Exhibit 10.6
EXECUTION COPY
PLEDGE AGREEMENT
This PLEDGE AGREEMENT ("PLEDGE AGREEMENT"), dated as of October 31,
1997, is executed by and between KMC Telecom Inc., a Delaware corporation (the
"PLEDGOR"), and AT&T Commercial Finance Corporation (the "LENDER").
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings given to such terms in the "Amended and Restated Loan
Agreement" (as defined below).
WITNESSETH:
WHEREAS, the Pledgor, KMC Telecom II, Inc. ("KMC II") and Lender have
entered into a certain Amended and Restated Loan and Security Agreement dated as
of September 22, 1997 (as amended, restated, supplemented or otherwise modified
from time to time, the "AMENDED AND RESTATED LOAN AGREEMENT"), pursuant to which
Lender has agreed, subject to certain conditions precedent, to make loans to the
Pledgor and KMC II from time to time;
WHEREAS, the Pledgor owns all of the issued and outstanding membership
interests of KMC Telecom Leasing I LLC, a Delaware limited liability company
("Leasing I"), and Pledgor will derive direct and indirect economic benefit from
the loans made to Leasing I under the Amended and Restated Loan Agreement;
WHEREAS, Pledgor and KMC II have requested Lender to amend the Amended
and Restated Loan Agreement to, INTER ALIA, add Leasing I and KMC Telecom
Leasing II LLC, a Delaware limited liability company ("Leasing II"), as
borrowers thereunder; and
WHEREAS, Lender has agreed to such request, provided, among other
things, that the Pledgor shall have granted a first priority security interest
in the "Pledged Collateral" (as hereinafter defined below) in order to secure
the prompt and complete payment, observance and performance of all of the
Pledgor's "Obligations" (as defined in the Amended and Restated Loan Agreement);
NOW, THEREFORE, in consideration of the premises set forth herein and
in order to induce the Lender to make additional loans, advances and other
financial accommodations under the Amended and Restated Loan Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Pledgor and the Lender hereby agree as follows:
1. PLEDGE. The Pledgor hereby pledges to the Lender, and grants to
the Lender a security interest in, the following (collectively, the "PLEDGED
COLLATERAL"):
(a) all membership interests of Leasing I, now or at any time or
times hereafter owned by the Pledgor, whether or not such membership interests
are represented by certificates, and any certificates representing such
membership interests (as identified on EXHIBIT A attached hereto and made a part
hereof), all options and warrants for the purchase of the membership interests
of Leasing I now or hereafter held in the name of the Pledgor (all of said
membership interests, options and warrants and all membership interests held in
the name of the Pledgor as a result of the exercise of such options or warrants
being hereinafter collectively referred to as the "PLEDGED MEMBERSHIP
INTERESTS"), and all distributions, cash, instruments, investment property and
other property from time to time received, receivable or otherwise distributed
in respect of, or in exchange for, any or all of such membership interests;
(b) all additional membership interests of Leasing I from time to
time acquired by the Pledgor in any manner, whether or not such membership
interests are represented by certificates and the certificates representing such
additional membership interests (any additional membership interests shall
constitute part of the Pledged Membership Interests and shall be listed on
EXHIBIT A), and all options, warrants, distributions, cash, instruments,
investment property and other rights and options from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such membership interests;
(c) the property and interests in property described in SECTION 3
below; and
(d) all proceeds of any of the foregoing.
2. SECURITY FOR THE OBLIGATIONS. The Pledged Collateral secures the
prompt payment, performance and observance of the Obligations.
3. PLEDGED COLLATERAL ADJUSTMENTS. If, during the term of this
Pledge Agreement:
(a) any distribution, reclassification, readjustment or other change
is declared or made in the capital structure of Leasing I, or any option
included within the Pledged Collateral is exercised, or both; or
(b) subscription warrants or any other rights or options shall be
issued in connection with the Pledged Collateral, then all new, substituted and
additional membership interests, warrants, rights, options, investment
properties or other securities, issued by reason of any of the foregoing, shall
be immediately delivered to and held by the Lender under the terms of this
Pledge Agreement and shall constitute Pledged Collateral hereunder; PROVIDED,
HOWEVER, that nothing contained in this SECTION 3 shall be deemed to permit any
distribution, issuance of additional membership interests, warrants, rights or
options, reclassification, readjustment or other change in the capital structure
of Leasing I which is not expressly permitted in the Amended and Restated Loan
Agreement.
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4. SUBSEQUENT CHANGES AFFECTING PLEDGED COLLATERAL. The Pledgor
represents and warrants that it has made its own arrangements for keeping
informed of changes or potential changes affecting the Pledged Collateral
(including, but not limited to, rights to convert, rights to subscribe, rights
to distributions, reorganization or other exchanges, tender offers and voting
rights), and the Pledgor agrees that the Lender shall have no obligation to
inform the Pledgor of any such changes or potential changes or to take any
action or omit to take any action with respect thereto. The Lender may, after
the occurrence of an Event of Default, without notice and at its option,
transfer or register the Pledged Collateral or any part thereof into its or its
nominee's name with or without any indication that such Pledged Collateral is
subject to the security interest hereunder. In addition, the Lender may at any
time exchange certificates or instruments representing or evidencing Pledged
Membership Interests for certificates or instruments of smaller or larger
denominations.
5. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) the Pledgor is the sole legal and beneficial owner of one hundred
percent (100%) of the issued and outstanding membership interests of Leasing I,
free and clear of any Lien except for the security interest created by this
Pledge Agreement, and the second priority security interest created by the
Pledge Agreement (the "Junior Pledge") executed in favor of the Lender under
that certain Subordinated Loan and Security Agreement of September 22, 1997, as
amended, among the Lender, the Pledgor, KMC II, Leasing I and Leasing II;
(b) the Pledgor has full power and authority (corporate or otherwise)
to enter into this Pledge Agreement;
(c) there are no restrictions upon the voting rights associated with,
or upon the transfer of, any of the Pledged Collateral other than those created
by the Junior Pledge;
(d) the Pledgor has the right to vote, pledge and grant a security
interest in or otherwise transfer such Pledged Collateral free of any Liens
other than those created by the Junior Pledge;
(e) no authorization, approval, or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required either
(i) for the pledge of the Pledgor's Pledged Collateral pursuant to this Pledge
Agreement or for the execution, delivery or performance of this Pledge Agreement
by the Pledgor or (ii) for the exercise by the Lender of the voting or other
rights provided for in this Pledge Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Pledge Agreement (except as may be required
(x) in connection with such disposition by laws affecting the offering and sale
of securities generally and (y) by the FCC or any PUC); and
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(f) the pledge of the Pledgor's Pledged Collateral pursuant to this
Pledge Agreement creates a valid and perfected first priority security interest
in such Pledged Collateral, in favor of the Lender, securing the payment and
performance of the Obligations; and
(g) to the extent that the Pledged Collateral consists of
uncertificated membership interests, Pledgor agrees to ensure that, pursuant to
Section 12A:8-408(7) of the New Jersey Uniform Commercial Code, at periodic
intervals no less frequent than annually and at any time upon reasonable written
request of the Lender, Leasing I shall send to the Lender a dated written
statement in the form of EXHIBIT B containing:
(i) A description of the issue of which the uncertificated security
is a part;
(ii) The name and address and any taxpayer identification number of
the Pledgor, as the registered owner;
(iii) The name and address and any taxpayer identification number of
Lender, as the registered pledgee;
(iv) The number of units subject to the pledge; and
(v) A notation of any liens and restrictions of the issuer and any
adverse claims (as to which the issuer has a duty under 12A:8-403(4)) to
which the uncertificated security may be subject or a statement that there
are none of those liens, restrictions, or adverse claims.
6. VOTING RIGHTS. During the term of this Pledge Agreement, and
except as provided in this SECTION 6 below, the Pledgor shall have the right to
exercise all membership rights associated with the Pledged Collateral and vote
the Pledged Membership Interests in a manner not inconsistent with the terms of
this Pledge Agreement, the Amended and Restated Loan Agreement and any other
agreement, instrument or document executed pursuant thereto or in connection
therewith. The Lender shall at the sole cost and expense of the Pledgor,
execute and deliver (or cause to be executed and delivered) to the Pledgor all
such proxies and other instruments the Pledgor may reasonably request for the
purpose of enabling such Pledgor to exercise the voting or other rights that it
is entitled to exercise. Subject to the provisions of SECTION 9(G), after the
occurrence and during the continuation of an Event of Default, the Lender may,
at the Lender's option and following written notice from the Lender to the
Pledgor, exercise all voting powers and membership rights pertaining to the
Pledged Collateral, and until all of the Obligations have been paid in full (in
cash), the Pledgor irrevocably constitutes and appoints Lender as the proxy and
attorney-in-fact of the Pledgor, with full power of substitution to exercise
such voting powers and membership rights; PROVIDED, HOWEVER that Lender will not
take any action pursuant to this Pledge Agreement which would constitute or
result in any assignment of a FCC or PUC license or any change of control of
Leasing I if such assignment or change of control would require under then
existing law (including the written rules and regulations
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promulgated by the FCC or any PUC), the prior approval of the FCC or any PUC,
without first obtaining such approval of the FCC or any PUC.
7. DISTRIBUTIONS.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) the Pledgor shall be entitled to receive and retain any and all
distributions in respect of the Pledged Collateral to the extent Leasing I
is permitted to make such payments under the Amended and Restated Loan
Agreement, PROVIDED, HOWEVER, that any and all
(A) distributions and interest paid or payable other than in
cash with respect to, and instruments and other property received,
receivable or otherwise distributed with respect to, or in exchange
for, any of the Pledged Collateral; and
(B) distributions paid or payable in cash with respect to any
of the Pledged Collateral on account of a partial or total liquidation
or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus; or in redemption of, or in exchange for,
any of the Pledged Collateral;
shall be, and shall be forthwith delivered to the Lender to hold as,
Pledged Collateral and shall, if received by the Pledgor, be received in
trust for the Lender, be segregated from the other property or funds of the
Pledgor, and be delivered immediately to the Lender as Pledged Collateral
in the same form as so received (with any necessary endorsement); and
(ii) the Lender shall execute and deliver (or cause to be executed
and delivered) to the Pledgor all such proxies and other instruments as the
Pledgor may reasonably request for the purpose of enabling the Pledgor to
receive the distribution payments which it is authorized to receive and
retain pursuant to paragraph (i) above.
(b) Subject to the provisions of SECTION 9(G), after the occurrence
and during the continuation of an Event of Default:
(i) All rights of the Pledgor to receive the distributions which it
would otherwise be authorized to receive and retain pursuant to SECTION
7(A)(I) hereof shall cease, and all such rights shall thereupon become
vested in the Lender, which shall thereupon have the sole right to receive
and hold as Pledged Collateral such distributions;
(ii) all distributions which are received by the Pledgor contrary to
the provisions of paragraph (i) of this SECTION 7(B) shall be received in
trust for the Lender, shall be segregated from other funds of the Pledgor
and shall be paid over immediately to the
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Lender as Pledged Collateral in the same form as so received (with any
necessary endorsements); and
(iii) the Pledgor shall, upon the request of the Lender, at Pledgor's
expense, use its best efforts to do or cause to be done all such other acts
and things as may be necessary to make the sale of the Pledged Collateral
or any part thereof valid and binding and in compliance with applicable
law. The Pledgor will reimburse the Lender for all expenses incurred by
the Lender in connection with the foreclosure on or sale of the Pledged
Collateral, including, without limitation, reasonable attorneys' and
accountants' fees and expenses in connection with any of the foregoing.
8. TRANSFERS AND OTHER LIENS. The Pledgor agrees that it will not
(i) sell or otherwise dispose of, or grant any option with respect to, any of
the Pledged Collateral without the prior written consent of the Lender, or (ii)
create or permit to exist any Lien upon or with respect to any of the Pledged
Collateral, except for the security interest under this Pledge Agreement and the
Junior Pledge.
9. REMEDIES.
(a) The Lender shall have, in addition to any other rights given
under this Pledge Agreement or by law, all of the rights and remedies with
respect to the Pledged Collateral of a secured party under the Uniform
Commercial Code as in effect in the State of New Jersey. In addition, after the
occurrence and during the continuation of an Event of Default, the Lender shall
have such powers of sale and other powers as may be conferred by applicable law.
With respect to the Pledged Collateral or any part thereof which shall then be
in or shall thereafter come into the possession or custody of the Lender or
which the Lender shall otherwise have the ability to transfer under applicable
law, the Lender may, in its sole discretion, without notice except as specified
below, after the occurrence and during the continuation of an Event of Default,
sell or cause the same to be sold at any exchange, broker's board or at public
or private sale, in one or more sales or lots, at such price as the Lender may
deem best, for cash or on credit or for future delivery, without assumption of
any credit risk, and the purchaser of any or all of the Pledged Collateral so
sold shall thereafter own the same, absolutely free from any claim, encumbrance
or right of any kind whatsoever. The Lender may, in its own name, or in the
name of a designee or nominee, buy the Pledged Collateral at any public sale
and, if permitted by applicable law, buy the Pledged Collateral at any private
sale. The Pledgor shall be liable to the Lender for all reasonable expenses
(including, without limitation, court costs and reasonable attorneys' and
paralegals' fees and expenses) of, or incident to, the enforcement of any of the
provisions hereof. The Lender agrees to distribute any proceeds of the sale of
the Pledged Collateral in accordance with the Amended and Restated Loan
Agreement.
(b) Unless any of the Pledged Collateral threatens to decline
speedily in value or is or becomes of a type sold on a recognized market, the
Lender 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
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or other intended disposition is to be made. Any sale of the Pledged Collateral
conducted in conformity with reasonable commercial practices of banks,
commercial finance companies, insurance companies or other financial
institutions disposing of property similar to the Pledged Collateral shall be
deemed to be commercially reasonable. Notwithstanding any provision to the
contrary contained herein, any requirements of reasonable notice shall be met if
such notice is received by the Pledgor as provided in SECTION 19 below, at least
five (5) Business Days before the time of the sale or disposition. Any other
requirement of notice, demand or advertisement for sale is waived, to the extent
permitted by law.
(c) In view of the fact that federal and state securities laws may
impose certain restrictions on the method by which a sale of the Pledged
Collateral may be affected after an Event of Default, the Pledgor agrees that
after the occurrence of an Event of Default, the Lender may, from time to time,
attempt to sell all or any part of the Pledged Collateral by means of a private
placement restricting the bidders and prospective purchasers to those who are
qualified and will represent and agree that they are purchasing for investment
only and not for distribution. In so doing, the Lender may solicit offers to
buy the Pledged Collateral, or any part of it, from a limited number of
investors deemed by the Lender, in its reasonable judgment, to be financially
responsible parties who might be interested in purchasing the Pledged
Collateral. If the Lender solicits such offers from not less than three (3)
such investors, then the acceptance by the Lender of the highest offer obtained
therefrom shall be deemed to be a commercially reasonable method of disposing of
such Pledged Collateral.
(d) In connection with the enforcement by the Lender of any
remedies available to the Lender as a result of any Event of Default, the
Pledgor agrees to, and to use its best efforts to cause Leasing I to join and
cooperate fully, in each case at the Lender's election, with the Lender, any
receiver referred to below and/or the successor bidder or bidders at any
foreclosure sale in a filing of an application (and furnishing any additional
information that may be required in connection with such application) with the
FCC, any PUC and all applicable federal, state and local governmental
authorities, requesting their prior approval of (i) the operation and/or
abandonment of all or any portion of any assets of Leasing I and/or (ii) the
transfer of control of Leasing I or any of its assets or assignment of all
licenses, certificates, authorizations, approvals and permits, issued to Leasing
I by the FCC, any PUC or any such authorities with respect to its assets and the
operation thereof. In connection with the foregoing, the Pledgor agrees to, and
agrees to use its best efforts to cause Leasing I to, take such further actions,
and execute all such instruments, as the Lender reasonably deems necessary or
desirable. The Pledgor agrees that the Lender may enforce any obligations of
the Pledgor as set forth in this Section by an action for specific performance.
(e) Notwithstanding any other provision of this Pledge Agreement to
the contrary, the exercise of any rights hereunder by the Lender that may
require FCC or any PUC approval shall be subject to obtaining such approval.
Pending obtaining FCC or such PUC approval the Pledgor will not do anything to
delay, hinder, interfere or obstruct the exercise of the Lender's rights
hereunder in obtaining such approvals.
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(f) In connection with the exercise of its remedies under this
Agreement, Lender may, upon the occurrence and during the continuation of an
Event of Default obtain the appointment of a receiver or trustee to assume, upon
receipt of all necessary judicial, FCC, PUC or other governmental authority,
consents or approvals, control of or ownership of any Pledged Collateral. Such
receiver or trustee shall have all rights and powers provided to it by law or by
court order or provided to Lender under this Pledge Agreement. Upon the
appointment of such trustee or receiver, the Pledgor agrees to cooperate, to the
extent necessary or appropriate, in the expeditious preparation, execution and
filing of an application to the FCC or any PUC for consent to the transfer of
control or assignment of Leasing I's Authorizations to the receiver or trustee.
(g) If an Event of Default has occurred and Lender demands payment of
the Obligations pursuant to SECTION 9.02 of the Amended and Restated Loan
Agreement, then Lender shall forebear from foreclosing on the Pledged Collateral
for five (5) Business Days following Lender's demand for payment of the
Obligations pursuant to SECTION 9.02 of the Amended and Restated Loan Agreement,
and if within such five (5) Business Day period the Pledgor or Borrower pays to
Lender all of the Obligations (without any Prepayment Premium) in cash, then
Lender shall return to Pledgor the Pledged Membership Interests, and this Pledge
Agreement shall terminate.
10. SECURITY INTEREST ABSOLUTE. All rights of the Lender and
security interests hereunder, and all obligations of the Pledgor hereunder,
shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Amended and
Restated Loan Agreement or any other agreement or instrument relating thereto;
(ii) 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 Amended and Restated Loan Agreement;
(iii) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the Obligations; or
(iv) to the extent permitted by 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 other than
indefeasible payment in full (in cash).
11. LENDER APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby appoints
the Lender its attorney-in-fact, with full authority, in the name of the Pledgor
or otherwise, after the occurrence and during the continuation of an Event of
Default, from time to time in the Lender's discretion, to take any action and to
execute any instrument which the Lender may deem necessary or advisable to
accomplish the purposes of this Pledge Agreement, including, without
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limitation, to receive, endorse and collect all instruments made payable to the
Pledgor representing any interest payment or other distribution in respect of
the Pledged Collateral or any part thereof and to give full discharge for the
same and to arrange for the transfer of all or any part of the Pledged
Collateral on the books of Leasing I to the name of the Lender or the Lender's
nominee.
12. WAIVERS. The Pledgor waives presentment and demand for payment
of any of the Obligations, protest and notice of dishonor or Event of 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 Amended and Restated Loan Agreement.
13. TERM. This Pledge Agreement shall remain in full force and
effect until the Obligations have been fully and indefeasibly paid and satisfied
and the Amended and Restated Loan Agreement has terminated pursuant to its
terms. Upon the termination of this Pledge Agreement as provided above (other
than as a result of the sale of the Pledged Collateral), the Lender will release
the security interest created hereunder and will deliver the Pledged Membership
Interests to the Pledgor.
14. DEFINITIONS. The singular shall include the plural and vice
versa and any gender shall include any other gender as the context may require.
15. SUCCESSORS AND ASSIGNS. This Pledge Agreement shall be binding
upon and inure to the benefit of the Pledgor, the Lender and their respective
successors and assigns. The Pledgor's successors and assigns shall include,
without limitation, a receiver, trustee or debtor in possession of or for the
Pledgor.
16. APPLICABLE LAW; SEVERABILITY. THIS PLEDGE AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO
THE CONFLICT OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW JERSEY.
Whenever possible, each provision of this Pledge Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but, if any
provision of this Pledge Agreement shall be held to be prohibited or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Pledge Agreement. Furthermore, if
any term or provision hereof is held to be inconsistent with the Communications
Act of 1934, as amended, 47 U.S.C. 151 et seq., or with the Rules and
Regulations of the FCC, or otherwise illegal, unenforceable or invalid for any
reason, such provision shall not affect the remainder hereof, and the parties
shall promptly cooperate in good faith to modify this Pledge Agreement, so as to
avoid any impairment of Lender's security interest in the Pledged Collateral.
17. FURTHER ASSURANCES. The Pledgor agrees that it will cooperate
with the Lender and will execute and deliver, or cause to be executed and
delivered, all such other powers, proxies, instruments and documents, and will
take all such other action, including, without
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limitation, the filing of financing statements, as the Lender may reasonably
request from time to time in order to carry out the provisions and purposes of
this Pledge Agreement.
18. THE LENDER'S DUTY OF CARE. The Lender shall not be liable for
any acts, omissions, errors of judgment or mistakes of fact or law including,
without limitation, acts, omissions, errors or mistakes with respect to the
Pledged Collateral, except for those arising solely out of or solely in
connection with the Lender's (i) gross negligence or willful misconduct, or (ii)
failure to use reasonable care with respect to the safe custody of the Pledged
Collateral in the Lender's possession. Without limiting the generality of the
foregoing, the Lender shall be under no obligation to take any steps necessary
to preserve rights in the Pledged Collateral against any other parties but may
do so at its option. All expenses incurred in connection therewith shall be for
the sole account of the Pledgor, and shall constitute part of the Obligations
secured hereby.
19. NOTICES. All notices and other communications required or
desired to be served, given or delivered hereunder shall be made in the manner
prescribed by the Amended and Restated Loan Agreement and to the following
addresses, facsimile and telephone numbers:
if to the Lender, to
AT&T Capital Corporation/
Capital Markets Division
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President /Credit
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
AT&T Capital Corporation/
Capital Markets Division
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation: ▇▇▇-▇▇▇-▇▇▇▇
if to the Pledgor to:
c/o KMC Telecom Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
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Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation: ▇▇▇-▇▇▇-▇▇▇▇
20. AMENDMENTS, WAIVERS AND CONSENTS. No amendment or waiver of any
provision of this Pledge Agreement nor consent to any departure by the Pledgor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Lender pursuant to the terms of the Amended and Restated Loan
Agreement and then such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
21. NO STRICT CONSTRUCTION. The parties hereto have participated,
jointly in the negotiation and drafting of this Pledge Agreement. In the event
of any ambiguity or question of intent or interpretation arises, this Pledge
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of authorship of any provisions of this Pledge Agreement.
22. SECTION HEADINGS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
23. EXECUTION IN COUNTERPARTS. This Pledge Agreement may be executed
in any number of counterparts, each of which shall be an original, but all of
which shall together constitute one and the same agreement.
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IN WITNESS WHEREOF, the Pledgor and the Lender have executed and
delivered this Pledge Agreement by their respective duly authorized officers as
of the 31st day of October, 1997.
KMC TELECOM INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Chief Financial Officer
and Vice President
AT&T COMMERCIAL FINANCE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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Title: President
ACKNOWLEDGMENT
The undersigned hereby acknowledges receipt of a copy of the foregoing
Pledge Agreement, agrees promptly to note on its books the security interests
granted under such Pledge Agreement, and waives any rights or requirement at any
time hereafter to receive a copy of such Pledge Agreement in connection with the
registration of any Pledged Collateral in the name of the Lender or its nominee
or the exercise of voting rights by the Lender.
KMC Telecom Leasing I LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Chief Financial Officer
and Vice President
EXHIBIT A
to
PLEDGE AGREEMENT
dated as of October 31, 1997
PLEDGED MEMBERSHIP INTERESTS
Percentage of Issued and
Outstanding Membership
Name of Borrower Interests Owned by Pledgor
KMC Telecom Leasing I LLC 100%
EXHIBIT B
to
PLEDGE AGREEMENT
dated as of October 31, 1997
FORM OF STATEMENT OF UNCERTIFICATED SECURITIES
___________ __, 1997
AT&T Commercial Finance Corporation
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Taxpayer Identification No.: ▇▇▇▇▇▇▇▇▇
KMC Telecom Inc.
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Taxpayer Identification No.: ▇▇-▇▇▇▇▇▇▇
Re: Statement delivered pursuant to Section 12A:8-408(7) of the New
Jersey Commercial Code
Ladies and Gentlemen:
The undersigned, KMC Telecom Leasing I LLC ("Leasing I"), a Delaware
limited liability company, has caused the pledge of a 100% membership interest
in Leasing I (the "Pledged Membership Interests") by KMC Telecom Inc., a
Delaware corporation, in favor of AT&T Commercial Finance Corporation ("Lender")
to be registered on the books and records of Leasing I. Except for (i) the
pledge in favor of the Lender under the Amended and Restated Loan and Security
Agreement, dated as of September 22, 1997, as amended; (ii) the pledge in favor
of the Lender under the Subordinated Loan and Security Agreement, dated as of
September 22, 1997, as amended; and (iii) the terms and conditions contained in
the Limited Liability Company Agreement of Leasing I, to the knowledge of the
undersigned (including, without limitation, any information which may appear on
the undersigned's books and records), there are no liens, restrictions or
adverse claims to which the Membership Interests are or may be subject as of the
date hereof.
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF
THE TIME OF ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHTS
ON THE RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A
SECURITY.
KMC TELECOM LEASING I LLC
By:
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