ONE COMMUNICATIONS INTERNATIONAL INC.
US XCHANGE INC. (formerly known as BARTER
ACQUISITION CORPORATION)
By: /s/ Xxxx Xxxxxxxxx
--------------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Executive Vice President
& Chief Financial Officer
ISSUERS:
CHOICE ONE COMMUNICATIONS OF NEW YORK INC.
CHOICE ONE COMMUNICATIONS OF PENNSYLVANIA INC.
CHOICE ONE COMMUNICATIONS OF MASSACHUSETTS INC.
CHOICE ONE COMMUNICATIONS INTERNATIONAL INC.
CHOICE ONE COMMUNICATIONS OF RHODE ISLAND INC.
CHOICE ONE COMMUNICATIONS OF CONNECTICUT INC.
CHOICE ONE COMMUNICATIONS OF MAINE INC.
CHOICE ONE OF NEW HAMPSHIRE INC.
CHOICE ONE COMMUNICATIONS OF OHIO INC.
CHOICE ONE COMMUNICATIONS OF VERMONT INC.
CHOICE ONE ONLINE INC.
CHOICE ONE COMMUNICATIONS OF VIRGINIA INC.
CHOICE ONE COMMUNICATIONS SERVICES INC.
US XCHANGE INC. (formerly known as BARTER
ACQUISITION CORPORATION)
US XCHANGE OF INDIANA, L.L.C.
US XCHANGE OF ILLINOIS, L.L.C.
US XCHANGE OF WISCONSIN, L.L.C.
US XCHANGE OF MICHIGAN, L.L.C.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Executive Vice President
& Chief Financial Officer
