EXHIBIT 10.5
PLEDGE AND SECURITY AGREEMENT
by and among
PAC-WEST TELECOMM, INC.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Trustee
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Collateral Agent
January 29, 1999
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of January 29, 1999
(the "Pledge Agreement") by and among Pac-West Telecomm, Inc., a California
corporation (the "Pledgor"), the Trustee (as defined below) and Norwest Bank
Minnesota, National Association, as collateral agent (the "Collateral Agent"),
for the Trustee on behalf of the holders of the Notes (as defined herein).
RECITALS
A. The Pledgor and Norwest Bank Minnesota, National
Association, as Trustee (the "Trustee") have entered into that certain Indenture
dated as of January 29, 1999 (as amended, restated, supplemented or otherwise
modified from time to time, the "Indenture"), pursuant to which the Pledgor
issued $150,000,000 in aggregate principal amount of 13.5% Senior Notes due 2009
(the "Notes").
B. The Pledgor has agreed, pursuant to a Purchase Agreement
dated January 27, 1999 by and among the Pledgor, NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities LLC, CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. and First Union Capital Markets, a
division of Wheat First Securities, Inc. to (i) purchase a portfolio of
securities consisting of Government Securities (as defined herein)
(collectively, the "Pledged Securities") in an amount sufficient, in the opinion
of a nationally recognized firm of independent certified public accountants
selected by the Pledgor, upon receipt of the scheduled interest and principal
payments in respect of the Pledged Securities, to provide for payment of the
first two (2) scheduled interest payments due on the Notes, and (ii) place such
Pledged Securities in the Pledge Account (as defined herein) held by the
Collateral Agent for the benefit of the holders of the Notes.
C. The Pledgor is the sole legal and beneficial owner of the
Pledged Securities.
D. To secure the payment and performance by the Pledgor of its
obligations under the Indenture and the Notes (collectively, the "Obligations"),
the Pledgor has agreed to (i) pledge to the Collateral Agent for the benefit of
the Trustee and the ratable benefit of the holders of the Notes a security
interest in the Pledged Securities and the Pledge Account, and (ii) execute and
deliver this Pledge Agreement.
AGREEMENT
NOW, THEREFORE, in order to induce the holders of Notes to
purchase the Notes, and for good and valuable consideration, the receipt of
which is hereby acknowledged, the Pledgor hereby agrees with the Collateral
Agent for the benefit of the Trustee and for the ratable benefit of the holders
of Notes as follows:
1. Defined Terms. All capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Indenture. In addition to
any other defined terms used herein, the following terms shall constitute
defined terms for purposes of this Pledge Agreement and shall have the meanings
set forth below:
"Collateral" has the meaning given in Section 2 hereof.
"Government Securities" means direct obligations of, or
obligations fully guaranteed by, the United States of America for the payment of
which guarantee or obligations the full faith and credit of
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the United States is pledged.
"UCC" means, with respect to the validity and perfection and
the effect of perfection or non-perfection of the security interest, the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
2. Pledge and Grant of Security Interest
(a) The Pledgor hereby pledges and grants to the Trustee, for
the ratable benefit of the holders of the Notes, a continuing first priority
security interest in and to (i) all of the Pledgor's right, title and interest
in the Pledged Securities and the Pledge Account, (ii) all certificates or other
evidence of ownership representing the Pledged Securities and the Pledge
Account, and (iii) all products and proceeds of any of the Pledged Securities,
including, without limitation, all dividends, interest, principal payments,
cash, options, warrants, rights, instruments, subscriptions and other property
or proceeds from time to time received, receivable or otherwise distributed or
distributable in respect of or in exchange for any or all of the Pledged
Securities (collectively, the "Collateral").
(b) The Pledgor shall have no right to remove or withdraw from
the Pledge Account any financial asset, cash or other property now or hereafter
credited to the Pledge Account without the prior written consent of the Trustee,
except as provided in Section 5(b) herein. If at any time the Collateral Agent
shall receive any entitlement order from the Trustee (including, without
limitation, any order directing the sale, transfer or redemption of any
financial asset relating to, or cash or other item credited to, the Pledge
Account), the Collateral Agent shall comply with such entitlement order, without
further consent by the Pledgor or any other Person.
(c) The Trustee appoints the Collateral Agent as its agent and
securities intermediary hereunder, and the Collateral Agent accepts such
appointment and agrees to act as agent and securities intermediary for the
Trustee with respect to the Pledged Securities, without cost or expense to the
Trustee. The Collateral Agent will, no later than the Business Day immediately
following the date hereof, completely and accurately identify on its books and
records the Pledged Securities being held in the Pledge Account. In addition,
the Collateral Agent will, upon the Trustee's written request given at any time
to the Collateral Agent, either (a) deliver to the Trustee possession of duly
issued certificates evidencing the Pledged Securities registered in the name of
the Trustee or its nominee or designee, or (b) transfer the Pledged Securities
to an account at the Collateral Agent or to another financial intermediary
designated by the Trustee in the name of the Trustee. In the event that the
Pledgor shall be entitled to receive or acquire any distribution, in any form
whatsoever, including, without limitation, cash and non-cash dividends and
interest, in respect of the Pledged Securities, the Collateral Agent agrees that
it shall hold the same as agent and securities intermediary for the Trustee
subject to the terms hereof and the written instructions of the Trustee.
3. Security for Obligations. This Pledge Agreement and the
Collateral secure the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of all of the
Obligations.
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4. Delivery of Collateral; Pledge Account; Interest;
Substitution of Collateral
(a) If and to the extent the Pledged Securities comprise
"certificated securities," as defined in Section 8-102 of the UCC, such
securities shall be registered in the name of the Collateral Agent or its
nominee for the benefit of the holders of the Notes and delivered to the
Collateral Agent or its custodian in the State of New York, and possession
thereof shall be maintained by the Collateral Agent within the State of New
York.
(b) All Government Securities included in the Collateral shall
be registered in the name of the Collateral Agent or its nominee for the benefit
of the holders of the Notes on the records of the Federal Reserve Bank of New
York and credited in the books and records of the Collateral Agent to the Pledge
Account. All other uncertificated securities, if any, included in the Collateral
shall be registered on the books of the issuer of such uncertificated securities
in the name of the Collateral Agent or its nominee for the benefit of the
holders of the Notes, and credited in the books and records of the Collateral
Agent to the Pledge Account.
(c) Concurrently with the execution and delivery of this
Pledge Agreement, the Collateral Agent shall establish an account entitled the
"PLEDGE ACCOUNT FOR THE BENEFIT OF HOLDERS OF 13.5% NOTES DUE 2009 OF PAC-WEST
TELECOMM, INC." for the deposit of the Pledged Securities (the "Pledge Account")
at its office at Norwest Center, 6th and Marquette, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇.
The Pledge Account is and shall be maintained as a "securities account" within
the meaning of Article 8 of the UCC, and the Collateral Agent will treat all
property held by it in the Pledge Account as "financial assets" under Article
8-501(a) of the UCC. Subject to the other terms and conditions of this Pledge
Agreement, all funds or other property accepted by the Collateral Agent pursuant
to this Pledge Agreement shall be held in the Pledge Account for the ratable
benefit of the holders of the Notes. All proceeds of the Pledged Securities
shall remain on deposit in the Pledge Account until withdrawn in accordance with
this Pledge Agreement.
(d) All proceeds of, interest earned on and other
distributions or amounts paid with respect to, any Collateral shall be credited
to and retained in the Pledge Account, and the Collateral Agent shall invest and
reinvest the same as directed from time to time in writing by the Pledgor;
provided, however, that such proceeds and other amounts must be invested in
Government Securities. In all events, any monies so invested or reinvested and
any securities acquired thereby shall be (i) held as Collateral in the Pledge
Account, (ii) subject in all respects to the security interest created hereby
and shall be and remain under the control of the Collateral Agent, and (iii)
otherwise subject to the terms hereof.
(e) The parties acknowledge that the Collateral Agent shall
not be responsible for any diminution in the Pledge Account due to losses
resulting from investments. The Collateral Agent may use its own Investment
Department in executing purchases and sales of permissible investments.
5. Disbursements
(a) The Collateral Agent shall transfer, on each date when one
of the first two (2) scheduled interest payments is due on the Notes and without
notice from the Pledgor, from the Pledge Account to the Paying Agent under the
Indenture, funds necessary to provide for payment in full or of any portion of
the next scheduled interest payment on the Notes and the Paying Agent shall
apply the proceeds to such interest payment.
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(b) If at any time the amount of Collateral exceeds the amount
sufficient, in the opinion of a nationally recognized firm of independent
certified public accountants selected by the Pledgor, to provide for payment in
full of the first two (2) scheduled interest payments due on the Notes then
outstanding (or, in the event any of the first two (2) interest payments have
been made on the Notes, an amount sufficient to provide for payment in full of
all interest payments then remaining up to and including the second scheduled
interest payment on the Notes then outstanding), the Pledgor may direct the
Collateral Agent in writing to release to the Pledgor, or as the Pledgor
directs, an amount less than or equal to such excess. Upon receipt of such
written direction from the Pledgor, together with the opinion of a nationally
recognized firm of independent certified public accountants with respect to the
value of the Pledged Securities, the Collateral Agent shall take such action as
is necessary to provide for the payment to the Pledgor of the amount requested
from the Pledge Account.
(c) Immediately following the earlier of (i) the payment in
full of the first two (2) scheduled interest payments on the Notes, and (ii) the
day on which all of the Notes have been repurchased, redeemed or defeased, if no
Default or Event of Default is continuing, the security interest in the
Collateral evidenced by this Pledge Agreement shall terminate and be of no
further force and effect, and any and all Collateral in the Pledge Account shall
be released and transferred by the Collateral Agent to the Pledgor in accordance
with the Pledgor's written instructions. Furthermore, upon release of any
Collateral from the Pledge Account in accordance with the terms of this Pledge
Agreement, whether upon release of Collateral to the Paying Agent, to the
Pledgor or otherwise, the security interest evidenced by this Pledge Agreement
in the Collateral so released shall terminate and be of no further force and
effect.
6. Representations and Warranties. The Pledgor hereby
represents and warrants that:
(a) The execution, delivery and performance by the Pledgor of
this Pledge Agreement has been duly authorized by all necessary corporate action
and does not contravene or constitute a default under any provision of
applicable law, regulation or the certificate of incorporation or the bylaws of
the Pledgor, or of any judgment, injunction, order, decree or any material
agreement or instrument binding upon the Pledgor, and does not result in the
creation or imposition of any Lien on any asset of the Pledgor, except for the
security interests granted under this Pledge Agreement.
(b) This Pledge Agreement has been duly executed and delivered
by the Pledgor and constitutes a valid and binding obligation of the Pledgor,
enforceable against the Pledgor in accordance with its terms, except as such
enforceability may be limited by the effect of any applicable bankruptcy,
insolvency, reorganization, fraudulent conveyances, moratorium or other similar
laws affecting creditors' rights generally or general principles of equity.
(c) The Pledgor is the record and beneficial owner of the
Collateral, free and clear of any Lien or claims of any Person (except for the
security interest granted under this Pledge Agreement). No financing statement
covering the Pledged Securities is on file in any public office, other than
financing statements filed pursuant to this Pledge Agreement.
(d) Upon the delivery to the Collateral Agent of the
certificates, if any, representing the Pledged Securities, any filing of
financing statements required by the UCC and notation on the records of the
Collateral Agent that it holds the Pledged Securities as pledgee, the pledge of
the Collateral pursuant to this Pledge Agreement creates a valid and perfected
first priority security interest in and to the Collateral, securing the payment
and performance of the Obligations for the ratable benefit of the holders of the
Notes,
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enforceable as such against all creditors of the Pledgor and any Persons
purporting to purchase any of the Collateral from the Pledgor.
(e) No consent of any other Person and no consent,
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 by the Pledgor of the Collateral pursuant to this Pledge Agreement or for
the execution, delivery or performance of this Pledge Agreement by the Pledgor
(except for any filings and notations necessary to perfect the security interest
created hereby in the Collateral) or (ii) 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.
(f) No litigation, proceeding or investigation of or before
any arbitrator or governmental authority is pending or, to the knowledge of the
Pledgor, threatened by or against the Pledgor with respect to this Pledge
Agreement or any of the transactions contemplated hereby.
(g) The pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by any applicable law or government regulation,
release, interpretation or opinion of the Board of Governors of the Federal
Reserve System or other regulatory agency (including, without limitation,
Regulations T, U and X of the Board of Governors of the Federal Reserve System).
7. Further Assurances. The Pledgor agrees promptly to take
such actions and to execute and deliver or cause to be executed and delivered,
or use its best efforts to procure, such stock or bond powers, proxies,
assignments, instruments and such other or different writings as the Collateral
Agent may reasonably request, all in form and substance satisfactory to the
Collateral Agent, deliver any instruments to the Collateral Agent and take any
other actions that are necessary to perfect, continue the perfection of, confirm
and assure the first priority of the Collateral Agent's security interest in the
Collateral, to protect the Collateral against the rights, claims or interests of
third persons, or to otherwise effect the purposes of this Pledge Agreement. The
Pledgor also hereby authorizes the Collateral Agent to file any financing or
continuation statements with respect to the Collateral without the signature of
the Pledgor (to the extent permitted by applicable law). The Pledgor will pay
all costs incurred by the Collateral Agent in connection with any of the
foregoing.
8. Covenants. The Pledgor covenants and agrees with the
Collateral Agent and the holders of the Notes from and after the date of this
Pledge Agreement until the earlier of payment in full in cash of (A) each of the
first two (2) scheduled interest payments due on the Notes under the terms of
the Indenture or (B) all Obligations due and owing under the Indenture and the
Notes in the event such Obligations become due and payable prior to the payment
of the first two (2) scheduled interest payments on the Notes, as follows:
(a) The Pledgor agrees that it (i) will not sell or otherwise
dispose of, or grant any option or other interest with respect to, any of the
Collateral, (ii) will not create or permit to exist any Lien upon or with
respect to any of the Collateral, except for the Liens created pursuant to this
Pledge Agreement, and (iii) will at all times be the sole beneficial owner of
the Collateral.
(b) The Pledgor agrees that it will not (i) enter into any
agreement or understanding that purports to or may restrict or inhibit 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) with regard to the Collateral, fail to pay or discharge any tax, assessment
or levy of any nature due with respect
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thereto later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment.
9. Power of Attorney
(a) 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:
(i) collection of proceeds of any Collateral;
(ii) conveyance of any item of Collateral to any purchaser
thereof as specified herein;
(iii) giving of any notices or recording of any Liens pursuant
to Section 7 hereof;
(iv) making any payments or taking any acts pursuant to
Section 10 hereof;
(v) 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
discretion, and any such payments made by the Collateral Agent shall become
Obligations of the Pledgor to the Collateral Agent, due and payable immediately
upon demand; and
(vi) taking any acts pursuant to Section 13 hereof.
(b) The Collateral Agent's authority under this Section 9
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, to
the extent permitted by applicable law, sign the Pledgor's names on all
financing statements or any other documents deemed necessary or appropriate by
the Collateral Agent to preserve, process or perfect the security interest in
the Collateral, and to file the same, and to prepare, sign the Pledgor's name
and file any notice of Lien, and to take any other actions arising from or
incident to the powers granted to the Collateral Agent in this Pledge Agreement.
This power of attorney is coupled with an interest and shall be irrevocable by
the Pledgor.
(c) 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 of the
Notes, be governed by this Pledge Agreement, but, as between the Collateral
Agent and the Pledgor, the Collateral Agent shall be conclusively presumed to be
acting as agent for the holders of the Notes with full and valid authority so to
act or refrain from acting, and the Pledgor shall not be obligated or entitled
to make any inquiry respecting such authority.
(d) The Collateral Agent undertakes to perform such duties and
only such duties as are specifically set forth in this Pledge Agreement and no
implied covenants or obligations shall be read into this Pledge Agreement
against the Collateral Agent. The Collateral Agent shall not be deemed to have
knowledge of an Event of Default under the Indenture unless informed in writing
by the Pledgor or the
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holder of any Note.
(e) The Collateral Agent shall not be required to exercise any
remedies hereunder unless requested in writing to do so by the holders of a
majority in principal amount of the outstanding Notes and only if furnished with
indemnity reasonably satisfactory to the Collateral Agent. The Collateral Agent
may consult with counsel and shall not be liable for any action taken in good
faith in reliance upon advice of counsel except for gross negligence or willful
misconduct. The Collateral Agent makes no representation or warranty and shall
have not responsibility concerning the value or validity of the Collateral or
the validity or perfection of the pledge thereof or any security interest
therein. The provisions of Section 7.02(a)(i) of the Indenture are incorporated
herein by reference.
(f) The Collateral Agent may at any time on 30 days notice to
the Pledgor and the holders of the Notes resign hereunder. Upon any such
resignation the Pledgor shall promptly appoint another financial institution
reasonably satisfactory to the holders of a majority in principal amount or the
outstanding Notes to act as Collateral Agent hereunder and such resignation
shall become effective upon the acceptance of the appointment by the successor.
(g) 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 a prudent financial institution similarly situated would accord its own
property, it being understood that neither the Collateral Agent nor the holders
of the Notes shall have responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not any such Person has or is
deemed to have knowledge of such matters, or (ii) taking any necessary steps to
preserve rights against any parties with respect to any Collateral.
10. Collateral Agent May Perform. If the Pledgor fails to
perform any agreement contained herein, the Collateral Agent may, but shall not
be obligated to, itself perform or cause performance of such agreement, and the
expenses incurred by or on behalf of the Collateral Agent in connection
therewith shall be payable by the Pledgor under Section 14 hereof.
11. No Assumption of Duties. The rights and powers granted to
the Collateral Agent hereunder are being granted in order to preserve and
protect the security interest of the Collateral Agent and the holders of Notes
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 imposed under applicable law.
12. Indemnity. The Pledgor shall indemnify, defend and hold
harmless the Collateral Agent and its directors, officers, agents and employees
from and against all claims, actions, obligations, losses, liabilities and
expenses, including reasonable costs, fees and disbursements of counsel, the
costs of investigations, and claims for damages, arising from the Collateral
Agent's performance under this Pledge Agreement, except insofar as the same may
have been caused by the gross negligence or willful misconduct of such
indemnified Person. The obligations of the Pledgor under this Section 12 shall
survive the resignation or removal of the Collateral Agent or the termination of
this Pledge Agreement.
13. Remedies upon Event of Default. If an Event of Default
shall have occurred:
(a) Upon the acceleration of the Notes in accordance with the
terms of the Indenture,
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the Collateral Agent shall have and may exercise with reference to the
Collateral any or all of the rights and remedies of a secured party under the
UCC, and as otherwise granted herein or under any other applicable law or under
any other agreement executed by Pledgor, including, without limitation, the
right and power to sell, at public or private sale or sales, or otherwise
dispose of, or otherwise utilize the Collateral and any part or parts thereof,
in any manner authorized or permitted under the UCC after default by a debtor,
and to apply the proceeds thereof toward payment of any costs and expenses and
attorneys' fees and expenses thereby incurred by the Collateral Agent and toward
payment of the Obligations in such order or manner as the Collateral Agent may
elect. 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 or is or becomes of a type sold on a recognized market, the
Collateral Agent shall 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 such notice is
mailed to the Pledgor as provided in Section 17 herein, at least fifteen (15)
days before the time of the sale or disposition. The Collateral Agent or any
holder of Notes may, in its own name or in the name of a designee or nominee,
buy any of the Collateral at any public sale and, if permitted by applicable
law, at any private sale. All expenses (including court costs and reasonable
attorneys' fees, expenses and disbursements) of, or incident to, the enforcement
of any of the provisions hereof shall be recoverable from the proceeds of the
sale or other disposition of the Collateral.
(b) The Pledgor further agrees to use its 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 Collateral Agent and the
holders of Notes, that the Collateral Agent and the holders of Notes have no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 13 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants, except for a defense that no Event of Default has occurred.
(c) All rights to marshaling of assets of the Pledgor,
including any such right with respect to the Collateral, are hereby waived by
the Pledgor. The Pledgor shall not contest or support any other Person in
contesting the validity or priority of the security interests created under this
Pledge Agreement.
14. Fees and Expenses. The Pledgor shall, upon demand, pay to
the Collateral Agent the amount of its fees (which shall be in an amount
previously agreed by the Pledgor and the Collateral Agent) and any and all
expenses (including, without limitation, the reasonable fees, expenses and
disbursements of counsel, experts and agents retained by the Collateral Agent)
that the Collateral Agent may incur in connection with (i) the administration of
this Pledge Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Collateral Agent and the
holders of the Notes hereunder, or (iv) the failure by the Pledgor to perform or
observe any of the provisions hereof.
15. Security Interest Absolute. All rights of the Collateral
Agent and the holders of
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the Notes, and the security interests created hereunder, and all obligations of
the Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Indenture;
(c) any exchange, surrender, release or non-perfection of any
Liens on any other Collateral for all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Obligations or of this Pledge Agreement.
16. Authority of the Collateral Agent. 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 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. None of the Collateral Agent,
any director, officer, employee, attorney or agent of the Collateral Agent nor
any holder of the Notes shall be liable to the Pledgor for any action taken or
omitted to be taken by it or them hereunder, except for its own bad faith, gross
negligence or willful misconduct, nor shall the Collateral Agent be responsible
for the legality, 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 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 and its directors, officers, employees, attorneys
and agents shall be entitled to rely on the opinion of a nationally recognized
firm of independent certified public accountants with respect to the dollar
amount of the Pledged Securities.
17. Notices. Any communication, notice or demand to be given
hereunder shall be duly given hereunder if given in the form and manner, and
delivered to the address set forth in the Indenture, or in such other form and
manner or to such other address as shall be designated by any party hereto to
each other party hereto in a written notice delivered in accordance with the
terms of the Indenture.
18. No Waiver; Cumulative Rights. No failure on the part of
the Collateral Agent to exercise, and no delay in exercising, any right, remedy
or power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise by the Collateral Agent of any right, remedy or power hereunder
preclude any other or future exercise of any other right, remedy or power. Each
and every right, remedy and power hereby granted to the Collateral Agent or
allowed it by law or other agreement shall be cumulative and not exclusive the
one of any other, and may be exercised by the Collateral Agent from time to
time.
19. Benefits of Pledge Agreement. Nothing in this Pledge
Agreement, whether express or implied, shall give to any Person other than the
parties hereto and their successors hereunder, and the holders of the Notes, any
benefit or any legal or equitable right, remedy or claim under this Pledge
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Agreement.
20. Applicable Law; Waiver of Jury Trial. (a) THIS PLEDGE
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. THE PLEDGOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE
VENUE OF ANY LITIGATION BETWEEN THE PLEDGOR AND THE COLLATERAL AGENT IN
ACCORDANCE WITH THIS PARAGRAPH. EACH OF THE PLEDGOR AND THE COLLATERAL AGENT
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY
IN ANY ACTION OR PROCEEDING THAT IN ANY MANNER ARISES OUT OF OR IN CONNECTION
WITH OR IS IN ANY WAY RELATED TO THIS PLEDGE AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN.
(b) THE PROVISIONS OF THIS SECTION 20 ARE A MATERIAL
INDUCEMENT FOR THE COLLATERAL AGENT ENTERING INTO THIS PLEDGE AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY. THE PLEDGOR HEREBY ACKNOWLEDGES THAT IT HAS
REVIEWED THE PROVISIONS OF THIS SECTION 20 WITH INDEPENDENT COUNSEL.
21. Calculation of Interest. For purposes of this Pledge
Agreement, all calculations of the first two (2) scheduled interest payments on
the Notes shall be calculated on the basis that interest will accrue on the
Notes at the rate of 13.5% per annum and will be payable semi-annually in
arrears on August 1, 1999 and February 1, 2000. Interest on the Notes will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
22. Execution in Counterparts. This Pledge Agreement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute one and the same instrument.
23. Settlement. Amounts, if any, held in the Pledge Account
pending settlement of purchase of the Pledged Securities shall constitute
Collateral hereunder, shall be held by the Collateral Agent for the benefit of
the holders of the Notes and a portion thereof equal to the aggregate price paid
for such Pledged Securities shall be released by the Collateral Agent (without
further direction or instruction required from any other party hereto) against
delivery of such Pledged Securities, and any excess funds remaining in the
Pledge Account after giving effect to such settlement shall be promptly
forwarded pursuant to written instructions of the Company.
Signature page follows
10
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Pledge and Security Agreement as of the day first written above.
PAC-WEST TELECOMM, INC.
as Pledgor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
as Trustee and Collateral Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Signer
[Signature Page to Pledge and Security Agreement]