Exhibit 10.25
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AGREEMENT is made effective as of May 29, 2001, by
LOGIX COMMUNICATIONS ENTERPRISES, INC., an Oklahoma corporation (hereinafter
referred to as the "Debtor"), and ▇▇▇▇▇▇ ▇▇ LIMITED PARTNERSHIP, an Oklahoma
limited partnership (hereinafter referred to as the "Secured Party"), with its
business address at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
1. RECITATIONS. Of even date herewith, the Debtor has made, executed and
delivered to the Secured Party its written promissory note (the "Note")
in the stated principal amount of Two Million and no/100 Dollars
($2,000,000). This Agreement is intended to provide collateral security
for the repayment of all of the Debtor's obligations, now or hereafter
owing, to the Secured Party, including the indebtedness represented by
the Note, including principal and interest (collectively, the
"Obligations").
2. PLEDGE AND SECURITY AGREEMENT. For good and valuable consideration, the
receipt and sufficiency of which are hereby expressly acknowledged, the
Debtor hereby grants Secured Party a security interest in and lien on,
all of the Debtor's right, title and interest in and to the following,
whether now owned or hereafter existing or acquired by the Debtor
(hereinafter collectively called the "Collateral"):
2.1 All of the issued and outstanding capital stock of ▇▇▇▇▇▇
Telephone Company; Inc., an Oklahoma corporation ("DTC")
listed on Exhibit A hereto;
2.2 All of the issued and outstanding capital stock of Logix
Communications Corporation, an Oklahoma corporation ("Logix
Sub") listed on Exhibit A hereto;
2.3 All of the issued and outstanding capital stock of ▇▇▇▇▇▇
Fiber/Forte of Colorado, Inc., an Oklahoma corporation
("Fiber") listed on Exhibit A hereto; and
2.4 All securities, certificates and instruments representing or
evidencing the capital stock referred to in Sections 2.1, 2.2
and 2.3 or the ownership thereof, and all dividends, cash,
options, warrants, stock splits, reclassifications, rights,
instruments or other investment property and other property or
cash or non cash proceeds of any kind, character or form from
time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the capital stock
referred to in Sections 2.1, 2.2 and 2.3;
2.5 The promissory note dated this date executed by Logix Sub in
favor of Debtor and the security therefor as evidenced by the
Security Agreement dated this date executed by Logix Sub in
favor of Debtor.
2.6 All cash and non-cash proceeds of the above specified
property, regardless of kind, character or form.
This security interest is given to secure the payment and performance
of the Obligations and all security documents executed, or to be
executed, in connection therewith; all future advances made by Secured
Party to the Debtor; all liabilities of Debtor to Secured Party of
every kind and description including both direct and indirect
liabilities, liabilities due or to become due and whether absolute or
contingent, and liabilities now existing or incurred in the
administration, enforcement and collection thereof, including
attorney's fees in enforcing the Secured Party's rights hereunder; all
amendments, modifications, supplements, extensions, renewals,
substitutions and changes in the Note and the Pledge Agreement; all
advances made by the Secured Party to protect the security hereof,
including advances made for or on account of levies, taxes and for
maintenance or recovery of the Collateral; interest on any and all
monies expended or advanced by the Secured Party hereunder or pursuant
hereto; and for performance of the covenants and agreements set forth
herein.
3. GENERAL REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants
that:
3.1 AUTHORIZATION, EXECUTION, ORGANIZATION, ETC. Debtor is an
Oklahoma corporation, duly organized, validly existing and in
good standing under the laws of the State of Oklahoma. Debtor
is authorized to do business in all states in which such
qualification is necessary. Debtor has obtained all consents,
approvals, permits and permissions related to the transactions
herein contemplated and required under any covenant,
agreement, encumbrance, law or regulation. Debtor has the
capacity and authority to incur the Obligations and enter into
this Agreement and consummate the transactions herein provided
and nothing prohibits or restricts the right or ability of
Debtor to carry out the terms hereof. The agreements
evidencing the Obligations and Agreement and all agreements,
instruments and documents herein provided to be executed or to
be caused to be executed by Debtor hereunder will be duly
authorized, executed and delivered by and are binding upon
Debtor and are enforceable in accordance with the terms hereof
and thereof. Neither this Agreement nor any agreement,
document or instrument executed or to be executed in
connection with the same, nor anything provided in or
contemplated by this Agreement or any such other agreement,
document or instrument, does nor or shall hereafter breach,
invalidate, cancel, make inoperative or interfere with, or
result in the acceleration or maturity of, any agreement,
document, instrument, right or interest, affecting or relating
to Debtor or all or any portion of the Collateral. There are
no actions, suits or proceedings pending or, to Debtor's
knowledge, threatened, before or by any judicial,
administrative or union body, any arbiter or any governmental
authority, against or affecting the Collateral (or any portion
thereof) or the power or right of Seller to incur the
Obligations or carry out the provisions of this Agreement.
3.2 Except for the security interest granted to the Secured Party
herein, the Debtor is and shall remain the owner of all
Collateral free from any liens, security interests,
encumbrances, or other right, title or interest of any other
person, firm or corporation, and the Debtor shall defend the
Collateral against all claims and demands of all persons at
any time claiming the same or any interest therein adverse to
the Secured Party.
2
3.3 The Collateral is fully paid, validly issued, genuine and is
beneficially owned by Debtor free and clear of all liens,
claims and encumbrances or rights or interest of any other
person. There are no restrictions upon transfer of any of the
Collateral, and Debtor may transfer such Collateral without
the consent of any other person.
3.4 Secured Party shall not be required to take any steps
necessary to preserve any rights in the Collateral against
prior parties or to protect, perfect, preserve or maintain any
security interest given to secure the Collateral.
3.5 The Debtor is an organization organized solely under the laws
of the State of Oklahoma and no other state or jurisdiction.
Neither any state (other than Oklahoma) nor the United States
must maintain a public record showing the Debtor to be
organized.
3.6 The Debtor's chief executive office is located at ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇.
3.7 Exhibit A completely and accurately sets forth all of the
capital stock of DTC, Logix Sun and Fiber and all information
on Exhibit A is complete and accurate.
3.8 The security interest granted under the Pledge Agreement is a
first priority perfected security interest.
4. GENERAL COVENANTS.
4.1 The Debtor agrees to properly pay when due any and all
federal, state and local taxes, assessments and charges upon
or against the Collateral before the same become delinquent
and before penalties accrue thereon, unless and to the extent
that the same are being contested in good faith by appropriate
proceedings.
4.2 Upon request by Secured Party, Debtor agrees to promptly
execute and deliver such financing statement or statements,
amendments and assignments thereof or supplements thereto,
deliver stock certificates, stock powers and other instruments
covering the Collateral as Secured Party may from time to time
require in order to preserve and protect the first priority
security interest hereby granted. Without limitation of the
foregoing Debtor will endorse promptly the promissory note
described in Paragraph 2.5 in form satisfactory to Secured
Party and promptly deliver the same to Secured Party.
4.3 In the event Debtor shall fail to pay taxes, assessments,
costs and expenses which Debtor is under any of the terms
hereof required to pay, or fails to keep the Collateral free
from other security interests, liens or encumbrances, the
Secured Party may (but is not obligated to) make expenditures
for any or all such purposes and the amount so expended,
together with interest thereon at a rate per annum equal to
the rate of interest provided in the Note, shall become
immediately due and payable by Debtor to Secured Party and
shall have the benefit of and be secured by the security
interest herein granted and agreed to. All costs and expenses
of Secured Party in retaking, holding, preparing for sale and
selling or
3
otherwise realizing upon any Collateral in the event of
default by the Debtor, including court costs and attorney's
fees and other legal expense, shall likewise constitute
additional indebtedness of Debtor which Debtor promises to pay
on demand and which shall be entitled to the benefit of and be
secured by said security interest.
4.4 Upon receipt thereof, the Debtor shall immediately deliver to
Secured Party the Collateral described herein to be held by
Secured Party in the same manner as the property originally
deposited as Collateral.
4.5 For all purposes herein, Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of
the Collateral if it takes such action for that purpose as the
Secured Party takes for similar collateral in its ordinary
course of business.
4.6 In its discretion and without notice to the Debtor, the
Secured Party may take any one or more of the following
actions, without liability, except to account for property
actually received by it:
(i) Insure any of the Collateral;
(ii) Exchange any of the Collateral for other property
upon a reorganization, recapitalization or other
readjustment and, in connection therewith, deposit
any of the Collateral with any committee or
depositary upon such terms as the Secured Party may
determine;
(iii) In its name, or in the name of Debtor, demand, ▇▇▇
for, collect or receive any money or property at any
time payable or receivable on account of or in
exchange for any of the Collateral and, in connection
therewith, endorse notes, checks, drafts, money
orders, documents of title or other evidences of
payment, shipment or storage in the name of the
Debtor; and
(iv) Take or release any other collateral security for any
of the Collateral.
4.7 The Secured Party shall be under no duty to exercise or to
withhold the exercise of any rights, powers, privileges and
options expressly or implicitly granted to the Secured Party
in this Agreement and shall not be responsible for any failure
to do so or delay in so doing.
4.8 The Debtor will not change its state of incorporation or
establish a new chief executive office.
4.9 All capital stock specified in Sections 2.1, 2.2 and 2.3 shall
be delivered to and held by the Secured Party, with undated
stock powers attached, duly endorsed in blank. All instruments
or certificates representing or evidencing such capital stock
shall be delivered to and held by the Secured Party and shall
be in suitable form for transfer by delivery, and shall be
accompanied by all necessary instruments of transfer or
assignment duly executed in blank, and/or with
4
appropriate endorsements, in form and substance satisfactory
to the Secured Party.
4.10 Upon the Acquisition of any capital stock of DTC, Logix Sub or
Fiber that is not listed on Exhibit A hereto, the Debtor shall
promptly notify the Secured Party of such acquisition and,
concurrently with such notification, deliver to the Secured
Party an updated Exhibit A which completely and accurately
sets forth all of such capital stock of any kind held by the
Debtor.
4.11 Until all Obligations have been paid and performed in full,
the Debtor hereby covenants and agrees that it shall not,
unless the Secured Party otherwise consents in advance in
writing, sell, lease, assign, pledge, transfer or otherwise
dispose of any of the Collateral, whether now owned or
hereafter acquired.
5. EVENTS OF DEFAULT. Debtor shall be in default hereunder in
the event of the occurrence of any of the following ("Events of Default"):
(i) the failure to make any payment required pursuant to
any of the Obligations as it becomes due,
(ii) any representation or warranty of Debtor is
incorrect, false or misleading in any material
respect when made,
(iii) Debtor fails to observe or perform any of the
covenants or agreements contained in this Agreement,
(iv) Debtor fails to observe or perform any other covenant
or agreement of any of the Obligations other than the
payment of money which continues for a period of
thirty (30) days after Secured Party gives notice
thereof to Debtor, or
(v) an event of default occurs and is continuing under
any other agreement between Debtor and Secured Party.
(vi) any default occurs in the obligations of Logix Sub to
Debtor under the Note and/or agreements described in
Paragraph 2.5 hereof or to Secured Party under any
promissory note given by Logix Sub to Secured Party
or any agreement creating a security interest as
security for any such note.
(vii) the Secured Party receives at any time after the
execution hereof and prior to payment of all of the
Obligations, a report from any office in which
filings have been made perfecting the security
interest created hereby indicating that the Secured
Party's security interest is not prior to all other
security or other interests reflected in such report.
(viii) Debtor shall (i) apply for or consent to the
appointment of a receiver, trustee, custodian,
intervenor or liquidator of all or a substantial part
of its assets, (ii) file a voluntary petition in
bankruptcy or file a petition or answer seeking
5
reorganization of an arrangement with creditors or to
take advantage of any Debtor Laws, (iii) admit in
writing that it is unable to pay its debts as they
become due or generally not pay its debts as they
become due, (iv) make a general assignment for the
benefit of creditors, (v) file an answer admitting
the material allegations of, or consent to, or
default in answering, a petition filed against it in
any bankruptcy, reorganization or insolvency
proceeding or (vi) take corporate action for the
purpose of effecting any of the foregoing; or (i) an
involuntary petition or complaint is filed against
Debtor seeking bankruptcy or reorganization of
Debtor, or the appointment of a receiver, custodian,
trustee, intervenor or liquidator for Debtor, or for
all or substantially all of Debtor's assets, and such
petition or complaint is not dismissed within 60 days
of the filing thereof, or (ii) an order, judgment or
decree shall be entered by any Tribunal approving a
petition or complaint seeking reorganization of
Debtor or appointing a receiver, custodian, trustee,
intervenor or liquidator for Debtor, or of all or
substantially all of Debtor's assets, as applicable,
and such order, judgment or decree continues unstayed
for a period of 60 days.
(ix) Any "Event of Default" occurs under the Security
Agreement dated as of May 29, 2001 between Logix
Communications Corporation and the Secured Party, as
amended, modified or supplemented from time to time.
(x) This Pledge Agreement shall cease for any reason to
be in full force and effect, or the Debtor shall so
assert, or the lien or security interest created
under this Pledge Agreement shall cease to be
enforceable and of the same effect and priority
purported to be created hereunder.
6. REMEDIES.
6.1 Upon the occurrence of an Event of Default and at any time
thereafter, Secured Party may without notice to Debtor declare
all liabilities secured hereby immediately due and payable,
and may proceed to enforce payment and performance of same and
exercise any and all rights and remedies provided by the
Uniform Commercial Code, as well as all other rights and
remedies possessed by Secured Party. Unless the Collateral in
whole or in part threatens to decline speedily in value or is
of a type customarily sold on a recognized market, Secured
Party will give the Debtor reasonable notice of the time and
place of any public sale, or of the time after which any
private sale or other disposition is to be made. The Secured
Party may be a purchaser at any public sale. The requirement
of reasonable notice shall be met if notice is mailed, postage
prepaid, to the address of the Debtor provided for herein at
least ten (10) days before sale or other disposition. The
Secured Party is authorized at any such sale, if it deems it
advisable to do so, to restrict prospective bidders or
purchasers to persons who will represent and agree that they
are purchasing for their own account, for investment, and not
with a view to the distribution or sale of the Collateral.
Secured Party is also hereby authorized by Debtor, but not
obligated, to take such actions, give such notices, obtain
such rulings and consents, and do such other
6
things as Secured Party may deem appropriate in the event of a
sale or disposition of any of the Collateral. Debtor clearly
understands that Secured Party may in its discretion approach
a restricted number of potential purchasers and that a sale
under such circumstances may yield a lower price for the
Collateral or any part or parts thereof than would otherwise
be obtainable if sold in the open market, and Debtor agrees
that such private sales shall constitute a commercially
reasonable method of disposing of the Collateral.
6.2 As regards that portion of the Collateral consisting of cash
or cash equivalent items such as checks, drafts or deposited
funds, Secured Party may upon the occurrence of an Event of
Default specified in Section 5 hereof, immediately apply them
against any liabilities of the Debtor, selected by Secured
Party, and for this purpose it is agreed that cash or
equivalents will be considered identical to cash proceeds.
Secured Party shall have the right immediately and without
further action by it to set off against the liabilities
secured hereby all money owed by Secured Party to the
undersigned whether due or not, and Secured Party will be
deemed to have exercised such right of set off and to have
made a charge against such money at the time of any
acceleration upon default even though some charges made are
entered on the Secured Party's books subsequent thereto.
Secured Party may demand, collect, receipt for, settle,
compromise, adjust, ▇▇▇ for, foreclose, release or realize
upon the Collateral, in its own name or in the name of Debtor
as Secured Party may determine. Secured Party shall not be
liable for any act or omission on the part of Secured Party,
its officers, agents, or employees, except willful misconduct.
6.3 As regards that portion of the Collateral consisting of stock
or other voting securities, the Secured Party may upon the
occurrence of an Event of Default hereunder:
(i) Transfer to or register in its name or in the name of
its nominee any of the Collateral, with or without
indication of the security interest herein created,
and whether or not so transferred or registered,
receive the income, dividends and other distributions
thereon and hold them or apply them to the
liabilities of the Debtor, in any order of priority;
(ii) Exercise or cause to be exercised all voting and
corporate powers with respect to any of the
Collateral so registered or transferred, including
all rights of conversion, exchange, subscription or
any other rights, privilege or options pertaining to
such collateral, as if the absolute owner thereof,
and the Debtor hereby irrevocably grants to the
Secured Party the Debtor's proxy to vote any
Collateral during any Event of Default and the Debtor
shall take action which the Secured Party may request
in furtherance of the granting of such proxy; the
proxy granted and each stock power and similar power
now or hereafter granted are coupled within interest
and shall be irrevocable;
7
(iii) Make any compromise or settlement deemed advisable
with respect to any of the Collateral; or
(iv) Renew, extend or otherwise change the terms and
conditions of any of the Collateral.
(v) Debtor agrees that, because of the Securities Act of
1933, as amended, or the rules and regulations
promulgated thereunder (collectively, the "SECURITIES
ACT"), or any other laws or regulations, and for
other reasons, there may be legal or practical
restrictions or limitations affecting Secured Party
in any attempts to dispose of certain portions of the
Collateral and for the enforcement of its rights. For
these reasons, Secured Party is hereby authorized by
Debtor, but not obligated, upon the occurrence and
during the continuation of a default, to sell all or
any part of the Collateral at private sale, subject
to investment letter or in any other manner which
will not require the Collateral, or any part thereof,
to be registered in accordance with the Securities
Act or any other laws or regulations. Debtor
understands that Secured Party may in its discretion
approach a limited number of potential purchasers and
that a sale under such circumstances may yield a
lower price for the Collateral, or any part thereof,
than would otherwise be obtainable if such Collateral
were either afforded to a larger number of potential
purchasers, registered under the Securities Act, or
sold in the open market. Debtor agrees that any such
private sale made under this Agreement shall be
deemed to have been made in a commercially reasonable
manner, and that Secured Party has no obligation to
delay the sale of any Collateral to permit the issuer
thereof to register it for public sale under any
applicable federal or state securities Laws.
(vi) Secured Party is authorized, in connection with any
such sale, (A) to restrict the prospective bidders on
or purchasers of any of the Collateral to a limited
number of sophisticated investors who will represent
and agree that they are purchasing for their own
account for investment and not with a view to the
distribution or sale of any of such Collateral, and
(B) to impose such other limitations or conditions in
connection with any such sale as Secured Party
reasonably deems necessary in order to comply with
applicable law. Debtor covenants and agrees that it
will execute and deliver such documents and take such
other action as Secured Party reasonably deems
necessary in order that any such sale may be made in
compliance with applicable law. Upon any such sale
Secured Party shall have the right to deliver,
assign, and transfer to the purchaser thereof the
Collateral so sold. Each purchaser at any such sale
shall hold the Collateral so sold absolutely free
from any claim or right of Debtor of whatsoever kind,
including any equity or right of redemption of
Debtor. Debtor, to the extent permitted by applicable
law, hereby specifically waives all rights of
redemption, stay, or appraisal which it has or may
have under any law now existing or hereafter enacted.
8
(vii) The Collateral may be sold in one lot as an entirety
or in separate parcels, as Secured Party may
reasonably determine.
(viii) So long as no Event of Default shall have occurred or
exist, the Debtor shall have all voting or other
consensual rights with respect to the Collateral;
PROVIDED, HOWEVER, that the Debtor shall not exercise
or refrain from exercising any such right without the
consent of the Secured Party if such action or
inaction could result in a material reduction in the
fair market value of the Collateral, or adversely
affect (A) the validity, priority or perfection of
the first priority security interest and pledge
granted or purported to be granted hereunder or (B)
the rights and remedies of the Secured Party
hereunder.
7. GENERAL.
7.1 FURTHER ASSURANCES. Debtor agrees to promptly execute such
stock powers, endorse such instruments, or execute such
additional pledge agreements or other documents as may be
required by the Secured Party in order effectively to grant to
Secured Party the security interest in (and pledge and
assignment of) the Collateral and to enforce and exercise
Secured Party's rights regarding same.
7.2 SECURITIES LAWS. Upon the occurrence or existence of an Event
of Default, Debtor hereby agrees to cooperate fully with
Secured Party to sell, at foreclosure or other private sale,
the Collateral pledged hereunder.
7.3 EXPENDITURES OF SECURED PARTY. The Debtor shall be liable for
and agrees to pay Secured Party for all expenditures of
Secured Party in maintaining the Collateral, and all costs,
attorney's fees and other expenditures of Secured Party in the
enforcement or collection of any note, warranty, agreement,
liability or obligation of the Debtor, to Secured Party or in
the enforcement or collection of or realization upon the
Collateral or in the holding, preparing for sale or sale of
any Collateral.
7.4 WAIVERS. No act, delay, omission, or course of dealing between
the Debtor and Secured Party, including Secured Party's waiver
of remedy because of any default hereunder, shall constitute a
waiver of any of Secured Party's rights and remedies under
this Agreement or any other agreement between the parties, or
under the documents evidencing the liabilities secured hereby.
Waiver by Secured Party of any rights or remedies under the
terms of this Agreement or with respect to any of Debtor's
liabilities to Secured Party will not be a bar to the exercise
of any right or remedy on any subsequent occasion. All rights
and remedies of Secured Party are cumulative and may be
exercised singularly or concurrently, and the exercise of any
one or more of them will not be a waiver of any other. No
waiver, change, modification, or discharge of any of Secured
Party's rights or of the Debtor's duties as so specified or
allowed will be effective unless in writing and signed by
Secured Party.
9
7.5 SECURED PARTY'S RIGHT TO TRANSFER. Debtor grants to Secured
Party the right to transfer any and all of the Collateral to
its own name or that of its nominee after default, and Secured
Party may exercise all rights and privileges to which it will
thereupon become entitled, but it will be under no duty to
exercise such rights and privileges.
7.6 RIGHTS OF SECURED PARTY ASSIGNABLE. Secured Party at any time
and at its option may pledge, transfer or assign its rights
under this Agreement or any part of said rights, and any
pledgee, transferee or assignee shall have the rights of
Secured Party as to the rights or parts thereof so pledged,
transferred or assigned.
7.7 PARTIAL INVALIDITY. If any provision of this Agreement shall
for any reason be held to be invalid or unenforceable, such
invalidity or unenforceability shall not affect any other
provision hereof, and this Agreement shall be construed as if
such invalid or unenforceable provisions had never been
contained herein.
7.8 BINDING EFFECT. This Agreement shall be binding on the
Debtor's respective heirs, executors, administrators,
representatives, successors and assigns, and shall inure to
the benefit of the Secured Party's successors and assigns.
7.9 CONSTRUCTION. This Agreement shall be deemed a contract made
under the laws of the State of Oklahoma and shall be construed
in accordance with the laws of said state.
7.10 COUNTERPARTS. This Agreement may be executed in counterpart
and will be effective when a counterpart is executed by each
party.
7.11 INDEMNITY. Debtor will indemnify and hold Secured Party
harmless from and against any and all claims, damages, loss,
liability or judgments which may be incurred or sustained by
Secured Party or asserted against Secured Party, directly or
indirectly, in connection with the existence of or the
exercise of any of the rights of Secured Party under this
Agreement.
IN WITNESS WHEREOF, Secured Party and Debtor have caused this
Agreement to be duly executed and delivered as of the date and year first above
written.
SECURED PARTY: ▇▇▇▇▇▇ ▇▇ LIMITED PARTNERSHIP, an
Oklahoma limited partnership
By: RLD, INC., General Partner
By
--------------------------------
Name:
--------------------------
Title:
-------------------------
10
DEBTOR: LOGIX COMMUNICATIONS ENTERPRISES, INC.,
an Oklahoma corporation
By
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
11
EXHIBIT A
ISSUER CERTIFICATE NO. NO. OF SHARES
--------------------------------------------------------------------------
Logix Communications Corporation 3 1000
▇▇▇▇▇▇ Telephone Company, Inc. 35 300
▇▇▇▇▇▇ fiber/FORTE of Colorado, Inc. 3 500