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EXHIBIT 4.4
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COLLATERAL PLEDGE AND
SECURITY AGREEMENT
Dated as of June 25, 1998
among
US XCHANGE, L.L.C.,
as Pledgor,
THE BANK OF NEW YORK,
as Trustee, and
THE BANK OF NEW YORK,
as Collateral Agent
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TABLE OF CONTENTS
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Page
SECTION 1. Definitions; Appointment; Deposit and Investment.............................2
1.1 Definitions.........................................................2
1.2 Appointment of the Collateral Agent.................................5
1.3 Pledge and Grant of Security Interest...............................5
SECTION 2. Establishment and Maintenance of Collateral Accounts.........................6
SECTION 3. Delivery and Control of Collateral...........................................7
SECTION 4. Delivery of Collateral Other than U.S. Government Obligations................9
SECTION 5. Investing of Amounts in the Collateral Accounts..............................9
SECTION 6. Disbursements...............................................................10
SECTION 7. Representations and Warranties..............................................12
SECTION 8. Further Assurances..........................................................14
SECTION 9. Covenants...................................................................14
SECTION 10. Power of Attorney; Agent May Perform........................................15
SECTION 11. No Assumption of Duties; Reasonable Care....................................16
SECTION 12. Indemnity...................................................................16
SECTION 13. Remedies upon Event of Default..............................................16
SECTION 14. Fees and Expenses...........................................................18
SECTION 15. Security Interest Absolute..................................................18
SECTION 16. Collateral Agent's Representations, Warranties and Covenants................19
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SECTION 17. Miscellaneous Provisions....................................................21
17.1. Notices............................................................21
17.2. No Adverse Interpretation of Other Agreements......................22
17.3. Severability.......................................................22
17.4. Headings...........................................................22
17.5. Counterpart Originals..............................................22
17.6. Benefits of Pledge Agreement.......................................22
17.7. Amendments, Waivers and Consents...................................22
17.8. [RESERVED].........................................................23
17.9. Continuing Security Interest; Termination..........................23
17.10. Survival Provisions................................................23
17.11. Waivers............................................................23
17.12. Authority of the Collateral Agent..................................23
17.13. Final Expression...................................................24
17.14. Rights of Holders..................................................24
17.15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER
OF JURY TRIAL; WAIVER OF DAMAGES.................................24
17.16. Effectiveness......................................................26
SCHEDULE I: Pledged Securities.....................................................I-1
EXHIBIT A: Officer's Certificate..................................................A-1
EXHIBIT B: Independent Public Accountant's Opinion................................B-1
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This Collateral Pledge and Security Agreement (this "Pledge
Agreement") is made and entered into as of June 25, 1998 among US XCHANGE,
L.L.C., a Michigan limited liability company (the "Pledgor"), having its
principal offices at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, THE BANK OF NEW YORK, a New York banking corporation, having its
principal corporate trust office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ 21 West, New York,
New York 10286, Attention: Corporate Trust Trustee Administration, as trustee
(in such capacity, the "Trustee") for the holders (the "Holders") of the Notes
(as defined herein) issued by the Pledgor under the Indenture referred to below,
and THE BANK OF NEW YORK, as collateral agent and securities intermediary (in
such capacity, the "Collateral Agent")
W I T N E S S E T H:
WHEREAS, the Pledgor and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated (the
"Placement Agent") are parties to a Placement Agreement dated June 22, 1998 (the
"Placement Agreement"), pursuant to which the Pledgor will issue and sell to the
Placement Agent $200 million aggregate principal amount of 15% Senior Notes due
2008 (the "Notes");
WHEREAS, the Pledgor and The Bank of New York, as 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 to
purchase, or cause the purchase of, and pledge to the Trustee for the benefit of
the Holders, on the Closing Date (as defined in the Placement Agreement), U.S.
Government Obligations (as defined in the Indenture) 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 and delivered to the Trustee, to provide for
payment in full of the first six scheduled interest payments due on the Notes
(such obligation, together with the obligation to repay the principal, premium,
if any, interest, fees, expenses or otherwise on the Notes and under the
Indenture, this Agreement and any other transaction document related thereto 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 Pledgor has opened a securities account (the "Pledge
Account") with the Collateral Agent, as securities intermediary, at its office
at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ 21 West, New York, New York 10286, Account No.
290527 (designated "Pledge Account pledged by US Xchange"), in the name of the
Pledgor;
WHEREAS, the Pledgor has opened a non-interest bearing cash
collateral account (the "Cash Collateral Account") with the Collateral Agent, at
its office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ 21 West, New York, New York 10286,
Account No. 066885 (designated "Collateral A/C pledged by US Xchange"), in the
name of the Pledgor but under the sole
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dominion and control of the Collateral Agent and subject to the terms of this
Pledge Agreement; and
WHEREAS, it is a condition precedent to the purchase of the Notes
by the Placement Agent pursuant to the Placement Agreement that the Pledgor
apply certain of the proceeds of the offering of the Notes to purchase the
Pledged Securities (as defined below) and deposit such Pledged Securities into
the Pledge Account to be held therein subject to the terms of this Pledge
Agreement and shall have granted the assignment and security interest and made
the pledge and assignment contemplated by this Pledge Agreement.
NOW, THEREFORE, in consideration of the premises herein
contained, and in order to induce the Placement Agent to purchase the Notes, the
Pledgor, the Trustee and the Collateral Agent hereby agree, for the benefit of
the Placement Agent and for the ratable benefit of the Holders, 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 ("N.Y. Uniform Commercial Code") from time to
time and/or in Section 357.2 of the Treasury Regulations (as defined in Section
1.1(c)) are used in this Pledge Agreement as such terms are defined in such
Article 8 or 9 and/or such Section 357.2.
(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):
"Cash Collateral Account" has the meaning specified in the
Preliminary Statements hereof.
"Cash Equivalents" means any of the following, to the extent
owned by the Pledgor free and clear of all Liens other than Liens created
hereunder: (a) U.S. Government Obligations, (b) insured certificates of deposit
of, or time deposits with, any commercial bank that (i) is a member of the
Federal Reserve System, (ii) issues (or the parent of which issues) commercial
paper rated as described in clause (c), (iii) is organized under the laws of the
United States of America or any State thereof and (iv) has combined capital and
surplus of at least $500 million, (c) commercial paper in an aggregate amount of
no more than $5 million
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per issuer outstanding at any time, issued by any corporation organized under
the laws of any State of the United States of America and rated at least
"Prime-1" (or the then equivalent grade) by ▇▇▇▇▇'▇ or "A-1" (or the then
equivalent grade) by S&P or (d) overnight repurchase agreements secured by U.S.
Government Obligations.
"CFR" means U.S. Code of Federal Regulations.
"Closing Date" has the meaning specified in the Placement
Agreement.
"Collateral" has the meaning specified in Section 1.3 hereof.
"Collateral Accounts" means the Pledge Account and the Cash
Collateral Account.
"Collateral Agent" has the meaning specified in the recital of
the parties hereto.
"Collateral Investments" has the meaning specified in Section 5
hereof.
"Entitlement holder" has the meaning specified in N.Y. Uniform
Commercial Code Section 8-102(a)(7) or in respect of any Book-entry Security,
the meaning specified for "Entitlement Holder" in 31 C.F.R. Section 357.2 or
as applicable to such Book-entry Security, the corresponding federal banking
regulations.
"Event of Default" has the meaning specified in Section 13
hereof.
"FRBNY" means Federal Reserve Bank of New York.
"FRBNY Account" means the Participant's Securities Account
maintained in the name of the Collateral Agent by the FRBNY.
"FRBNY Member" means any Person that is eligible to maintain (and
that maintains) with the FRBNY one or more FRBNY Member Securities Accounts in
such Person's name.
"FRBNY Member Securities Account" means, in respect of any
Person, an account in the name of such Person at the FRBNY, to which account
U.S. Government Obligations held for such Person are or may be credited.
"Holders" has the meaning specified in the recital of the
parties hereto.
"Issuer Order" has the meaning specified in Section 6(a) hereof.
"Notes" has the meaning specified in the Preliminary Statements
hereof and shall include the Exchange Notes.
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"N.Y. Uniform Commercial Code" has the meaning specified in
Section 1.1(b).
"Obligations" has the meaning specified in the Preliminary
Statements hereof.
"Placement Agent" has the meaning specified in the Preliminary
Statements hereof.
"Placement Agreement" has the meaning specified in the
Preliminary Statements hereof.
"Pledge Account" has the meaning specified in the Preliminary
Statements hereof.
"Pledged Securities" has the meaning specified in Section 1.3
hereof.
"Pledgor" has the meaning specified in the recital of the parties
hereto.
"Pledgor's Designee" has the meaning specified in Section 6(b)
hereof.
"Pledgor's Fund" has the meaning specified in Section 6(b)
hereof.
"Securities intermediary" means a Person that is a "securities
intermediary" (as defined in N.Y. Uniform Commercial Code Section 8-102(a)(14))
and, in respect of any Book-entry Security, a "Securities Intermediary" (as
defined in 31 C.F.R. Section 357.2 or, as applicable to such Book-entry
Security, as defined in the corresponding federal book-entry regulations).
"Security" has the meaning specified in Section 8-102(a)(15) of
the N.Y. Uniform Commercial Code or, in respect of any Book-entry Security, has
the meaning specified for "Security" in 31 C.F.R. Section 357.2 (or as
applicable to such Book-entry Security, the corresponding federal book-entry
regulations).
"Security entitlement" has the meaning specified in N.Y. Uniform
Commercial Code Section 8-102(a)(17) or, in respect of any Book-entry Security,
has the meaning specified for "Security Entitlement" in 31 C.F.R. 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 in cash of all obligations due and owing
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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 federal 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 federal
regulations referred to in clause (a) above (as in effect from time to time) the
federal regulations governing other U.S. Government Obligations.
"Trustee" has the meaning specified in the recital of parties
hereto.
"Uncertificated Security" has the meaning specified in Section
8-102(a)(18) of the N.Y. Uniform Commercial Code.
"U.S. Government Obligations" means securities (including,
without limitation, United States Treasury securities, including Treasury bills,
Treasury notes, Treasury bonds, STRIPS and CUBES) and the security entitlements
in, and financial assets based on such securities, maintained in the form of
entries in the commercial book-entry system of the FRBNY and held for the
related entitlement holder by a FRBNY Member pursuant to the Treasury
Regulations.
1.2 Appointment of the Collateral Agent. The Pledgor hereby
appoints the Collateral Agent as Collateral Agent in accordance with the terms
and conditions set forth herein and the Collateral Agent 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
assigns and pledges to the Trustee for its benefit and the ratable benefit of
the Holders and hereby grants to the Trustee for its benefit and for the ratable
benefit of the Holders, a lien on and security interest in all of the Pledgor's
right, title and interest in, to and under the following property: (a) the U.S.
Government Obligations identified by CUSIP No. in Part I of Schedule I to this
Pledge Agreement (the "Pledged Securities") and the certificates representing
the Pledged Securities, the scheduled payments of principal and interest thereon
which will be sufficient to provide for payment in full of the first six
scheduled interest payments due on the Notes, (b) the security entitlements
described in Part II of said Schedule I with respect to the financial assets
described, the securities intermediary named, and the securities account
referred to therein, (c) the Pledge Account, all security entitlements from time
to time carried in 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 hereinafter
defined) from time to time and all certificates and instruments, if any,
representing or evidencing the Collateral Investments, and any and all security
entitlements to the Collateral Investments, and
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any and all related securities accounts in which any security entitlements to
the Collateral Investments is carried, (e) the Cash Collateral Account, all
funds held therein and all certificates or instruments, if any, from time to
time representing or evidencing the Cash Collateral Account, (f) 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
Collateral Agent for or on behalf of the Pledgor and specifically designated by
the Pledgor to be in substitution for any or all of the then existing
Collateral, (g) all interest, dividends, cash, instruments and other property,
if any, from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Collateral and (h)
all proceeds of any and all of the foregoing Collateral (including, without
limitation, proceeds that constitute property of the types described in clauses
(a) - (g) of this Section 1.3) and, to the extent not otherwise included, all
(i) payments under insurance (whether or not the Trustee is the loss payee
thereof) or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral and (ii)
cash proceeds of any and all of the foregoing Collateral (such property being
collectively referred to herein as the "Collateral"). Without limiting the
generality of the foregoing, this Pledge Agreement secures the payment of all
amounts that constitute part of the Obligations and would be owed by the Pledgor
to the Trustee under the Notes, the Indenture, this Pledge Agreement and any
other transaction documents related thereto but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Pledgor.
SECTION 2. Establishment and Maintenance of Collateral Accounts.
(a) The Collateral Agent has established and at all times until the Termination
Date shall maintain each of the Cash Collateral Account and the Pledge Account.
The following provisions shall apply to the establishment and maintenance of
each such Collateral Account:
(i) The Collateral Agent shall cause each Collateral Account to
be, and each Collateral Account shall be, separate from all other
accounts maintained by the Collateral Agent.
(ii) The Collateral Agent shall, in accordance with all
applicable laws, have sole dominion and control over the Cash Collateral
Account.
(iii) It shall be a term and condition of each Collateral Account
and the Pledgor irrevocably instructs the Collateral Agent,
notwithstanding any other term or condition to the contrary in any other
agreement, that no amount (including interest on Collateral Investments)
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 Collateral Agent an amount equal to $82,469,783.89 by
depositing all such funds into the Cash Collateral Account. The Cash Collateral
Account shall be subject to such
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applicable laws, and such applicable regulations of the Board of Governors of
the Federal Reserve System and of any other appropriate banking or governmental
authority, as may now or hereafter be in effect.
(c) As soon as possible after receipt of the amount referred to
in Section 2(b) (and not later than the Business Day following the Closing
Date), (i) the Collateral Agent shall apply such amount to purchase the U.S.
Government Obligations (in the name of the Trustee) listed on Schedule I hereto,
and credit such U.S. Government Obligations to the Pledge Account as Collateral
hereunder; and (ii) the Collateral Agent shall ensure that, on the Settlement
Date of such U.S. Government Obligations, the FRBNY indicates by book-entry that
those U.S. Government Obligations being settled on such date are credited to the
FRBNY Account.
(d) The Collateral Agent 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. Any such proceeds that the Pledgor directs the Collateral
Agent in writing not to reinvest in Collateral Investments shall be deposited
and held in the Cash Collateral Account.
SECTION 3. Delivery and Control of Collateral. (a) All
certificates or instruments representing or evidencing Collateral shall be
delivered to and held by or on behalf of the Collateral Agent pursuant hereto
and shall be in suitable form for transfer or delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. In addition, the Collateral
Agent shall have the right at any time to exchange certificates or instruments
representing or evidencing Collateral for certificates or instruments of smaller
or larger denominations.
(b) With respect to any Collateral that constitutes a security
and is not represented or evidenced by a certificate or instrument, the Pledgor
shall cause the issuer thereof either (i) to register the Trustee as the
registered owner of such security or (ii) to agree in writing with the Trustee
and the Pledgor that such issuer will comply with instructions with respect to
such security originated by the Trustee without further consent of the Pledgor,
such agreement to be in form and substance satisfactory to the Trustee.
(c) With respect to any Collateral that constitutes a security
entitlement, the Pledgor shall cause the Collateral Agent either (i) to identify
in its records the Trustee as having such security entitlement against the
Collateral Agent or (ii) to agree in writing with the Pledgor and the Trustee
that the Collateral Agent will comply with entitlement orders (that is,
notifications communicated to the Collateral Agent directing transfer or
redemption of the financial asset to which Pledgor has a security entitlement)
originated by the Trustee without further consent of the Pledgor, such agreement
to be in form and substance satisfactory to the Trustee.
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(d) With respect to any Collateral that constitutes a securities
account, the Pledgor will comply with subsection (c) of this Section 3 with
respect to all security entitlements carried in such securities account.
(e) Concurrently with the execution and delivery of this Pledge
Agreement, the Trustee is delivering to the Pledgor and the Placement Agent a
duly executed certificate, in the form of Exhibit A hereto, of an officer of the
Trustee.
(f) [RESERVED]
(g) Concurrently with the execution and delivery of this Pledge
Agreement, the Pledgor is delivering to the Collateral Agent financing
statements in form acceptable for filing under the N.Y. Uniform Commercial Code
and the Uniform Commercial Code of the State of Michigan, 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 Collateral Agent (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 Cash Collateral Account.
(b) Collateral consisting of Cash Equivalents (other than U.S.
Government Obligations) will be deemed to be delivered to the Collateral Agent
(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 either Collateral Account.
(c) Collateral consisting of uncertificated securities (other
than U.S. Government Obligations) will be deemed delivered to the Collateral
Agent when the Collateral Agent (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 such Collateral Account.
(d) Collateral consisting of securities, and represented or
evidenced by certificates or instruments, will be deemed delivered to the
Custodian 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 Collateral Agent and held by or on behalf
of the Collateral Agent 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 Collateral Accounts. The
Collateral
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Agent shall advise the Pledgor if, at any time, any amounts shall exist in the
Collateral Accounts uninvested, and if directed in writing by the Pledgor, the
Collateral Agent will, subject to the provisions of Section 6 and Section 13,
(a) invest such amounts on deposit in the Collateral Accounts 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 (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 Collateral Accounts, collectively, at any
time during the term of this Pledge Agreement, is 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. Interest and proceeds
that are not invested or reinvested in Collateral Investments as provided above
shall be deposited and held in the Cash Collateral Account. Except as otherwise
provided in Sections 11 and 12, the Collateral Agent shall not be liable for any
loss in the investment or reinvestment of amounts held in the Collateral
Accounts. The Collateral Agent is not at any time under any duty to advise or
make any recommendation for the purchase, sale, retention or disposition of the
Collateral Investments.
SECTION 6. Disbursements. The Collateral Agent shall hold the
Collateral in the Collateral Accounts and release the same, or a portion
thereof, only as follows:
(a) At least one 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 Collateral Agent to release from the Collateral
Accounts and pay to the Holders proceeds sufficient to provide for
payment in full of such interest then due on the Notes; provided,
however, that in the event any Collateral Investment is required to be
liquidated, the Pledgor will give the Collateral Agent at least three
Business Days' notice. Upon receipt of an Issuer Order, the Collateral
Agent will take any action necessary to provide for the payment of the
interest on the Notes to the Holders in accordance with the payment
provisions of the Indenture from (and to the extent of) proceeds of the
Collateral in the Collateral Accounts. Nothing in this Section 6 shall
affect the Collateral Agent'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 Collateral Accounts ("Pledgor Funds"), the Pledgor
may, after payment in full of such interest payment or portion thereof
from proceeds of the Collateral or such Pledgor Funds or both, direct
the Collateral Agent 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 Collateral Accounts in an amount less than or equal to
the amount of Pledgor
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Funds applied to such interest payment. Upon receipt of such Issuer
Order by the Collateral Agent, the Collateral Agent shall pay over to
the Pledgor or the Pledgor's Designee, as the case may be, the requested
amount from proceeds in the Collateral Accounts. Concurrently with any
release of funds to the Pledgor pursuant to this Section 6(b), the
Pledgor shall deliver to the Collateral Agent 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
contravene any provision of applicable law or the limited liability
company operating agreement or equivalent organizational instruments of
the Pledgor or any material agreement or other material instrument
binding upon the Pledgor or any of its subsidiaries or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over the Pledgor or any of its subsidiaries or result in
the creation or imposition of any Lien on any assets of the Pledgor,
except for the lien and security interest granted under this Pledge
Agreement.
(c) At least one Business Day prior to the due date of any of the
first six scheduled interest payments on the Notes, the Pledgor
covenants to give the Collateral Agent (by Issuer Order) notice as to
whether payment of interest will be made pursuant to Section 6(a) or
6(b) and as to the respective amounts of interest that will be paid
pursuant to Section 6(a) or 6(b); provided, however, that, in the event
any Collateral Investment is required to be liquidated, the Pledgor will
give the Collateral Agent at least three Business Days' notice. If no
such notice is given, the Collateral Agent will, subject to Section
6(d), act pursuant to Section 6(a) as if it had received an Issuer Order
pursuant thereto for the payment in full of the interest then due.
(d) The Collateral Agent shall not be required to liquidate any
Collateral Investments in order to make any scheduled payment of
interest or any release hereunder unless instructed to do so by Issuer
Order or pursuant to Section 13 hereof.
(e) In the event that the Collateral held in the Pledge Account
exceeds 100% of the amount sufficient, in the opinion of a nationally
recognized firm of independent public accountants selected by the
Pledgor, to provide for payment in full of the first six scheduled
interest payments due on the Notes (or, in the event an interest 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 Collateral Agent shall release to
the Pledgor, at the Pledgor's written request, accompanied by an opinion
prepared by such nationally recognized firm of independent public
accountants, any such excess Collateral.
(f) 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.
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(g) Nothing contained in 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 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 contravene any provision of applicable law or the
limited liability company operating agreement or equivalent
organizational instruments of the Pledgor or any material agreement or
other material instrument binding upon the Pledgor or any of its
subsidiaries or any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Pledgor or any of its
subsidiaries, or result in the creation or imposition of any Lien on any
assets of the Pledgor, except for the Lien and security interests
granted under this Pledge Agreement; no consent, approval, authorization
or order of, or qualification with, and no notice to or filing with, any
governmental body or agency or other third party 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 for the execution, delivery or performance
of this Agreement by the Pledgor or (iii) for the perfection or
maintenance of the pledge, assignment and security interest created
hereby (including the first priority nature of such pledge, assignment
or security interest), except for the filing of financing and
continuation statements under the Uniform Commercial Code of applicable
jurisdictions which financing statements have been delivered pursuant to
Section 3(g) hereof, or (iv) except for any such consents, approvals,
authorizations or orders required to be obtained by the Collateral Agent
(or the Holders) for reasons other than the consummation of this
transaction, for the exercise by the Collateral Agent 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 legal and beneficial owner of the
Collateral, free and
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clear of any Lien or claims of any Person (except for the Lien and
security interests granted under this Pledge Agreement). No effective
financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any public office other than
the financing statements, if any, to be filed pursuant to this Pledge
Agreement.
(c) This Pledge Agreement has been duly authorized, validly
executed and delivered by the Pledgor and (assuming the due
authorization and valid execution and delivery of this Pledge Agreement
by each of the Trustee and the Collateral Agent and enforceability of
the Pledge Agreement against each of the Trustee and the Collateral
Agent in accordance with its terms) constitutes a valid and binding
agreement of the Pledgor, enforceable against the Pledgor in accordance
with its terms, except as (i) the enforceability hereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, preference,
reorganization, moratorium or similar laws now or hereafter in effect
relating to or affecting the rights or remedies of creditors generally,
(ii) the availability of equitable remedies may be limited by equitable
principles of general applicability and the discretion of the court
before which any proceeding therefor may be brought, (iii) the
exculpation provisions and rights to indemnification hereunder may be
limited by U.S. federal and state securities laws and public policy
considerations and (iv) the waiver of rights and defenses contained in
Section 13(b), Section 17.11 and Section 17.15 hereof may be limited by
applicable law.
(d) Upon the delivery to the Collateral Agent of the Collateral
in accordance with the terms hereof and the filing of the financing
statements referred to in Section 3(g) hereof, 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 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 N.Y. Uniform Commercial Code),
enforceable as such against all creditors of the Pledgor and any persons
purporting to purchase any of the Collateral from the Pledgor other than
as permitted by the Indenture. Upon filing of the financing statements
described in Section 3(g) hereof, all filings and other actions
necessary or desirable to perfect and protect such security interest
will have been duly taken.
(e) There are no legal or governmental proceedings pending or, to
the best of the Pledgor's knowledge, threatened to which the Pledgor or
any of its subsidiaries is a party or to which any of the properties of
the Pledgor or any of its subsidiaries 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,
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Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System) applicable to the Pledgor.
(g) No Event of Default exists.
(h) The chief place of business and chief executive office of the
Pledgor are located at the address first specified above for the
Pledgor.
SECTION 8. Further Assurances. The Pledgor will, promptly upon
the request by the Collateral Agent (which request the Collateral Agent 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 Collateral Agent, deliver any instruments to the
Collateral Agent 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. Without limiting the generality of
the foregoing, the Pledgor will, if any Collateral shall be evidenced by a
promissory note or other instrument, deliver to the Collateral Agent and pledge
to the Trustee hereunder such note or instrument duly indorsed and accompanied
by duly executed instruments of transfer or assignment, all in form and
substance satisfactory to the Collateral Agent; and execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary, or as the Collateral Agent may
reasonably request, in order to perfect and preserve the pledge, assignment and
security interest granted or purported to be granted hereby. The Pledgor also
hereby authorizes the Collateral Agent to file any financing or continuation
statements, and amendments thereto, in the United States with respect to the
Collateral without the signature of the Pledgor (to the extent permitted by
applicable law). A photocopy or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law. The Pledgor will
promptly pay all reasonable costs incurred in connection with any of the
foregoing within 45 days of receipt of an invoice therefor. The Pledgor also
agrees, whether or not requested by the Collateral Agent, 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 in 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 that from and after the date of this Pledge Agreement
until the Termination Date:
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(a) 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 Liens and 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;
(b) it will not (i) enter into any agreement or understanding
that restricts or inhibits or purports to restrict or inhibit the
Trustee's or the Collateral Agent's rights or remedies hereunder,
including, without limitation, the Collateral Agent'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 its beneficial
interest in the Collateral not later than three Business Days prior to
the date of any proposed sale under any judgment, writ or warrant of
attachment with respect to the Collateral; and
(c) it will keep its chief place of business and chief executive
office at the location therefor specified in Section 7(h), or upon 30
days' prior written notice to the Collateral Agent, at such other
locations in a jurisdiction where all actions required by Section 8 have
been taken with respect to the Collateral.
SECTION 10. Power of Attorney; Agent May Perform. (a) Subject to
the terms of this Pledge Agreement, the Pledgor hereby appoints and constitutes
the Collateral Agent as the Pledgor's attorney-in-fact (with full power of
substitution) to exercise to the fullest extent permitted by law all of the
following powers upon and at any time after the occurrence and during the
continuance of an Event of Default: (a) collection of proceeds of any
Collateral; (b) conveyance of any item of Collateral to any purchaser thereof;
(c) giving of any notices or recording of any Liens hereof; and (d) paying or
discharging taxes or Liens levied or placed upon the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by the Collateral Agent in its sole reasonable discretion, and such
payments made by the Collateral Agent to become part of the Obligations of the
Pledgor to the Trustee, due and payable immediately upon demand. The Collateral
Agent's authority under this Section 10 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 Collateral Agent 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 (to the extent permitted by applicable law), and to take any
other actions arising from or incident to the powers granted to the Trustee or
the Collateral Agent in this Pledge Agreement. This power of attorney is coupled
with an interest and is irrevocable by the Pledgor.
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(b) If the Pledgor fails to perform any agreement contained
herein, the Collateral Agent may, after providing to the Pledgor notice of such
failure and five Business Days to effect such performance, itself perform, or
cause performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by the Pledgor under Section
14.
SECTION 11. No Assumption of Duties; Reasonable Care. The rights
and powers granted to the Collateral Agent hereunder are being granted in order
to preserve and protect the security interest of the Trustee and the Holders in
and to the Collateral granted hereby and shall not be interpreted to, and shall
not impose any duties on, the Collateral Agent 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 Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords similar property
held by the Collateral Agent for similar accounts, it being understood that the
Collateral Agent in its capacity as such (a) may consult with counsel of its
selection and the advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon and
(b) shall not have any responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities or other matters relative
to any Collateral, whether or not the Collateral Agent has or is deemed to have
knowledge of such matters, (ii) taking any necessary steps for the existence,
enforceability or perfection of any security interest of the Trustee or to
preserve rights against any parties with respect to any Collateral or (iii)
except as otherwise set forth in Section 5, investing or reinvesting any of the
Collateral, provided, however, that in the case of clause (a) and clause (b) of
this sentence, nothing contained in this Pledge Agreement shall relieve the
Collateral Agent of any responsibilities as a securities intermediary under
applicable law. In no event shall the Collateral Agent be liable for the
existence, validity, enforceability or perfection of any security interest of
the Trustee, or for special indirect or consequential damages or lost profits or
loss of business, arising in connection with this Agreement.
SECTION 12. Indemnity. The Pledgor shall indemnify, hold harmless
and defend the Collateral Agent and its directors and officers from and against
any and all claims, actions, obligations, liabilities and expenses, including
reasonable defense costs, reasonable investigative fees and costs, and
reasonable legal fees, expenses, and damages arising from the Collateral Agent's
performance as Collateral Agent under this Pledge Agreement, except to the
extent that such claim, action, obligation, liability or expense is directly
attributable to the bad faith, gross negligence or willful misconduct of such
indemnified person. The provisions of this Section 12 shall survive termination
of this Pledge Agreement and the resignation and removal of the Collateral
Agent.
SECTION 13. Remedies upon Event of Default. If any Event of
Default under the Indenture or default hereunder (any such Event of Default or
default being referred to in
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this Pledge Agreement as an "Event of Default") shall have occurred and be
continuing:
(a) The Trustee, the Collateral Agent and the Holders shall have,
in addition to all other rights given by law or by this Pledge Agreement
or the Indenture, all of the rights and remedies with respect to the
Collateral of a secured party upon default under the N.Y. Uniform
Commercial Code (whether or not the N.Y. Uniform Commercial Code applies
to the affected Collateral) at that time. In addition, with respect to
any Collateral that shall then be in or shall thereafter come into the
possession or custody of the Collateral Agent, the Collateral Agent may
and, at the direction of the Holders of a majority in aggregate
principal amount of the Notes then outstanding, shall appoint a broker
or other expert to sell or cause the same to be sold at any broker's
board or at public or private sale, in one or more sales or lots, at
such price or prices such broker or other expert may deem commercially
reasonable, for cash or on credit or for future delivery, without
assumption of any credit risk. The purchaser of any or all Collateral so
sold shall thereafter hold the same absolutely, free from any claim,
encumbrance or right of any kind whatsoever created by or through the
Pledgor. Unless any of the Collateral threatens, in the reasonable
judgment of the Collateral Agent, to decline speedily in value, the
Collateral Agent will give the Pledgor reasonable notice of the time and
place of any public sale thereof, or of the time after which any private
sale or other intended disposition is to be made. Any sale of the
Collateral conducted in conformity with reasonable commercial practices
of banks, insurance companies, commercial finance companies, or other
financial institutions disposing of property similar to the Collateral
shall be deemed to be commercially reasonable. Any requirements of
reasonable notice shall be met if notice of the time and place of any
public sale or the time after which any private sale is to be made is
given to the Pledgor as provided in Section 17.1 hereof at least ten
(10) days before the time of the sale or disposition. The Collateral
Agent or any Holder may, in its own name or in the name of a designee or
nominee, buy any of the Collateral at any public sale and, if permitted
by applicable law, at any private sale. The Collateral Agent shall not
be obligated to make any sale of Collateral regardless of notice of sale
having been given. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. 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, that the Trustee and
the Holders have
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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.
(c) All cash proceeds received by the Collateral Agent in respect
of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of the Collateral Agent,
be held by the Collateral Agent as collateral for, and/or then or at any
time thereafter applied (after payment of any amounts payable to the
Collateral Agent or the Trustee pursuant to Section 14) in whole or in
part by the Collateral Agent for the ratable benefit of the Holders
against all or any part of the Obligations in such order as the
Collateral Agent shall elect. Any surplus of such cash or cash proceeds
held by the Collateral Agent and remaining after payment in full of all
of the Obligations shall be paid over the Pledgor or to whomsoever may
be lawfully entitled to receive such surplus.
(d) The Collateral Agent may exercise any and all rights and
remedies of the Pledgor in respect of the Collateral.
(e) Subject to and in accordance with the terms of this Pledge
Agreement, all payments received by the Pledgor in respect of the
Collateral shall be received in trust for the benefit of the Collateral
Agent, shall be segregated from other funds of the Pledgor and shall be
forthwith paid over to the Collateral Agent in the same form as so
received (with any necessary indorsement).
(f) The Collateral Agent may, without notice to the Pledgor
except as required by law and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Obligations against
the Cash Collateral Account or any part thereof.
SECTION 14. Fees and Expenses. Pledgor agrees to pay to
Collateral Agent the fees as may be agreed upon from time to time. The Pledgor
will upon demand pay to the Trustee and the Collateral Agent 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 and the Collateral Agent, that the Trustee and the Collateral Agent 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 Collateral Agent, the Trustee and the
Holders 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
Collateral Agent,
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the Trustee and the Holders and security interests hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto;
(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;
(d) any change, restructuring or termination of the corporate
structure or the existence of the Pledgor or any of its subsidiaries;
(e) 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; or
(f) any manner of application of other collateral, or proceeds
thereof, to all or any item of the Obligations, or any manner of sale or
other disposition of any item of Collateral for all or any of the
Obligations.
SECTION 16. Collateral Agent's Representations, Warranties and
Covenants. The Collateral Agent represents and warrants that it is as of the
date hereof, and it agrees that for so long as it maintains the Collateral
Accounts and acts as the securities intermediary pursuant to this Pledge
Agreement it shall be a securities intermediary and a FRBNY Member. In
furtherance of the foregoing, the Collateral Agent hereby:
(a) represents and warrants that it is a commercial bank 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 FRBNY Member
Securities Account with the FRBNY;
(c) agrees that the Pledge Account shall be an account to which
financial assets may be credited, and the Collateral Agent 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;
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(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 any Collateral Account
from time to time to any other Person other than the Trustee;
(e) covenants that in its capacity as Collateral Agent hereunder
and with respect to the Collateral Accounts, 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 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 any Collateral
Account shall not be subject to any security interest, Lien or right of
set-off in favor of the Collateral Agent, except as may be expressly
permitted under the Indenture (and the Collateral Agent shall take such
actions as shall be necessary and appropriate to cause such Collateral
to remain free of any Lien or security interest of any underlying
securities intermediary through which the Collateral Agent holds such
Collateral or any security entitlement thereto);
(h) agrees, so long as it serves as Collateral Agent pursuant to
this Pledge Agreement, to maintain the Collateral Accounts and maintain
appropriate books and records in respect thereof in accordance with its
usual procedures and subject to the terms of this Pledge Agreement;
(i) hereby represents, that the Collateral Agent's jurisdiction,
for purposes of Section 8-110(e) of the N.Y. Uniform Commercial Code and
Section 357.11 of the Treasury Regulations or the corresponding U.S.
federal regulations as they pertain to this Pledge Agreement, the
Collateral Accounts and the security entitlements relating thereto,
shall be the State of New York;
(j) agrees that, with respect to any Collateral that constitutes
a security entitlement, it shall comply with the provisions of Section
3(c)(i) or (ii) of this Pledge Agreement and, with respect to any
Collateral that constitutes a securities account, it shall comply with
the provisions of Section 3(c)(i) or (ii) of this Pledge Agreement with
respect to all security entitlements carried in such securities account;
and
(k) agrees that if the jurisdiction of the Collateral Agent shall
change from that jurisdiction specified in Section 7(j), the Collateral
Agent will promptly notify the Trustee of such change and of such new
jurisdiction.
SECTION 17. Miscellaneous Provisions.
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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:
US Xchange, L.L.C.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Collateral Agent:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Corporate Trust Trustee
Administration
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Trustee:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Corporate Trust Trustee
Administration
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
or, as to any such party, at such other address as shall be designated by such
party in a written notice to each other party complying as to delivery with the
terms of this Section. All such notices and other communications shall be deemed
to have been duly given: at the time delivered by hand, if personally delivered;
three Business Days after being deposited in the mail, postage prepaid, if
mailed; when receipt is confirmed, if telecopied; and on the next Business Day
if timely delivered to an air courier guaranteeing overnight delivery.
17.2. No Adverse Interpretation of Other Agreements. This Pledge
Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor or any subsidiary thereof. No such pledge, security or
debt agreement (other than the Indenture) may
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be used to interpret this Pledge Agreement.
17.3. Severability. The provisions of this Pledge Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Pledge Agreement in any jurisdiction.
17.4. Headings. The headings in this Pledge Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
17.5. Counterpart Originals. This Pledge Agreement may be signed
in two or more counterparts, each of which shall be deemed an original, but all
of which shall together constitute one and the same agreement.
17.6. Benefits of Pledge Agreement. Nothing in this Pledge
Agreement, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Pledge Agreement.
17.7. Amendments, Waivers and Consents. Any amendment or waiver
of any provision of this Pledge Agreement and any consent to any departure by
the Pledgor, the Trustee or the Collateral Agent or 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 none of the Trustee,
the Collateral Agent, the Pledgor, or any Holder shall be deemed, by any act,
delay, indulgence, omission or otherwise, to have waived any right or remedy
hereunder or to have acquiesced in any default or Event of Default or in any
breach of any of the terms and conditions hereof. Failure of the Trustee, the
Pledgor, the Collateral Agent or any Holder to exercise, or delay in exercising,
any right, power or privilege hereunder shall not preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Trustee, the Pledgor, the Collateral Agent or any Holder of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy that the Trustee, the Pledgor, the Collateral Agent or such
Holder would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
17.8. [RESERVED]
17.9. Continuing Security Interest; Termination. (a) This Pledge
Agreement shall create a continuing security interest in and to the Collateral
and shall, unless otherwise
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provided in the Indenture or in this Pledge Agreement, remain in full force and
effect until the Termination Date. This Pledge Agreement shall be binding upon
the parties hereto and their respective transferees, successors and assigns, and
shall inure, together with the rights and remedies of the Trustee and the
Collateral Agent hereunder, to the benefit of the Trustee, the Collateral Agent,
the Pledgor, the Holders and their respective successors, transferees and
assigns.
(b) Upon the Termination Date, the pledge, assignment and
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the Pledgor. At such time, the Collateral Agent
shall, pursuant to an Issuer Order, promptly reassign and redeliver to the
Pledgor all of the Collateral hereunder that has not been sold, disposed of,
retained or applied by the Collateral Agent in accordance with the terms of this
Pledge Agreement and the Indenture and execute and deliver to the Pledgor such
documents as the Pledgor shall reasonably request to evidence such termination.
Such reassignment and redelivery shall be without warranty by or recourse to the
Collateral Agent or the Trustee in its capacity as such, except as to the
absence of any Liens on the Collateral created by or arising through the
Collateral Agent or the Trustee, and shall be at the reasonable expense of the
Pledgor.
17.10. Survival Provisions. All representations, warranties and
covenants 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 Sections 12 and 14 hereof and
the obligations of the Collateral Agent under Section 17.9(b) hereof shall
survive the termination of this Pledge Agreement.
17.11. 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.
17.12. Authority of the Collateral Agent. (a) The Collateral
Agent shall have and be entitled to exercise all powers hereunder that are
specifically granted to the Collateral Agent by the terms hereof, together with
such powers as are reasonably incident thereto. The Collateral Agent 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 Collateral Agent nor any director, officer, employee, attorney or agent of
the Collateral Agent shall be liable to the Pledgor for any action taken or
omitted to be taken by the Collateral Agent, in its capacity as Collateral
Agent, hereunder, except for its own bad faith, gross negligence or willful
misconduct, and the Collateral Agent shall not be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security furnished
pursuant hereto. The Collateral Agent and its directors, officers, employees,
attorneys and agents shall be entitled to rely on
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any communication, instrument or document believed by it or them to be genuine
and correct and to have been signed or sent by the proper Person or Persons. The
Collateral Agent shall have no duty to cause any financing statement or
continuation statement to be filed in respect of the Collateral.
(b) The Pledgor acknowledges that the rights and responsibilities
of the Collateral Agent under this Pledge Agreement with respect to any action
taken by the Collateral Agent or the exercise or non-exercise by the Collateral
Agent 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 Collateral Agent and the Holders, be governed by the Indenture and
by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Collateral Agent and the Pledgor, the Collateral
Agent shall be conclusively presumed to be acting as agent for the Trustee and
the Holders with full and valid authority so to act or refrain from acting, and
the Pledgor shall not be obligated or entitled to make any inquiry respecting
such authority.
17.13. Final Expression. This Pledge Agreement, together with the
Indenture and any other agreement executed in connection herewith, is intended
by the parties as a final expression of this Pledge Agreement and is intended as
a complete and exclusive statement of the terms and conditions thereof.
17.14. Rights of Holders. No Holder shall have any independent
rights hereunder other than those rights granted to individual Holders pursuant
to Section 607 of the Indenture; provided that nothing in this subsection shall
limit any rights granted to the Trustee under the Notes or the Indenture.
17.15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES. (a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK, AND, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK, ANY DISPUTE ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE PLEDGOR, THE TRUSTEE, THE COLLATERAL AGENT AND THE HOLDERS IN
CONNECTION WITH THIS PLEDGE AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT,
EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. NOTWITHSTANDING THE FOREGOING, THE MATTERS
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IDENTIFIED IN 31 C.F.R. 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.
(b) THE PLEDGOR HEREBY WAIVES PERSONAL 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 COURT") AND
CONSENTS THAT ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING
SHALL BE MADE BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE
PLEDGOR AT THE ADDRESS INDICATED IN SECTION 17.1. 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 AMONG THE PLEDGOR, THE TRUSTEE, THE
COLLATERAL AGENT AND THE HOLDERS 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, 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 NOR (EXCEPT AS
OTHERWISE PROVIDED IN THIS PLEDGE AGREEMENT OR THE INDENTURE) THE COLLATERAL
AGENT IN ITS CAPACITY AS COLLATERAL
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AGENT SHALL HAVE ANY LIABILITY TO THE PLEDGOR (WHETHER ARISING IN TORT, CONTRACT
OR OTHERWISE) FOR LOSSES SUFFERED BY THE PLEDGOR IN CONNECTION WITH, ARISING OUT
OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP
ESTABLISHED BY THIS PLEDGE AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE
JUDGMENT OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH HOLDER, AS THE CASE
MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE
COLLATERAL AGENT OR SUCH HOLDERS, AS THE CASE MAY BE, CONSTITUTING BAD FAITH,
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR WAIVES
THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE, THE COLLATERAL AGENT
OR ANY HOLDER IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO ENFORCE
ANY JUDGMENT OR OTHER COURT ORDER PERTAINING TO THIS PLEDGE AGREEMENT OR ANY
RELATED AGREEMENT OR DOCUMENT ENTERED IN FAVOR OF THE TRUSTEE, THE COLLATERAL
AGENT OR ANY HOLDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS PLEDGE AGREEMENT
OR ANY RELATED AGREEMENT OR DOCUMENT BETWEEN THE PLEDGOR, ON THE ONE HAND, AND
THE TRUSTEE, THE COLLATERAL AGENT AND/OR THE HOLDERS, ON THE OTHER HAND.
17.16. Effectiveness. This Pledge Agreement shall become
effective upon the effectiveness of the Indenture.
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IN WITNESS WHEREOF, the Pledgor, the Trustee and the Collateral
Agent have each caused this Pledge Agreement to be duly executed and delivered
as of the date first above written.
Pledgor:
US XCHANGE, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Co-Chairman and Chief
Executive Officer
Trustee:
THE BANK OF NEW YORK,
as Trustee
By: /s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
Title: Assistant Vice President
THE BANK OF NEW YORK,
as Collateral Agent
By: /s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
Title: Assistant Vice President
31
SCHEDULE I
PART I
PLEDGED SECURITIES
Description Original Cost at
of Debt CUSIP No(s). Final Maturity Principal Amount Closing Date
------- ------------ -------------- ---------------- ------------
Treasury Note ▇▇▇▇▇▇▇▇▇ 12/31/98 10,869,000 11,133,031.13
Treasury Note ▇▇▇▇▇▇▇▇▇ 6/30/99 12,963,000 13,414,064.06
Treasury Note 9128273RI 12/31/99 13,352,000 13,748,445.13
Treasury Strip ▇▇▇▇▇▇▇▇▇ 6/30/00 13,727,000 14,228,478.69
Treasury Strip ▇▇▇▇▇▇▇▇▇ 12/31/00 14,130,000 14,514,464.32
Treasury Strip ▇▇▇▇▇▇▇▇▇ 6/30/01 14,519,000 15,431,300.56
PART II
ISSUER OF DESCRIPTION OF SECURITIES INTERMEDIARY SECURITIES ACCOUNT
FINANCIAL ASSET FINANCIAL ASSET (NAME AND ADDRESS) (NUMBER AND LOCATION)
---------------- --------------- ------------------------ ------------------------
U.S. Government Treasury Note The Bank of New York The Bank of New York,
Account No. 290527
U.S. Government Treasury Note The Bank of New York The Bank of New York,
Account No. 290527
U.S. Government Treasury Note The Bank of New York The Bank of New York,
Account No. 290527
U.S. Government Treasury Strip The Bank of New York The Bank of New York,
Account No. 290527
U.S. Government Treasury Strip The Bank of New York The Bank of New York,
Account No. 290527
U.S. Government Treasury Strip The Bank of New York The Bank of New York,
Account No. 290527
I-1
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I-2
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EXHIBIT A
THE BANK OF NEW YORK
OFFICER'S CERTIFICATE
Pursuant to Section 3(e) of the Collateral Pledge and Security
Agreement (the "Pledge Agreement") dated as of June 25, 1998 among US Xchange,
L.L.C., a Michigan limited liability company (the "Pledgor"), The Bank of New
York, as trustee (the "Trustee") for the holders of the Pledgor's $200 million
aggregate principal amount of 15% Senior Notes Due 2008, and The Bank of New
York, as collateral agent and securities intermediary (the "Collateral Agent"),
the undersigned officer of the Trustee, on behalf of the Trustee, makes the
following certifications to the Pledgor and the Placement Agent. 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 acquired its security
entitlement to the Pledged Securities or through a "securities account" (as
defined in Section 8-501(a) of the N.Y. Uniform Commercial Code) maintained by
the Collateral Agent, for value and without notice of any adverse claim thereto.
Without limiting the generality of the foregoing, the Pledge Account, the Cash
Collateral Account, the Pledged Securities and the other Collateral are not, and
the Trustee's security entitlement to the Collateral 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 Collateral Agent, or the FRBNY) through
which the Trustee derives its security entitlement to the Collateral.
2. The Trustee has not knowingly caused or permitted the
Collateral Account or its security entitlement thereto to become subject to any
Lien created by or arising through the Trustee.
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IN WITNESS WHEREOF, the undersigned officer has executed this
Officer's Certificate on behalf of The Bank of New York, as Trustee this 25th
day of June, 1998.
THE BANK OF NEW YORK, as Trustee
By:/s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
Title: Assistant Vice President
A-2