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EXHIBIT 4.5
EXECUTION COPY
COLLATERAL PLEDGE AND
SECURITY AGREEMENT
Dated as of June 23, 1998
from
BIRCH TELECOM, INC.,
Pledgor
to
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
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TABLE OF CONTENTS
Section Page
SECTION 1. Definitions; Appointment; Deposit and Investment. .............. 2
1.1 Definitions.................................................... 2
1.2 Appointment of the Trustee..................................... 6
1.3 Pledge and Grant of Security Interest.......................... 6
SECTION 2. Delivery of Collateral; Establishment of Pledge Account......... 6
SECTION 3. Delivery of the Pledged Securities.............................. 7
SECTION 4. Delivery of Collateral Other than U.S. Government Obligations .. 9
SECTION 5. Investing of Amounts in the Pledge Account........ ............. 9
SECTION 6. Disbursements................................................... 9
SECTION 7. Representations and Warranties.................................. 11
SECTION 8. Further Assurances.............................................. 12
SECTION 9. Covenants....................................................... 13
SECTION l0. Power of Attorney............................................... 13
SECTION 11. No Assumption of Duties; Reasonable Care........................ 14
SECTION 12. Indemnity....................................................... 14
SECTION 13. Remedies upon Event of Default.................................. 14
SECTION 14. Expenses........................................................ 15
SECTION 15. Security Interest Absolute...................................... 15
SECTION 16. New York Securities Intermediary's Representations, Warranties
and Covenants................................................... 16
SECTION 17. Miscellaneous Provisions........................................ 17
17.1 Notices ........................................................ 17
17.2 Severability ................................................... 18
17.3 Headings ....................................................... 18
17.4 Counterpart Originals .......................................... 18
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17.5 Benefits of Pledge Agreement ................................... 18
17.6 Amendments, Waivers and Consents ............................... 18
17.7 Interpretation of Agreement .................................... 18
17.9 Survival Provisions ............................................ 19
17.10 Waivers ........................................................ 19
17.11 Authority of the Trustee ....................................... 19
17.12 Final Expression ............................................... 20
17.13 Rights of Holders of the Notes ................................. 20
17.14 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
DAMAGES......................................................... 20
17.15 Effectiveness .................................................. 22
SCHEDULE I PLEDGED SECURITIES 1
EXHIBIT A NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
OFFICER'S CERTIFICATE 1
EXHIBIT B [Attach Report from Ernst & Young LLP] 1
This Collateral Pledge and Security Agreement (this "Pledge Agreement")
is made and entered into as of June 23, 1998 by Birch Telecom, Inc., a Delaware
corporation (the "Pledgor"), having its principal offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, in favor of Norwest Bank Minnesota,
National Association, as Trustee (in such capacity, the "Trustee") having its
principal corporate trust ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust Department, as 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, its subsidiaries and the Initial Purchasers (as
defined in the Purchase Agreement) are parties to a Purchase Agreement, dated
June 18, 1998 (the "Purchase Agreement"), pursuant to which the Pledgor will
issue and sell to the Initial Purchasers 115,000 units (the "Units") each
consisting of $1,000 principal amount of the Pledgor's 14% Senior Notes due 2008
(the "Notes") and a warrant to purchase 12.25856 shares of the Company's common
stock, par value $.001 per share;
WHEREAS, the Pledgor 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 the Notes on the date hereof;
WHEREAS, pursuant to the Indenture, the Pledgor is required, on the
Closing Date (as defined in the Purchase Agreement), to purchase, or cause the
purchase of, and pledge to the Trustee for the benefit of the Holders of the
Notes U.S. Government Obligations (as defined
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below) in an amount that will be sufficient upon receipt of scheduled interest
and principal payments of such securities, in the opinion of a
nationally-recognized firm of independent public accountants selected by the
Pledgor (the "Accounting Firm") to provide for payment in full of the first six
scheduled interest payments due on the Notes to secure the Pledgor's obligation
(such obligation, together with the obligation to repay the principal, premium,
Liquidated Damages (as defined in the Registration Rights Agreement, dated as of
the Closing Date, between the Pledgor and the Initial Purchasers), if any, and
interest on the Notes in the event that the Notes become due and payable prior
to such time as the first six scheduled interest payments thereon shall have
been paid in full, being collectively referred to herein as the "Obligations");
WHEREAS, the Trustee has opened a securities account (the "Pledge
Account") with Bankers Trust Company, as Securities Intermediary (in such
capacity, the "New York Securities Intermediary"), at its office at 16 Wall St.,
MS 4039, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (designated "Pledge Account pledged by Birch
Telecom, Inc. to Norwest Bank Minnesota, National Association as Trustee and
Sole Entitlement Holder"), in the name of and under the sole dominion and
control of the Trustee and subject to the terms of this Pledge Agreement;
WHEREAS, pursuant to the Purchase Agreement it is a condition precedent
to the purchase of the Units by the Initial Purchasers that the Pledgor apply
certain of the proceeds of the offering of the Units to purchase the Pledged
Securities (as defined below) and to deposit such Pledged Securities into the
Pledge Account to be held therein under the sole dominion and control of the
Trustee and subject to the terms of this Pledge Agreement;
WHEREAS, to secure the Obligations of the Pledgor, the Pledgor has
agreed to execute and deliver this Pledge Agreement and pledge to the Trustee,
for its benefit and the ratable benefit of the Holders of the Notes, the Pledged
Securities and the related Collateral (as defined below) in order to secure the
payment by the Pledgor of all the Obligations.
All capitalized terms used herein but not defined herein shall have the
meanings assigned to such terms in the Indenture.
NOW, THEREFORE, in consideration of the premises herein contained, and
in order to induce the Holders of the Notes to purchase the Notes (as a part of
the purchase of the Units), the Pledgor and the Trustee hereby agree, for the
benefit of the Trustee and for the ratable benefit of the Holders of the Notes,
as follows:
SECTION 1. Definitions; Appointment; Deposit and Investment.
1.1 Definitions.
(a) Unless otherwise defined in this Pledge Agreement, terms defined or
referenced in the Indenture are used in this Pledge Agreement as such terms are
defined or referenced therein.
(b) Unless otherwise defined in the Indenture or in this Pledge
Agreement, terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York
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from time to time and/or in Section 357.2 of the Treasury Regulations (as
defined in Section 1.l(c)) are used in this Pledge Agreement as such terms are
defined in such Article 8 or 9 and/or such Section 357.2. Such terms shall
include, but not be limited to, "book-entry security", "certificated security",
"entitlement holder", "CUBES", "entitlement order", "financial asset",
"instrument", "participant's securities account", "proceeds", "securities
account", "securities intermediary", "security", "security entitlement" and
"STRIPS".
(c) In this Pledge Agreement the following terms have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Adverse Claim" has the meaning specified in Section 8-102(a)(1) of the
UCC.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than one year from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of one year
or less from the date of acquisition, bankers' acceptances with maturities not
exceeding one year and overnight bank deposits, in each case with any domestic
commercial bank having capital and surplus in excess of $500.0 million and a
▇▇▇▇▇▇▇▇ Bank Watch Rating of "B" or better, (iv) repurchase obligations with a
term of not more than 30 days for underlying securities of the types described
in clauses (ii) and (iii) above entered into with any financial institution
meeting the qualifications specified in clause (iii) above, (v) commercial paper
or other indebtedness issued by domestic corporations having the highest rating
obtainable from either ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's
Ratings Group and, in each case maturing within one year after the date of
acquisition and (vi) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i) through (v) of
this definition.
"Certificated Security" has the meaning specified in Section
8-102(a)(4) of the UCC.
"CFR" means the U.S. Code of Federal Regulations.
"Collateral" has the meaning specified in Section 1.3.
"Deposit Account" has the meaning specified in Section 9-105(e) of the
UCC.
"Entitlement Holder" has the meaning specified in Section 8-102(a)(7)
of the UCC.
"Entitlement Order" has the meaning specified in Section 8-102(a)(8) of
the UCC.
"Financial Asset" has the meaning specified in Section 8-102(a)(9) of
the UCC.
"FRB" means Federal Reserve Bank of New York.
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"FRB Account" means the participant's securities account maintained in
the name of the New York Securities Intermediary by the FRB.
"FRB Member" means any Person that is eligible to maintain (and that
maintains) with the FRB one or more FRB Member Securities Accounts in such
Person's name.
"FRB Member Securities Account" means in respect of any Person, an
account in the name of such Person at the FRB, to which account U.S. Government
Obligations held for such Person are or may be credited.
"General Intangibles" has the meaning specified in Section 9-106 of the
UCC.
"Instruments" has the meaning specified in Section 9-105(i) of the UCC.
"Investment Property" has the meaning specified in Section 9-115(1)(f)
of the UCC.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Money" has the meaning specified in Section 1-201(24) of the UCC.
"New York Securities Intermediary" has the meaning specified in the
recitals hereto.
"Pledgor" has the meaning specified in the recitals of the parties
hereto.
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the UCC and, in any event, shall include without limitation, all
interest, dividends or other earnings, income or distributions from or in
respect of, or from or in respect of investments or reinvestments of, the cash
and Cash Equivalents and Investment Property from time to time on deposit in the
Pledge Account, all collections and distributions with respect to the U.S.
Government Obligation and all other proceeds of Collateral.
"Securities Account" has the meaning specified in Section 8-501(a) of
the UCC.
"Securities Control" shall mean "control" as defined in Section
9-115(1)(e) of the UCC.
"Securities Intermediary" means a Person that is a "securities
intermediary" (as defined in Section 8-102(a)(14) of the UCC) and, in respect of
any book-entry security, a "securities intermediary" (as defined in 31 CFR
Section 357.2 or, as applicable to such book-entry security, the corresponding
Federal book-entry regulations).
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"Security" has the meaning specified in Section 8-102(a)(15) of the
UCC.
"Security Certificate" has the meaning specified in Section
8-102(a)(16) of the UCC.
"Security Entitlement" as defined in Section 8-102(a)(17) of the UCC
or, in respect of any book-entry security, as defined in 31 CFR Section 357.2
(or, as applicable to such book-entry security, the corresponding Federal
book-entry regulations).
"Settlement Date" means, as to any U.S. Government Obligations, the
date on which the purchase of such U.S. Government Obligations shall have been
settled.
"Termination Date" means the earlier of (a) the date of the payment in
full in cash of each of the first six scheduled interest payments due on the
Notes under the terms of the Indenture and (b) the date of the payment in full
of all obligations due and owing under this Pledge Agreement, the Indenture and
the Notes, in the event such obligations become due and payable prior to the
payment of the first six scheduled interest payments on the Notes.
"Treasury Regulations" means (a) the regulations contained in 31 CFR
Part 357 (including, without limitation, Section 357.2, Section 357.10 through
Section 357.14 and Section 357.41 through Section 357.44 of 31 CFR) and (b) to
the extent substantially identical to the regulations referred to in clause (a)
above (as in effect from time to time) the regulations governing other U.S.
Government Obligations.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Pledge Agreement or any successor thereto appointed in
accordance with the provisions of the TIA.
"UCC" means, unless otherwise specified herein, the Uniform Commercial
Code as in effect in New York State.
"Uncertificated Security" has the meaning specified in Section
8-102(a)(18) of the UCC.
"U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a "bank" (as defined in
Section 3(a)(2) of the Securities Act), as custodian with respect to any such
U.S. Government Obligation or a specific payment of principal of or interest on
any such U.S. Government Obligation held by such custodian for the account of
the holder of such depository receipt, provided (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government
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Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
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. As security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Obligations, the Pledgor hereby grants to
the Trustee for its benefit and for the ratable benefit of the Holders of the
Notes, a lien on and security interest in all of the Pledgor's right, title and
interest in, to and under the following property (whether characterized as
Certificate Securities or Uncertificated Securities, Financial Assets, Security
Entitlements, Deposit Accounts, bank accounts, Securities Accounts, Money,
Proceeds, Investment Property, General Intangibles or otherwise): (a) the U.S.
Government Obligations identified by CUSIP No. in Schedule I to this Pledge
Agreement (the "Pledged Securities"), the scheduled payments of principal and
interest of which will be sufficient to provide for payment in full of the first
six scheduled interest payments due on the Notes, (b) any and all applicable
Security Entitlements to the Pledged Securities, (c) the Pledge Account, all
funds held therein and all certificates and instruments, if any, from time to
time representing or evidencing the Pledge Account, (d) all Collateral
Investments (as defined below) and all certificates and instruments, if any,
representing or evidencing the Collateral Investments, and any and all Security
Entitlements to the Collateral Investments, and any and all related Securities
Accounts in which any Security Entitlement to the Collateral Investments is
carried, (e) all notes, certificates of deposit, Deposit Accounts, checks and
other instruments, if any, from time to time hereafter delivered to or otherwise
possessed by the Trustee for or on behalf of the Pledgor in substitution for or
in addition to any or all of the then existing Collateral, (f) all interest,
dividends, cash, instruments and other property, if any, from time to time
received by the Trustee, receivable or otherwise distributed in respect of or in
exchange for any or all of the then existing Collateral and (g) except as
otherwise provided herein, 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) (such property
being collectively referred to herein as the "Collateral").
SECTION 2. Delivery of Collateral; Establishment of Pledge Account. (a)
The Trustee has established with the New York Securities Intermediary, and at
all times until the Termination Date, the Pledgor shall maintain with the New
York Securities Intermediary, the Pledge Account. The Pledge Account shall be a
Securities Account. The following provisions shall apply to the establishment
and maintenance of the Pledge Account:
(i) The Trustee shall cause the Pledge Account to be, and the Pledge
Account shall be, separate from all other accounts maintained by the
Trustee.
(ii) The Trustee shall, in accordance with all applicable laws, have
sole dominion and control (including, without limitation, Securities
Control) over the Pledge Account,
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and it shall be a term and condition of the Pledge Account and the
Pledgor irrevocably instructs the Trustee, notwithstanding any other
term or condition to the contrary in any other agreement, that no
Collateral shall be released to or for the account of, or withdrawn by
or for the account of, the Pledgor or any other Person except as
expressly provided in this Pledge Agreement.
(iii) The Trustee shall, in accordance with and subject to all
applicable laws, be the sole Entitlement Holder of, and have the power to
originate Entitlement Orders with respect to, the Pledge Account and all
U.S. Government Obligations, Securities, Security Entitlements and other
Financial Assets held therein, and it shall be a term and condition of the
Pledge Account that the Trustee shall have the right to issue such
Entitlement Orders with respect to the Pledge Account and such Securities,
Security Entitlements and other Financial Assets without further consent
of the Pledgor, and that no Collateral shall be released to or for the
account of, or withdrawn by or for the account of, the Pledgor or any
other Person except as expressly provided in this Pledge Agreement.
(b) On the Closing Date, the Pledgor shall transfer, or cause to be
transferred, to the Trustee an amount equal to $44,246,583.50 by depositing (i)
cash in such amount or (ii) U.S. Government Obligations (in the name of the
Trustee) listed in Schedule I hereto purchased for such amount into the Pledge
Account.
(c) As soon as possible after receipt of the amount referred to in
Section 2(b)(i), (i) the Trustee shall apply such amount to purchase the U.S.
Government Obligations (in the name of the Trustee) listed on Schedule I hereto
in such principal amount. The Trustee shall ensure that, on the Settlement Date,
the FRB credits in the FRB Account those U.S. Government Obligations being
settled on such date which the Trustee has either received under Section
2(b)(ii) or purchased under this ---------- Section 2(c). The Trustee shall
cause the New York Securities Intermediary to credit any such U.S. Government
Obligations received or purchased by it to the Pledge Account as Collateral
hereunder.
(d) The Trustee will, from time to time, reinvest the proceeds of
Collateral that may mature or be sold in such Collateral Investments (in the
name of the Trustee) as it may be directed in writing by the Pledgor, and cause
such Collateral Investments to be credited to the Pledge Account as Collateral
hereunder. Such proceeds that are not so reinvested in Collateral Investments
shall be deposited and held in the Pledge Account.
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SECTION 3. Delivery of the Pledged Securities. (a) The Pledged
Securities shall be pledged and delivered to the Pledge Account in the name of
the Trustee and the Trustee shall become the Entitlement Holder of a Security
Entitlement to the Pledged Securities through action by the New York Securities
Intermediary, as confirmed (in writing or electronically or otherwise in
accordance with standard industry practice) to the Trustee by the New York
Securities Intermediary (i) indicating by book-entry that the Pledged Securities
and all Security Entitlements thereto have been credited to the Pledge Account,
or (ii) acquiring the Pledged Securities and all Security Entitlements thereto
for the Trustee and accepting the same for credit to the Pledge Account.
(b) Prior to or concurrently with the execution and delivery hereof and
prior to the transfer to the Trustee of the Pledged Securities (or acquisition
by the Trustee of any Security Entitlement thereto), as provided in subsection
(a) of this Section 3, the Trustee and the New York Securities Intermediary
shall establish the Pledge Account on the books of the New York Securities
Intermediary as a Securities Account segregated from all other custodial or
collateral accounts, such account to be maintained either (i) directly at its
offices located at 16 Wall St., MS 4039, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or (ii)
through a "Securities Account" maintained by the New York Securities
Intermediary at the FRB, as Securities Intermediary. Upon transfer of the
Pledged Securities to the Trustee (or the Trustee's acquisition of a Security
Entitlement thereto), as confirmed to the New York Securities Intermediary by
FRB or another Securities Intermediary, the New York Securities Intermediary
shall make appropriate book entries indicating that the Pledged Securities
and/or such Security Entitlement have been credited to and are held in the
Pledge Account. Subject to the other terms and conditions of this Pledge
Agreement, all funds or other property held by the Trustee pursuant to this
Pledge Agreement shall be held in the Pledge Account subject (except as
expressly provided in Section 6) to the exclusive dominion and control
(including, without limitation, Securities Control) of the Trustee and
exclusively for the benefit of the Trustee and for the ratable benefit of the
Holders of the Notes and segregated from all other funds or other property
otherwise held by the Trustee.
(c) All Collateral shall be retained in the Pledge Account pending
disbursement pursuant to the terms hereof.
(d) Concurrently with the execution and delivery of this Pledge
Agreement, the Trustee is delivering to the Pledgor and the Initial Purchasers a
duly executed certificate, in the form of Exhibit A hereto, of an officer of the
Trustee, confirming the Trustee's establishment and maintenance of the Pledge
Account with the New York Securities Intermediary and its receipt and holding of
the Pledged Securities or a Security Entitlement thereto and the crediting of
the Pledged Securities or such Security Entitlement to the Pledge Account, all
in accordance with this Pledge Agreement.
(e) Concurrently with the execution and delivery of this Pledge
Agreement, the Pledgor is delivering to the Trustee an opinion of the Accounting
Firm substantially in the form of Exhibit B hereto.
(f) Concurrently with the execution and delivery of this Pledge
Agreement, the
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Pledgor is delivering to the Trustee financing statements in form acceptable for
filing under the UCC of the State of New York, covering the Collateral described
in this Pledge Agreement.
SECTION 4. Delivery of Collateral Other than U.S. Government
Obligations. (a) Collateral consisting of cash will be deemed to be delivered to
the Trustee (such that the Trustee will have an enforceable lien and security
interest thereon and therein), when it has been (and for so long as it shall
remain) deposited in or credited to the Pledge Account.
(b) Collateral consisting of Cash Equivalents (other than U.S.
Government Obligations) will be deemed to be delivered to the Trustee (such that
the Trustee will have an enforceable lien and security interest thereon and
therein), when they have been (and for so long as they shall remain) deposited
in or credited to the Pledge Account.
(c) Collateral consisting of Securities (other than U.S. Government
Obligations) will be deemed delivered to the Trustee when the New York
Securities Intermediary (A) shall indicate by book entry that such Securities
have been credited to the Pledge Account or (B) shall receive such Security (or
a Financial Asset based on such Security) for the Trustee, from or at the
direction of the Pledgor, and shall accept such Security (or such Financial
Asset) for credit to the Pledge Account;
(d) Collateral consisting of Securities and represented or evidenced by
certificates or instruments will be deemed delivered to the Trustee when all
such certificates or instruments representing or evidencing the Collateral,
including, without limitation, amounts invested as provided in Section 5, shall
be delivered to the New York Securities Intermediary and held by or on behalf of
the Trustee pursuant hereto and shall be in registered form and specially
indorsed to the Trustee by an effective indorsement, all in form and substance
sufficient to convey a valid security interest in such Collateral to the Trustee
or shall be credited to the Pledge Account.
SECTION 5. Investing of Amounts in the Pledge Account. If at any time,
any amounts shall exist in the Pledge Account uninvested, and if directed in
writing by the Pledgor, the Trustee will, subject to the provisions of Section 6
and Section 13, (a) invest such amounts on deposit in the Pledge 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 in the name of the Trustee, as the
Pledgor may select and the Trustee may approve (the Cash Equivalents referred to
in clauses (a) and (b) above, together with the Pledged Securities, being
collectively referred to herein as "Collateral Investments"); provided, however,
that the amount in cash and Pledged Securities on deposit in the Pledge Account,
collectively, at any time during the term of this Pledge Agreement, must be
sufficient to provide for the payment in full of the remaining interest payments
at such time on the Notes up to and including the sixth scheduled interest
payment. Except as otherwise provided in Sections 11 and 12, the Trustee shall
not be liable for any loss in the investment or reinvestment of amounts held in
the Pledge Account.
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SECTION 6. Disbursements. The Trustee shall hold the Collateral in the
Pledge Account and release the same, or a portion thereof, only as follows:
(a) At least three Business Day prior to the due date of any of the
first six scheduled interest payments on the Notes, the Pledgor may, pursuant to
written instructions executed by the Pledgor (an "Issuer Order"), direct the
Trustee to release from the Pledge Account and pay to the Holders of the Notes
proceeds sufficient to provide for payment in full of such interest then due on
the Notes; provided, however, that in the event Collateral is required to be
liquidated, the Pledgor will give the Trustee at least five Business Days'
notice as to whether payment of interest will be made pursuant to this Section
6(a) or pursuant to Section 6(b). If no such notice is given and no such Issuer
Order is provided, the Trustee will act pursuant to this Section 6(a) as if it
had received an Issuer Order pursuant hereto for the payment in full of the
interest then due. Upon receipt of an Issuer Order or upon the Pledgor's failure
to give either such notice or such Issuer Order in a timely manner, the Trustee
will take any action necessary to provide for the payment of the interest on the
Notes to the Holders of the Notes in accordance with the payment provisions of
the Indenture from (and to the extent of) proceeds of the Collateral in the
Pledge Account. Nothing in this Section 6 shall affect the Trustee's rights to
apply the Collateral to the payments of amounts due on the Notes upon
acceleration thereof.
(b) If the Pledgor makes any interest payment or portion of an interest
payment for which the Collateral is security from a source of funds other than
the Pledge Account ("Pledgor Funds"), the Pledgor may, after payment in full of
such interest payment, direct the Trustee by Issuer Order to release to the
Pledgor or to another party at the direction of the Pledgor (the "Pledgor's
Designee") proceeds from the Pledge Account in an amount less than or equal to
the amount of Pledgor Funds applied to such interest payment. Upon receipt of
such Issuer Order by the Trustee, the Trustee shall pay over to the Pledgor or
the Pledgor's Designee, as the case may be, the requested amount from proceeds
in the Pledge Account. Concurrently with any release of funds to the Pledgor
pursuant to this Section 6(b), the Pledgor shall deliver to the Trustee a
certificate signed by an officer of the Pledgor stating that the Pledgor has
made the interest payment from a source of funds other than the Pledge Account,
and that such release has been duly authorized by the Pledgor and will not
violate any provision of applicable law or the Certificate of Incorporation or
the By-laws of the Pledgor or any material agreement or 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 interest granted under this
Pledge Agreement.
(c) Upon the Termination Date, the security interest in the Collateral
evidenced by this Pledge Agreement will automatically terminate and be of no
further force and effect, and the Collateral, upon receipt by the Trustee of an
Issuer Order, shall promptly be paid over and transferred to the Pledgor.
(d) In the event that the Collateral held in the Pledge Account exceeds
100% of the amount sufficient, in the written opinion of the Accounting Firm, to
provide for payment in full of the first six scheduled interest payments due on
the Notes (or, in the event an interest
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payment or payments have been made, an amount sufficient to provide for payment
in full of all interest payments remaining, up to and including the sixth
scheduled interest payment), the Trustee shall release to the Pledgor, at the
Pledgor's written request, accompanied by a written opinion of the Accounting
Firm, any such excess Collateral.
(e) Upon the release of any Collateral from the Pledge Account in
accordance with the terms of this Pledge Agreement, the security interest
evidenced by this Pledge Agreement in such released Collateral will
automatically terminate and be of no further force and effect.
(f) Nothing contained in Section 1, this Section 6, Section 13, or any
other provision of this Pledge Agreement shall (i) afford the Pledgor any right
to issue Entitlement Orders with respect to any Security Entitlement to the
Pledged Securities or 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 the 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 (including, without limitation, Securities
Control) (except as expressly provided in this Section 6) 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 of the Notes and
not as a Securities Intermediary for the Pledgor.
SECTION 7. Representations and Warranties. The Pledgor hereby
represents and warrants, as of the date hereof, that:
(a) The execution and delivery by the Pledgor of, and the performance
by the Pledgor of its obligations under, this Pledge Agreement will not violate
any provision of applicable law or the Articles of Incorporation or By-laws of
the Pledgor or any material agreement or 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
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any public office other than the financing statements, if any, filed pursuant to
this Pledge Agreement.
(c) This Pledge Agreement has been duly and validly authorized,
executed and delivered by the Pledgor and (assuming the due authorization,
execution and delivery of this Pledge Agreement by the Trustee and
enforceability of the Pledge Agreement against the Trustee in accordance with
its terms and the provisions of the TIA) constitutes a valid and binding
agreement of the Pledgor, enforceable against the Pledgor in accordance with its
terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether considered in a proceeding in equity or at law).
(d) Upon the delivery to the Trustee of the Collateral in accordance
with the procedures described in Section 3 and Section 4, the pledge of and
grant of a security interest in the Collateral securing the payment of the
Obligations for the benefit of the Trustee and the Holders of the Notes will
constitute a valid, first priority, perfected security interest in such
Collateral (except, with respect to Proceeds, only to the extent permitted by
Section 9-306 of the UCC), enforceable as such against all creditors of the
Pledgor and any persons purporting to purchase any of the Collateral from the
Pledgor, except in each case as enforcement may be subject to general principles
of equity (whether considered in a proceeding in equity or at law) and other
than as permitted by the Indenture.
(e) There are no legal or governmental proceedings pending or, to the
Pledgor's knowledge, threatened, against the Pledgor or any of its subsidiaries
or to which any of their respective properties 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 T, U and X of the Board of Governors of the Federal Reserve System)
applicable to the Pledgor.
(g) No Event of Default (as defined herein) exists.
SECTION 8. Further Assurances. The Pledgor will, promptly upon the
request by the Trustee (which request the Trustee may submit at the direction of
the Holders of a majority in aggregate 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
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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 60 days of receipt of an
invoice therefor. The Pledgor also agrees, whether or not requested by the
Trustee, to use its reasonable best efforts to perfect or continue the
perfection of, or to protect the first priority of, the Trustee's security
interest i and to the Collateral, 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 9. Covenants. The Pledgor covenants and agrees with the Trustee
and the Holders of the Notes that from and after the date of this Pledge
Agreement until the Termination Date:
(a) that it will not (i) (and will not purport to) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Collateral nor (ii) 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 and any Lien created by or arising
through the Trustee) and at all times will be the sole beneficial owner of
the Collateral; and
(b) that it will not (i) enter into any agreement or understanding that
restricts or inhibits or purports to restrict or inhibit the Trustee's
rights or remedies hereunder, including, without limitation, the Trustee's
right to sell or otherwise dispose of the Collateral or (ii) fail to pay
or discharge any tax, assessment or levy of any nature with respect to the
Collateral not later than five Business Days prior to the date of any
proposed sale under any judgment, writ or warrant of attachment with
respect to the Collateral.
SECTION l0. Power of Attorney. In addition to all of the powers granted
to the Trustee pursuant to the Indenture, subject to the terms of this Pledge
Agreement, 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 an Collateral; (b) conveyance of any item of
Collateral to any purchaser thereof; (c) giving of any notices or recording of
any Liens under Section 3; 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
reasonable discretion, and such payments made by the Trustee to become part of
the Obligations of the Pledgor to the Trustee, due and payable immediately upon
demand. The Trustee's authority under this Section l0 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 in its reasonable
discretion 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
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granted to the Trustee in this Pledge Agreement. This power of attorney is
coupled with an interest and is irrevocable by the Pledgor but shall remain in
effect only during the continuance of an Event of Default.
SECTION 11. 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 of the Notes in
and to the Collateral granted hereby and shall not be interpreted to, and shall
not impose any duties on, the Trustee in connection therewith other than those
expressly provided herein or imposed under applicable law. Except as provided by
applicable law or by the Indenture, the Trustee shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Trustee accords similar property held by the Trustee for similar
accounts, it being understood that the Trustee in its capacity as such shall not
have any responsibility for (a) 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 Pledge
Agreement shall relieve the Trustee of any responsibilities as a Securities
Intermediary under applicable law.
SECTION 12. Indemnity. The Pledgor shall indemnify the Trustee against
any and all losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this Pledge
Agreement, including the costs and expenses of enforcing this Pledge Agreement
against the Pledgor and defending itself against any claim (whether asserted by
the Pledgor or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Pledgor promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Pledgor shall not relieve the Pledgor of its obligations hereunder. The Pledgor
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Pledgor need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld. The
provisions of this Section 12 shall survive termination of this Pledge Agreement
and the resignation and removal of the Trustee for a period of three (3) years
after the Termination Date.
SECTION 13. Remedies upon Event of Default. If any Event of Default
under the Indenture or breach of the terms hereof (any such Event of Default or
breach being referred to in this Pledge Agreement as an "Event of Default")
shall have occurred and be continuing:
(a) The Trustee and the Holders of the Notes shall have, in addition to
all other rights given by law or by this Pledge Agreement or the
Indenture, all of the rights and remedies with respect to the Collateral
of a secured party under the UCC then in effect in the State of New York.
Any sale of the Collateral conducted in conformity with
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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 17.1 at least ten (10) days
before the time of the sale or disposition. The Trustee or any Holder of
Notes may, in its own name or in 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 13 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 13 will cause
irreparable injury to the Trustee and the Holders of the Notes, that the
Trustee and the Holders of the Notes have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 13 shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants
except for a defense that no Event of Default has occurred.
SECTION 14. Expenses. The Pledgor will, upon demand, pay to the Trustee
the amount of any and all reasonable expenses, including, without limitation,
the reasonable fees, expenses and disbursements of its counsel, experts and
agents retained by the Trustee, that the Trustee may incur in connection with
(a) the review, negotiation and administration of this Pledge Agreement, (b) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (c) the exercise or enforcement of any
of the rights of the Trustee and the Holders of the Notes hereunder or (d) the
failure by the Pledgor to perform or observe any of the provisions hereof.
SECTION 15. Security Interest Absolute. All rights of the Trustee and
the Holders of the Notes and security interests hereunder, and all obligations
of the Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Indenture;
(c) any exchange, surrender, release or non-perfection of any Liens on
any other collateral for all or any of the Obligations; or
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(d) to the extent permitted by applicable law, any other circumstance
which might otherwise constitute a defense available to, or a discharge
of, the Pledgor in respect of the Obligations or of this Pledge Agreement.
SECTION 16. New York Securities Intermediary's Representations,
Warranties and Covenants. For the purposes of this Section 16 only, the New York
Securities Intermediary represents and warrants that it is as of the date
hereof, and it agrees that for so long as it maintains the Pledge Account and
acts as the Securities Intermediary pursuant to this Pledge Agreement it shall
be a Securities Intermediary and a FRB Member. In furtherance of the foregoing
the New York Securities Intermediary hereby:
(a) represents and warrants that it is a corporation that in the
ordinary course of its business maintains securities accounts
for others and is acting in that capacity hereunder and with
respect to the Pledge Account;
(b) represents and warrants that it maintains a FRB Member
Securities Account with the FRB;
(c) agrees that the Pledge Account shall be an account to which
Financial Assets may be credited, and the New York Securities
Intermediary undertakes to treat the Trustee as entitled to
exercise rights that comprise (and entitled to the benefits
of) such Financial Assets, and entitled to exercise the rights
of an Entitlement Holder in the manner contemplated by the
UCC;
(d) hereby represents that it has not granted, and covenants that
so long as it acts as a Securities Intermediary hereunder it
shall not grant, control (including without limitation,
Securities Control) over or with respect to any Collateral
credited to the Pledge Account from time to time to any other
Person other than the Trustee;
(e) covenants that in its capacity as New York Securities
Intermediary hereunder and with respect to the Pledge Account,
it shall not take any action inconsistent with, and represents
and covenants that it is not and so long as this Pledge
Agreement remains in effect will not become party to any
agreement the terms of which are inconsistent with the
provisions of this Pledge Agreement;
(f) agrees, with the other parties to this Pledge Agreement, that
any item of property credited to the Pledge Account shall be
treated as a Financial Asset;
(g) agrees that any item of Collateral credited to the Pledge
Account shall not be subject to any security interest, Lien or
right of setoff in favor of the New York Securities
Intermediary, except as may be expressly permitted under the
Indenture (and the New York Securities Intermediary shall take
such actions as shall be necessary and appropriate to cause
such
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Collateral to remain free of any Lien or security interest of
any underlying Securities Intermediary through which the New
York Securities Intermediary holds such Collateral or any
Security Entitlement thereto);
(h) agrees, so long as it serves as New York Securities
Intermediary pursuant to this Pledge Agreement, to maintain
the Pledge Account and maintain appropriate books and records
in respect thereof in accordance with its usual procedures;
and
(i) agrees, with the other parties to this Pledge Agreement, that
the New York Securities Intermediary's jurisdiction, for
purposes of Section 8-110(e) of the UCC as it pertains to this
Pledge Agreement, the Pledge Account and the Security
Entitlements relating thereto, shall be the State of New York.
SECTION 17. Miscellaneous Provisions.
17.1 Notices. Any notice, approval, consent or other 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:
if to the Pledgor:
Birch Telecom, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Trustee:
Norwest Bank Minnesota, National Association
Sixth and Marquette
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Corporate Trust Department
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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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.
17.3 Headings. The headings in this Pledge Agreement have been inserted
for convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.
17.4 Counterpart Originals. This Pledge Agreement may be signed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Pledge Agreement by facsimile
shall be effective as delivery of a manually executed counterpart of this Pledge
Agreement.
Benefits of Pledge Agreement. Nothing in this Pledge Agreement, express
or implied, shall give to any person, other than the parties hereto and their
successors hereunder, and the Holders of the Notes, any benefit or any legal or
equitable right, remedy or claim under this Pledge Agreement.
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 of Notes shall be deemed, by
any act, delay, indulgence, omission or otherwise, to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. Failure of the Trustee or
any Holder of Notes to exercise, or delay in exercising, any right, power or
privilege hereunder shall not preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Trustee or
any Holder of Notes of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy that the Trustee or such Holder
of Notes would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
Interpretation of Agreement. All terms not defined herein or in the
Indenture shall have the meaning set forth in the 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.
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Continuing Security Interest; Termination. (a) This Pledge Agreement
shall create a continuing security interest in and to the Collateral and shall,
unless otherwise provided in the Indenture or in this Pledge Agreement, remain
in full force and effect until the payment in full in cash of the Obligations.
This Pledge Agreement shall be binding upon the Pledgor, its transferees,
successors and assigns, and shall inure, together with the rights and remedies
of the Trustee hereunder, to the benefit of the Trustee, the Holders of the
Notes and their respective successors, transferees and assigns.
(b) In addition to the provisions of Section 6(e) and subject to the
provisions of Section 17.9, this Pledge Agreement shall terminate upon the
payment in full in cash of the Obligations. At such time, and subject to Section
12, the Trustee shall, pursuant to an Issuer Order, reassign and redeliver to
the Pledgor all of the Collateral hereunder that has not been sold, disposed of,
retained or applied by the Trustee in accordance with the terms of this Pledge
Agreement and the Indenture. 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.
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 14 shall survive the
termination of this Pledge Agreement.
Waivers. The Pledgor waives presentment and demand for payment of any
of the Obligations, protest and notice of dishonor or default with respect to
any of the Obligations, and all other notices to which the Pledgor might
otherwise be entitled, except as otherwise expressly provided herein or in the
Indenture.
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 or negligence, 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. The Trustee shall have no duty to cause any financing statement or
continuation statement to be filed in respect of the Collateral.
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(b) The Pledgor acknowledges that the rights and responsibilities of
the Trustee under this Pledge Agreement with respect to any action taken by the
Trustee or the exercise or non-exercise by the Trustee of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Pledge Agreement shall, as between the Trustee and the
Holders of the Notes, be governed by the Indenture and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Trustee and the Pledgor, the Trustee shall be conclusively presumed to be
acting as agent for the Holders of the Notes with full and valid authority so to
act or refrain from acting, and the Pledgor shall not be obligated or entitled
to make any inquiry respecting such authority.
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.
Rights of Holders of the Notes. No Holder of Notes shall have any
independent rights hereunder other than those rights granted to individual
Holders of the Notes pursuant to Section 6.07 of the Indenture; provided that
nothing in this subsection shall limit any rights granted to the Trustee under
the Notes or the Indenture.
GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF DAMAGES. (a) BOTH
THIS PLEDGE AGREEMENT AND THE PLEDGE ACCOUNT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH 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 OF THE NOTES IN
CONNECTION WITH THIS PLEDGE AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT,
EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. NOTWITHSTANDING THE FOREGOING, THE MATTERS IDENTIFIED IN 31 CFR
SECTIONS 357.10 AND 357.11 (AS IN EFFECT ON THE DATE OF THIS PLEDGE AGREEMENT)
SHALL BE GOVERNED SOLELY BY THE LAWS SPECIFIED THEREIN. REGARDLESS OF ANY
PROVISION IN ANY OTHER AGREEMENT, FOR PURPOSES OF THE UCC, NEW YORK SHALL BE
DEEMED TO BE THE SECURITIES INTERMEDIARY'S JURISDICTION AS DEFINED IN SECTIONS
9-103(6)(d) AND 8-110(e) OF THE UCC AND THE PLEDGE ACCOUNT (AS WELL A ANY
SECURITIES ENTITLEMENTS RELATED THERETO) SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
(b) THE PLEDGOR HEREBY APPOINTS ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ AS ITS AGENT FOR SERVICE OF PROCESS IN ANY
SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AGREEMENT AND FOR ACTIONS
BROUGHT UNDER THE U.S. FEDERAL OR STATE SECURITIES LAWS BROUGHT IN ANY FEDERAL
OR STATE COURT LOCATED IN THE CITY OF NEW YORK (EACH A "NEW YORK
20
23
COURT"). EACH OF THE PARTIES HERETO SUBMITS TO THE JURISDICTION OF ANY NEW YORK
COURT AND TO THE COURTS OF ITS CORPORATE DOMICILE WITH RESPECT TO ANY ACTIONS
BROUGHT AGAINST IT AS DEFENDANT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE PLEDGOR, THE TRUSTEE AND THE HOLDERS OF THE NOTES IN CONNECTION WITH
THIS PLEDGE AGREEMENT, AND EACH OF THE PARTIES HERETO WAIVES ANY OBJECTION THAT
IT MAY HAVE TO THE LAYING OF VENUE, INCLUDING ANY PLEADING OF FORUM NON
CONVENIENS, WITH RESPECT TO ANY SUCH ACTION AND WAIVES ANY RIGHT TO WHICH IT MAY
BE ENTITLED ON ACCOUNT OF PLACE OF RESIDENCE OR DOMICILE.
(c) THE PLEDGOR AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY AS
TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF NOTES, 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.
(d) THE PLEDGOR AGREES THAT NEITHER ANY HOLDER OF NOTES 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 NON-APPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH
HOLDER OF NOTES, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS ON THE PART OF THE TRUSTEE OR SUCH HOLDERS OF NOTES, AS THE CASE MAY
BE, CONSTITUTING BAD FAITH OR NEGLIGENCE.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR WAIVES THE
POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER OF NOTES IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO ENFORCE ANY JUDGMENT OR
OTHER COURT
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24
ORDER PERTAINING TO THIS PLEDGE AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT
ENTERED IN FAVOR OF THE TRUSTEE OR ANY HOLDER OF NOTES, 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 OF THE NOTES,
ON THE OTHER HAND.
Effectiveness. This Pledge Agreement shall become effective upon the
effectiveness of the Indenture.
[signature pages follow]
22
25
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:
BIRCH TELECOM, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: V.P. Finance
26
Trustee:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By: ___________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Corporate Trust Officer
BANKERS TRUST COMPANY,
as Securities Intermediary, for
purposes of Section 16 only
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: ___________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
27
SCHEDULE I
PLEDGED SECURITIES
Original
Description CUSIP Final Principal Cost at
of Security No(s). Maturity Amount Closing Date
----------- ----- -------- ------ ------------
----------- ----- -------- ------ ------------
----------- ----- -------- ------ ------------
----------- ----- -------- ------ ------------
----------- ----- -------- ------ ------------
----------- ----- -------- ------ ------------
28
EXHIBIT A
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
OFFICER'S CERTIFICATE
Pursuant to Section 3(d) of the Collateral Pledge and Security
Agreement (the "Pledge Agreement") dated as of June 23, 1998 between Birch
Telecom, Inc., a Delaware corporation (the "Pledgor"), and Norwest Bank
Minnesota, National Association, trustee (in such capacity, the "Trustee") for
the holders of the Pledgor's 14% Senior Notes due 2008, the undersigned officer
of the Trustee, on behalf of the Trustee, makes the following certifications to
the Pledgor and the Initial Purchasers. Capitalized terms used and not defined
in this Officer's Certificate have the meanings set forth or referred to in the
Pledge Agreement.
1. Substantially contemporaneously with the execution and delivery of
this Officer's Certificate, the Trustee has established the Pledge Account with
the New York Securities Intermediary. The Trustee is the entitlement holder with
respect to the financial assets on deposit in the Pledge Account and has
acquired a security entitlement with respect to such financial assets. The
Trustee will be the entitlement holder with respect to the Pledged Securities
and will acquire a security entitlement with respect to the Pledged Securities
when the New York Securities Intermediary indicates by book entry that the
Pledged Securities have been credited to the Pledge Account. Without limiting
the generality of the foregoing, the Pledge Account, the Pledged Securities and
the other Collateral are not, and the Trustee's security entitlement with
respect to the financial assets on deposit in the Pledge Account is not, to the
actual knowledge of the corporate trust officer having responsibility for the
administration of this Indenture on behalf of the Trustee, subject to any Lien
granted by or to or arising through or in favor of any Securities Intermediary
(including, without limitation, the New York Securities Intermediary, or the
Federal Reserve Bank of New York).
2. The Trustee has not caused or permitted the Pledge Account or its
Security Entitlement with respect to the financial assets on deposit in the
Pledge Account to become subject to any Lien created by or arising through the
Trustee.
A-1
29
IN WITNESS WHEREOF, the undersigned officer has executed this Officer's
Certificate on behalf of Norwest Bank Minnesota, National Association, Trustee
this 23rd day of June, 1998.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
Trustee
By: __________________________
Name:
Title:
A-2
30
EXHIBIT B
[Attach Report from ▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇]
▇-▇