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EXHIBIT 4.4
COLLATERAL PLEDGE AND SECURITY AGREEMENT
This COLLATERAL PLEDGE AND SECURITY AGREEMENT (this "Pledge
Agreement") is made and entered into as of [ ], 1998 by ALLEGIANCE
TELECOM, INC., a Delaware corporation (the "Pledgor"), having its principal
office at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, in favor of
THE BANK OF NEW YORK, a New York banking corporation, having an office at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, as trustee (the "Trustee")
for the holders (the "Holders") of the Notes (as defined herein) issued by the
Pledgor under the Indenture referred to below. Capitalized terms used herein
and not otherwise defined herein shall have the meanings given to such terms in
the Indenture.
W I T N E S S E T H
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 on the date hereof
$200,000,000 in aggregate principal amount of [ ]% Senior Notes due 2008
(the "Notes"); and
WHEREAS, the Pledgor has agreed, pursuant to the Indenture, to
(i) purchase or cause the purchase of Pledged Securities (as defined herein) in
an amount that will be sufficient upon receipt of scheduled interest and
principal payments in respect thereof to provide for the payment of the first
six scheduled interest payments due on the Notes and (ii) place such Pledged
Securities (as defined herein) (or cause them to be placed) in an account held
by the Trustee for the benefit of Holders of the Notes; and
WHEREAS, to secure the obligations of the Pledgor under the
Indenture and the Notes to pay in full each of the first six scheduled interest
payments on the Notes and to secure repayment of the principal, premium (if
any) and interest on the Notes in the event that the Notes become due and
payable prior to such time as the first six scheduled interest payments thereon
shall have been paid in full (collectively, the "Obligations"), the Pledgor has
agreed (i) to pledge to the Trustee for its benefit and the ratable benefit of
the Holders of the Notes, a security interest in the Pledged Securities (as
defined herein) and related collateral and (ii) to execute and deliver this
Pledge Agreement in order to secure the payment and performance by the Pledgor
of all the Obligations; and
WHEREAS, it is a condition precedent to the initial purchase of
the Notes by the initial Holders thereof that the Pledgor shall have granted
the security interest and made the pledge contemplated by this Pledge
Agreement; and
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WHEREAS, unless otherwise defined herein or in the Indenture,
terms used in Articles 8 or 9 of the Uniform Commercial Code ("UCC") as in
effect in the State of New York are used herein as therein defined.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises herein
contained, and in order to induce the Holders of the Notes to purchase the
Notes, the Pledgor hereby agrees with the Trustee, for the benefit of the
Trustee and for the ratable benefit of the Holders of the Notes, as follows:
SECTION 1. Pledge and Grant of Security Interest. The Pledgor
hereby pledges to the Trustee for its benefit and for the ratable benefit of
the Holders of the Notes, and hereby grants to the Trustee for its benefit and
for the ratable benefit of the Holders of the Notes, a continuing first
priority security interest in and to all of the Pledgor's right, title and
interest in, to and under the following (hereinafter collectively referred to
as the "Collateral"), whether characterized as investment property, general
intangibles or otherwise: (a) the United States Treasury securities identified
by CUSIP No. in Annex 1 to Exhibit A to this Pledge Agreement (the "Pledged
Securities"), (b) any and all applicable security entitlements to the Pledged
Securities, (c) The Bank of New York account in the name of "[ ] (the
"Pledge Account") established and maintained by the Trustee pursuant to this
Pledge Agreement, (d) any and all related securities accounts in which security
entitlements to the Pledged Securities are carried, (e) all notes, certificates
of deposit, deposit accounts, checks and other instruments from time to time
hereafter delivered to or otherwise possessed by the Trustee for or on behalf
of the Pledgor in substitution for or in addition to any or all the then
existing Collateral, (f) all interest, dividends, cash, instruments and other
property 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
(g) all proceeds of any and all of the foregoing Collateral (including, without
limitation, proceeds that constitute property of the types described in clauses
(a) - (f) of this Section 1) and, to the extent not otherwise included, all
cash in the Pledge Account.
SECTION 2. Security for Obligation. This Pledge Agreement and
the grant of a security interest in the Pledged Securities and the Pledge
Account hereunder secures the prompt and complete payment and performance when
due (whether at stated maturity, by acceleration or otherwise) of all the
Obligations. Without limiting the generality of the foregoing, this Pledge
Agreement and the grant of a security interest in the Pledged Securities and
the Pledge Account hereunder secures the payment of all amounts that constitute
part of the Obligations and would be owed by the Pledgor to the Trustee or the
Holders under the Notes or the Indenture 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.
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SECTION 3. Maintaining the Pledge Account. So long as any
Obligation shall remain outstanding:
(a) The Pledgor will maintain separately the Pledge Account
with The Bank of New York.
(b) It shall be a term and condition of the Pledge Account,
notwithstanding any term or condition to the contrary in any other
agreement relating to the Pledge Account, and except as otherwise
provided by the provisions of Section 5 and Section 15.9, that no amount
shall be paid or released to or for the account of, or withdrawn by or
for the account of, the Pledgor or any other Person from the Pledge
Account.
The Pledge Account shall be subject to such 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.
SECTION 4. Delivery of Collateral; Pledge Account; Interest.
(a) The Pledged Securities shall be pledged and transferred to the Trustee and
the Trustee shall become the holder of a security entitlement to the Pledged
Securities, through action by the Federal Reserve Bank of New York ("FRBNY"),
The Bank of New York or another securities intermediary, as confirmed (in
writing or electronically or otherwise in accordance with standard industry
practice) to the Trustee by FRBNY, The Bank of New York or such other
securities intermediary (i) indicating by book-entry that the Pledged
Securities or a security entitlement thereto has been credited to the Trustee's
account, or (ii) acquiring the Pledged Securities or a security entitlement
thereto for the Trustee and accepting the same for credit to a securities
account of the Trustee.
(b) With respect to any Collateral that constitutes a security
and is not represented or evidenced by a certificate or an 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 Pledgor and the Trustee 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 reasonably satisfactory to the Trustee.
(c) With respect to any Collateral that constitutes a security
entitlement, the Pledgor shall cause the securities intermediary with
respect to such security entitlement either (i) to identify in its
records the Trustee as having such security entitlement against such
securities intermediary or (ii) to agree in writing with the Pledgor and
the Trustee that such securities intermediary will comply with
entitlement orders (that is, notifications communicated to such
securities intermediary directing transfer or
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redemption of the financial asset to which the Pledgor has a security
entitlement) originated by the Trustee without further consent of the
Pledgor, such agreement to be in form and substance reasonably
satisfactory to the Trustee.
(d) With respect to any Collateral that constitutes a
securities account, the Pledgor will comply with subsection (c) of this
Section 4 with respect to all security entitlements carried in such
securities account.
(e) Prior to or concurrently with the execution and delivery
hereof and prior to the transfer to the Trustee of the Pledged
Securities (or acquisition by the Trustee of any security entitlement
thereto), as provided in subsection (a) of this Section 4, the Trustee
shall establish the Pledge Account on its books as an account segregated
from all other custodial or collateral accounts at its office at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: [ ],
Corporate Trust Administration. Upon transfer of the Pledged Securities
to the Trustee (or the Trustee's acquisition of a security entitlement
thereto), as confirmed to the Trustee by FRBNY, The Bank of New York or
another securities intermediary, the Trustee shall make appropriate book
entries indicating that the Pledged Securities and/or such security
entitlements have been credited to and are held in the Pledge Account.
Subject to the other terms and conditions of this Pledge Agreement, all
funds or other property held by the Trustee pursuant to this Pledge
Agreement shall be held in the Pledge Account subject (except as
expressly provided in Sections 5(a), (b), (c), (d) and (e) hereof) to
the exclusive dominion and control of the Trustee and exclusively for
the benefit of the Trustee and for the ratable benefit of the Holders of
the Notes and segregated from all other funds or other property
otherwise held by the Trustee.
(f) All Collateral shall be retained in the Pledge Account
pending disbursement pursuant to the terms hereof.
(g) Concurrently with the execution and delivery of this
Pledge Agreement, the Trustee is delivering to the Pledgor and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated a duly executed Notification and Control
Agreement ("Control Agreement"), in the form of Exhibit A hereto,
executed by an officer of the Trustee, confirming the Trustee's
establishment and separate maintenance of the Pledge Account, its
receipt and holding of the Pledged Securities or any security
entitlement thereto and the crediting of the Pledged Securities or such
security entitlements to the Pledge Account, all in accordance with this
Pledge Agreement.
(h) Concurrently with the execution and delivery of this
Pledge Agreement, the Pledgor is delivering to the Trustee
acknowledgment copies or stamped receipt copies of proper financing
statements, duly filed on or before the Closing Date under the UCC of
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the States of New York and Texas, covering the Collateral described in
this Pledge Agreement.
SECTION 5. Disbursements. (a) Three business days prior to
the due date of any of the first six scheduled interest payments on the Notes,
the Pledgor may, pursuant to written instructions given by the Pledgor to the
Trustee (an "Issuer Order"), direct the Trustee to release from the Pledge
Account and pay to the Holders of the Notes proceeds sufficient to provide for
payment in full of such interest then due on the Notes. Upon receipt of an
Issuer Order, the Trustee will release funds in an amount sufficient to provide
for the payment of the interest on the Notes in accordance with such Issuer
Order and the payment provisions of the Indenture to the Holders of the Notes
from (and to the extent of) proceeds of the Pledged Securities in the Pledge
Account. If no such Issuer Order is issued by the Pledgor, the Trustee will
act in accordance with Section 5(e). Nothing in this Section 5 shall affect
the Trustee's rights to apply the Collateral to the payments of amounts due on
the Notes upon acceleration thereof.
(b) If the Pledgor makes any interest payment or portion of an
interest payment for which the Collateral is security from a source of
funds other than the Pledge Account ("Pledgor Funds"), the Pledgor may,
after payment in full of such interest payment, direct the Trustee
pursuant to an Issuer Order to release to the Pledgor or to another
party at the direction of the Pledgor (the "Pledgor's Designee")
proceeds from the Pledge Account in an amount less than or equal to the
amount of Pledgor Funds applied to such interest payment. Upon receipt
by the Trustee of such Issuer Order and provided the Trustee has
received such interest payment, the Trustee shall pay over to the
Pledgor or the Pledgor's Designee, as the case may be, the requested
amount from proceeds in the Pledge Account as soon as practicable.
(c) If at any time the principal of and interest on the
Pledged Securities exceeds 100% of the amount sufficient, in the written
opinion of a nationally recognized firm of independent accountants
selected by the Pledgor and delivered to the Trustee, to provide for
payment in full of the remaining first six scheduled interest payments
due on the Notes, the Pledgor may direct the Trustee to release any such
excess amount to the Pledgor or to the Pledgor's Designee. Upon receipt
of an Issuer Order (which shall include a certificate from such
nationally recognized firm of independent accountants stating the amount
by which the Pledged Securities exceeds the amount required to be held
in the Pledge Account) the Trustee shall pay over to the Pledgor or the
Pledgor's Designee, as the case may be, any such excess amount.
(d) Upon payment in full of the first six scheduled interest
payments on the Notes, the security interest in the Collateral evidenced
by this Pledge Agreement will automatically terminate and be of no
further force and effect and the Collateral shall promptly be paid over
and transferred to the Pledgor. Furthermore, upon the release of
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any Collateral from the Pledge Account in accordance with the terms of
this Pledge Agreement, whether upon release of Collateral to Holders as
payment of interest or otherwise, the security interest evidenced by
this Pledge Agreement in such released Collateral will automatically
terminate and be of no further force and effect and the Trustee shall
deliver such documents as may be necessary to discharge any security
interest with respect to the Collateral under the UCC..
(e) At least three Business Days prior to the due date of each
of the first six scheduled interest payments on the Notes, the Pledgor
may give the Trustee notice (by Issuer Order) as to whether such
interest payment will be made pursuant to Section 5(a) or 5(b) above and
the respective amounts of interest that will be paid from the Pledge
Account and from Pledgor Funds. Any Pledgor Funds to be used to make
any interest payment shall be delivered to the Trustee, in immediately
available funds, at or prior to 10:00 a.m. (New York City time) on such
interest payment date. If no such Issuer Order is given or such Pledgor
Funds have not been so delivered, the Trustee will act pursuant to
Section 5(a) above as if it had received an Issuer Order pursuant
thereto for the payment in full of the interest then due from the Pledge
Account.
(f) The Trustee shall liquidate Collateral in the Pledge
Account (pursuant to written instructions from Pledgor) in order to make
any scheduled payment of interest unless there are sufficient funds in
the Pledge Account on such interest payment date.
(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 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 Pledged Securities, 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 (except as expressly provided in Sections
5(a), (b) and (c) hereof) 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 to the Pledged Securities
solely as Trustee for the Holders of the Notes and not as a securities
intermediary.
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SECTION 6. Representations and Warranties. The Pledgor hereby
represents and warrants 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
certificate of incorporation of the Pledgor or any agreement or other
instrument binding upon the Pledgor or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Pledgor or any of its subsidiaries, or
result in the creation or imposition of any Lien on any assets of the
Pledgor, except for the security interests granted under this Pledge
Agreement.
(b) No consent of any other person and no approval,
authorization, order of, action by or qualification with, any
governmental authority, regulatory body, agency or other third party is
required, other than such consents, approvals, authorizations, orders,
actions or qualifications that have been received, (i) for the
execution, delivery or performance by the Pledgor of its obligations
under this Pledge Agreement, (ii) for the grant by the Pledgor of the
security interest created hereby, for the pledge by the Pledgor of the
Collateral pursuant to this Pledge Agreement or (iii) except for any
such consents, approvals, authorizations or orders required to be
obtained by the Trustee (or the Holders) for reasons other than the
consummation of this transaction, for the exercise by the Trustee of the
rights provided for in this Pledge Agreement or the remedies in respect
of the Collateral pursuant to this Pledge Agreement.
(c) The Pledgor is the beneficial owner of the Collateral,
free and clear of any Lien or claims of any person or entity (except for
the security interests created by this Pledge Agreement). No financing
statement or instrument similar in effect covering all or any part of
the Pledgor's interest in the Pledged Securities is on file in any
public or recording office, other than the financing statements filed
pursuant to this Pledge Agreement. The Pledgor has no trade names.
(d) This Pledge Agreement has been duly authorized, validly
executed and delivered by the Pledgor and 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 creditors' rights or remedies generally, (ii)
the availability of equitable remedies may be limited by equitable
principles of general applicability, (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 12(d), Section 15.11
and Section 15.15 hereof may be limited by applicable law.
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(e) Upon the delivery to the securities intermediary 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 securities intermediary that it holds the Pledged Securities as
pledgee, the pledge and grant of a security interest in the Collateral
pursuant to this Pledge Agreement for the benefit of the Trustee and the
Holders of the Notes creates a valid and perfected first priority
security interest in such Collateral, securing the payment of the
Obligations enforceable as such against all creditors of the Pledgor
(and any persons purporting to purchase any of the Collateral from the
Pledgor).
(f) 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 such subsidiary 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.
(g) The pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by law or governmental regulation
(including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System) applicable to the Pledgor.
(h) No Event of Default (as defined herein) exists.
SECTION 7. Further Assurances. (a) The Pledgor agrees that
from time to time, at the expense of the Pledgor, the Pledgor will, promptly
upon request by the Trustee, 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 satisfactory to the
Trustee, deliver any instruments to the Trustee and take any other actions that
may be necessary or, in the reasonable opinion of the Trustee, 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.
(b) The Pledgor hereby authorizes the Trustee to file any
financing or continuation statements 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
Pledge Agreement or any financing statement covering the Collateral or
any part thereof shall be sufficient as a financing statement where
permitted by law.
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(c) The Pledgor will promptly pay all 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 Trustee, to take all actions that are necessary to perfect or
continue the perfection of, or to protect the first priority of, the
Trustee's security interest in and to the Collateral, including the
filing of all necessary financing and continuation statements, 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 8. Covenants. The Pledgor covenants and agrees with the
Trustee and the Holders of the Notes that from and after the date of this
Pledge Agreement until the earlier of payment in full in cash of (x) each of
the first six scheduled interest payments due on the Notes under the terms of
the Indenture or (y) all obligations due and owing under the Indenture and the
Notes in the event such obligations become due and payable prior to the payment
in full of the first six scheduled interest payments on the Notes:
(a) that (i) it will not (and will not purport to) sell or
otherwise dispose of, or grant any option or warrant with respect to,
any of the Collateral or its beneficial interest therein, and (ii) it
will not create or permit to exist any Lien or other adverse interest in
or with respect to its beneficial interest in any of the Collateral
(except for the security interests granted under this Pledge Agreement
and any Lien created by or arising through the Trustee); and
(b) that it will not (i) enter into any agreement or
understanding that restricts or inhibits or purports to restrict or
inhibit the Trustee's rights or remedies hereunder, including, without
limitation, the Trustee's right to sell or otherwise dispose of the
Collateral or (ii) fail to pay or discharge any tax, assessment or levy
of any nature with respect to its beneficial interest in the Collateral
not later than five days prior to the date of any proposed sale under
any judgment, writ or warrant of attachment with respect to such
beneficial interest.
SECTION 9. Power of Attorney. In addition to all of the
powers granted to the Trustee pursuant to the Indenture, the Pledgor hereby
appoints and constitutes the Trustee as the Pledgor's attorney-in-fact (with
full power of substitution), with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Trustee's discretion to take any action and to execute any instrument that the
Trustee may deem necessary or advisable to accomplish the purposes of this
Pledge Agreement, including, without limitation:
(a) to ask for, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral,
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(b) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above,
(c) to file any claims or take any action or institute any
proceedings that the Trustee may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Trustee with respect to any of the Collateral, and
(d) to pay or discharge taxes or Liens levied or placed upon
the Collateral, the legality or validity thereof and the amounts
necessary to discharge the same to be determined by the Trustee in its
sole reasonable discretion, and such payments made by the Trustee to
become part of the Obligations of the Pledgor to the Trustee, due and
payable immediately upon demand;
provided, however, that the Trustee shall have no obligation to perform any of
the foregoing actions. The Trustee'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, sign the
Pledgor's name on all financing statements (to the extent permitted by
applicable law) or any other documents deemed necessary or appropriate by the
Trustee to preserve, protect or perfect the security interest in the Collateral
and to file the same, prepare, file and sign the Pledgor's name on any notice
of Lien, and to take any other reasonable actions arising from or incident to
the powers granted to the Trustee in this Pledge Agreement. This power of
attorney is coupled with an interest and is irrevocable by the Pledgor.
SECTION 10. No Assumption of Duties; Reasonable Care. The
rights and powers conferred on the Trustee hereunder are solely to preserve and
protect the security interest of the Trustee and the Holders of the Notes in
and to the Collateral granted hereby and shall not be interpreted to, and shall
not impose any duties on the Trustee in connection therewith other than those
expressly provided herein or imposed under applicable law. Except as provided
by applicable law or by the Indenture, the Trustee shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Trustee accords similar property held by the Trustee for its own
account, it being understood that the Trustee in its capacity as such shall not
have any responsibility for (a) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities or other matters relative to any
Collateral, whether or not the Trustee has or is deemed to have knowledge of
such matters, (b) taking any necessary steps to preserve rights against any
parties with respect to any Collateral or (c) investing or reinvesting any of
the Collateral or any loss on any investment.
SECTION 11. Indemnity. The Pledgor shall indemnify, hold
harmless and defend the Trustee and its directors, officers, agents and
employees, from and against any and all
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claims, actions, obligations, liabilities and expenses, including reasonable
defense costs, reasonable investigative fees and costs, and reasonable legal
fees and damages arising from the Trustee's performance as Trustee under this
Pledge Agreement, except to the extent that such claim, action, obligation,
liability or expense is directly attributable to the bad faith, negligence or
wilful misconduct of such indemnified person. The obligations of the Pledgor
under this Section 11 shall survive the termination of this Agreement.
SECTION 12. 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 this Pledge Agreement as an "Event of Default")
shall have occurred and be continuing:
(a) The Trustee and the Holders of the Notes may exercise, in
addition to all other rights given by law or by this Pledge Agreement or
the Indenture, all of the rights and remedies with respect to the
Collateral of a secured party under the UCC in effect in the State of
New York at that time or to exercise any other remedy given to it under
the Indenture, may hire investment advisers or other experts, and may
cause the sale of the Collateral or any part thereof in one or more
parcels at any broker's board or at public or private sale, in one or
more sales or lots, at any of the Trustee's offices or elsewhere, for
cash, on credit or for future delivery, at such price or prices as the
Trustee or any such investment adviser or other expert reasonably may
deem best, and upon such other terms as the Trustee or any such
investment adviser or other expert may deem commercially reasonable.
Unless any of the Collateral threatens, in the reasonable judgment of
the Trustee or any such investment adviser or other expert, to decline
speedily in value or is or becomes of a type sold in a recognized
market, which shall be deemed to include the Pledged Securities, the
Trustee will give at least ten business days' notice to the Pledgor in
accordance with Section 15.1 of the time and place of any public sale or
the time after which any private sale is to be made. The Trustee shall
not be obligated to cause any sale of Collateral regardless of notice of
sale having been given. The Trustee 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. 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. 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. The Trustee or any Holder of Notes may, in its own name or
in the name of a designee or nominee, buy any of the Collateral at any
public sale and, if permitted by applicable law, at any private sale.
All reasonable expenses (including court costs and reasonable attorneys'
fees, expenses and
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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) All cash proceeds received by the Trustee in respect of
any sale of, collection from, or other realization upon all or any part
of the Collateral may, in the reasonable discretion of the Trustee, be
held by the Trustee as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Trustee
pursuant to Section 13) in whole or in part by the Trustee for the
ratable benefit of the Holders of the Notes against, all or any part of
the Obligations in such order as the Trustee shall elect. Any surplus
of such cash or cash proceeds held by the Trustee and remaining after
payment in full of all the Obligations shall promptly be paid over to
the Pledgor or to whomsoever may be entitled to receive such surplus as
ordered by a court of competent jurisdiction.
(c) The Trustee 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
Pledge Account or any part thereof.
(d) The Pledgor further agrees to use its reasonable best
efforts to do or cause to be done all such other acts as may be
reasonably necessary to make such sale or sales of all or any portion of
the Collateral pursuant to this Section 12 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 12 will cause irreparable injury to the Trustee and the
Holders of the Notes, that the Trustee and the Holders of the Notes have
no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 12
shall be specifically enforceable against the Pledgor, and the Pledgor
hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no
Event of Default has occurred.
SECTION 13. Expenses. The Pledgor will upon demand pay to the
Trustee the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees, expenses and disbursements of its counsel,
experts and agents retained by the Trustee, that the Trustee may incur in
connection with (a) the review, negotiation and administration of this Pledge
Agreement, (b) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (c) the exercise or
enforcement of any of the rights of the Trustee and the Holders of the Notes
hereunder or (d) the failure by the Pledgor to perform or observe any of the
provisions hereof.
SECTION 14. Security Interest Absolute. All rights of the
Trustee and the Holders of the Notes and security interests hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
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(a) any lack of validity or enforceability of the Indenture or
Notes 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 taking, exchange, surrender, release or non-perfection
of any Liens on any other collateral for all or any of the Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations or
any other assets of the Pledgor;
(e) any change, restructuring or termination of the corporate
structure or existence of the Pledgor; or
(f) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to, or
a discharge of, the Pledgor in respect of the Obligations or of this
Pledge Agreement.
SECTION 15. Miscellaneous Provisions.
Section 15.1. Notices. Any notice or communication given
hereunder 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:
Allegiance Telecom, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
if to the Trustee:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: [ ], Corporate Trust Administration
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All such notices and other communications shall, when mailed, delivered or
telecopied, respectively, be effective three business days after deposit in the
mails, when delivered or telecopied, respectively, addressed as aforesaid.
Section 15.2. 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 be used to interpret
this Pledge Agreement.
Section 15.3. 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.
Section 15.4. 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.
Section 15.5. 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.
Section 15.6. 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 of the Notes,
any benefit or any legal or equitable right, remedy or claim under this Pledge
Agreement.
Section 15.7. Amendments, Waivers and Consents. Any amendment
or waiver of any provision of this Pledge Agreement and any consent to any
departure by the Pledgor 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 then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
Neither the Trustee nor any Holder of Notes shall be deemed, by any act, delay,
indulgence, omission or otherwise, to have waived any right or remedy hereunder
or to have acquiesced in any Default or Event of Default or in any breach of
any of the terms and conditions hereof. Failure of the Trustee or any Holder
of Notes to exercise, or delay in exercising, any right, power or privilege
hereunder shall not preclude any other or further exercise thereof or the
exercise of
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15
any other right, power or privilege. A waiver by the Trustee or any Holder of
Notes of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy that the Trustee or such Holder of
Notes would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
Section 15.8. Interpretation of Agreement. To the extent a term
or provision of this Pledge Agreement conflicts with the Indenture, the
Indenture shall control with respect to the subject matter of such term or
provision. Acceptance of or acquiescence in a course of performance rendered
under this Pledge Agreement shall not be relevant to determine the meaning of
this Pledge Agreement even though the accepting or acquiescing party had
knowledge of the nature of the performance and opportunity for objection.
Section 15.9. Continuing Security Interest; Termination. (a)
This Pledge Agreement shall create a continuing security interest in and to the
Collateral and shall, unless otherwise provided in this Pledge Agreement,
remain in full force and effect until the payment in full in cash of the
Obligations. This Pledge Agreement shall be binding upon the Pledgor, its
transferees, successors and assigns, and shall inure, together with the rights
and remedies of the Trustee hereunder, to the benefit of the Trustee, the
Holders of the Notes and their respective successors, transferees and assigns.
(b) This Pledge Agreement (other than Pledgor's obligations
under Sections 11 and 13) shall terminate upon the payment in full in
cash of the Obligations. At such time, the Trustee shall, pursuant to
an Issuer Order, reassign and redeliver to the Pledgor all of the
Collateral hereunder that has not been sold, disposed of, retained or
applied by the Trustee in accordance with the terms of this Pledge
Agreement and the Indenture and take all actions that are necessary to
release the security interest created by this Pledge Agreement in and to
the Collateral, including the execution and delivery of all termination
statements necessary to terminate any financing or continuation
statements filed with respect to the Collateral. Such reassignment and
redelivery shall be without warranty by or recourse to the Trustee in
its capacity as such, except as to the absence of any Liens on the
Collateral created by or arising through the Trustee, and shall be at
the reasonable expense of the Pledgor.
Section 15.10. Survival of Representations and Covenants. All
representations, warranties and covenants of the Pledgor contained herein shall
survive the execution and delivery of this Pledge Agreement, and shall
terminate only upon the termination of this Pledge Agreement.
Section 15.11. 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
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16
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.
Section 15.12. Authority of the Trustee. (a) The Trustee shall
have and be entitled to exercise all powers hereunder that are specifically
granted to the Trustee by the terms hereof, together with such powers as are
reasonably incident thereto. The Trustee may perform any of its duties
hereunder or in connection with the Collateral by or through agents or
employees and shall be entitled to retain counsel and to act in reliance upon
the advice of counsel concerning all such matters. Except as otherwise
expressly provided in this Pledge Agreement or the Indenture, neither the
Trustee nor any director, officer, employee, attorney or agent of the Trustee
shall be liable to the Pledgor for any action taken or omitted to be taken by
the Trustee, in its capacity as Trustee, hereunder, except for its own bad
faith, negligence or willful misconduct, and the Trustee shall not be
responsible for the validity, effectiveness or sufficiency hereof or of any
document or security furnished pursuant hereto. The Trustee and its directors,
officers, employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document believed by it or them to be genuine and
correct and to have been signed or sent by the proper person or persons.
(b) The Pledgor acknowledges that the rights, privileges,
immunities, protections and responsibilities of the Trustee under this
Pledge Agreement with respect to any action taken by the Trustee or the
exercise or non-exercise by the Trustee of any option, right, request,
judgment or other right or remedy provided for herein or resulting or
arising out of this Pledge Agreement shall, as between the Trustee and
the Holders of the Notes, be governed by the Indenture and by such other
agreements with respect thereto as may exist from time to time among
them, but, as between the Trustee and the Pledgor, the Trustee shall be
conclusively presumed to be acting as agent for the Holders of the Notes
with full and valid authority so to act or refrain from acting, and the
Pledgor shall not be obligated or entitled to make any inquiry
respecting such authority.
Section 15.13 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. In the event of a conflict between this Agreement and the Indenture,
the terms of the Indenture shall control.
Section 15.14. Rights of Holders of the Notes. No Holder of
Notes shall have any independent rights hereunder other than those rights
granted to individual Holders of the Notes pursuant to Section 6.07 of the
Indenture; provided that nothing in this subsection shall limit any rights
granted to the Trustee under the Notes or the Indenture.
Section 15.15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER
OF JURY TRIAL; WAIVER OF DAMAGES. (a) THIS PLEDGE AGREEMENT
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17
SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK,
AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THE PLEDGOR, THE TRUSTEE AND THE HOLDERS
OF THE NOTES IN CONNECTION WITH THIS PLEDGE AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
(b) THE PLEDGOR HEREBY APPOINTS LOEB & LOEB LLP, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ AS ITS AGENT FOR SERVICE OF PROCESS IN ANY SUIT,
ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AGREEMENT AND FOR ACTIONS
BROUGHT UNDER U.S. FEDERAL OR STATE SECURITIES LAWS BROUGHT IN ANY FEDERAL OR
STATE COURT LOCATED IN THE CITY OF NEW YORK AND AGREES TO SUBMIT TO THE
JURISDICTION OF ANY SUCH COURT.
(c) THE PLEDGOR AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY
AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF NOTES, HAVE THE RIGHT,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE PLEDGOR OR
THE COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH
(AND HAVING PERSONAL OR IN REM JURISDICTION OVER THE PLEDGOR OR THE COLLATERAL,
AS THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH COLLATERAL, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE
PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR
CROSSCLAIMS IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH
PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE,
EXCEPT FOR SUCH COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN
ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE PLEDGOR
WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN THE CITY
OF NEW YORK ONCE THE TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(d) THE PLEDGOR AGREES THAT NEITHER ANY HOLDER OF NOTES NOR
(EXCEPT AS OTHERWISE PROVIDED IN THIS PLEDGE AGREEMENT OR THE INDENTURE) THE
TRUSTEE IN ITS CAPACITY AS TRUSTEE SHALL HAVE ANY LIABILITY TO THE PLEDGOR
(WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE
PLEDGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS PLEDGE
18
18
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 OF NOTES, AS THE CASE MAY BE, THAT
SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE TRUSTEE OR
SUCH HOLDERS OF NOTES, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, 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 OR ANY HOLDER
OF NOTES 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 OR ANY HOLDER OF
NOTES, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR
PRELIMINARY OR PERMANENT INJUNCTION, THIS PLEDGE AGREEMENT OR ANY RELATED
AGREEMENT OR DOCUMENT BETWEEN THE PLEDGOR ON THE ONE HAND AND THE TRUSTEE
AND/OR THE HOLDERS OF THE NOTES ON THE OTHER HAND.
19
IN WITNESS WHEREOF, the Pledgor and the Trustee have each caused
this Pledge Agreement to be duly executed and delivered as of the date first
above written.
Pledgor:
ALLEGIANCE TELECOM, INC.
By:
--------------------------
Name:
Title:
Trustee:
THE BANK OF NEW YORK
By:
--------------------------
Name:
Title:
20
EXHIBIT A
NOTIFICATION AND CONTROL AGREEMENT
THIS NOTIFICATION AND CONTROL AGREEMENT (the "Agreement") dated
as of [ ], 1998 between Allegiance Telecom, Inc. (the "Pledgor") and The
Bank of New York, a New York banking corporation, in its capacity as trustee
(the "Trustee") and in its capacity as a bank (the "Bank") at which the Pledgor
maintains the Pledge Account (as defined herein).
A. The Pledgor has granted to the Trustee a security interest
in certain U.S. Treasury securities and security entitlements related thereto
(the "Pledged Securities") maintained by the Pledgor with the Bank and carried
in an account in the name of "[ ]" (the "Pledge Account") and all
additions thereto and substitutions and proceeds thereof (collectively, the
"Collateral"), pursuant to, and as more particularly described in, a Collateral
Pledge and Security Agreement dated as of [ ], 1998 between the
Pledgor and the Trustee (as the same may hereafter be amended, supplemented or
otherwise modified from time to time, the "Pledge Agreement"; terms defined in
the Pledge Agreement and not otherwise defined herein are used herein as
therein defined).
B. Terms defined in Articles 8 or 9 of the Uniform Commercial
Code as in effect in the State of New York (the "UCC") are used in this
Agreement (including, without limitation, paragraph A above) as defined in
Articles 8 or 9, respectively, of the UCC.
C. Pursuant to the Pledge Agreement, the Trustee has required
the execution and delivery of this Agreement.
NOW, THEREFORE, for valuable consideration and intending to be
legally bound, the parties hereto agree and acknowledge as follows:
1. NOTICE OF SECURITY INTEREST. The Pledgor and Trustee are
entering into this Agreement to perfect, and confirm the first priority lien
of, the Trustee's security interest in the Collateral. The Bank agrees to
promptly make all necessary entries or notations in its books and records to
reflect the Trustee's security interest in the Collateral and to apply any
value distributed on account of any Pledged Securities as directed by the
Trustee without further consent from the Pledgor. The Bank acknowledges that
the Trustee has control over the Pledge Account and all Pledged Securities
contained therein from time to time.
2. SEPARATE PLEDGE ACCOUNT; TRUSTEE REPRESENTATIONS AND
WARRANTIES. (a) The Trustee hereby instructs the Bank, and the Bank hereby
confirms and agrees that, unless the Trustee shall otherwise direct the Bank in
writing, (i) the Pledge Account is to be
21
2
maintained separately at all times and (ii) the Pledged Securities shall be
carried only in the Pledge Account.
(b) The Trustee hereby represents and warrants that it has
acquired its security interest in, and security entitlement to, the Collateral
for value and without notice of any adverse claim thereto. Without limiting
the generality of the foregoing, the Collateral is not, to the Trustee's
knowledge, subject to any Lien granted by the Trustee in favor of any
securities intermediary (including, without limitation, the Bank or the Federal
Reserve Bank of New York) and the Trustee has not caused or permitted the
Collateral to become subject to any Lien created by or arising through the
Bank.
3. CONTROL. The Bank hereby agrees, upon written direction
from the Trustee and without further consent from the Pledgor, (a) to comply
with all instructions, entitlement orders and directions of any kind originated
by the Trustee concerning the Collateral, to liquidate or otherwise dispose of
the Collateral as and to the extent directed by the Trustee and pay over to the
Trustee all proceeds and other value therefrom or otherwise distributed with
respect thereto without any set off or deduction, and (b) except as otherwise
directed by the Trustee, not to comply with the instructions or directions of
the Pledgor or any other person.
4. OTHER AGREEMENTS; TERMINATION; SUCCESSOR TRUSTEES. The
Bank shall simultaneously send to the Trustee copies of all notices given and
statements rendered pursuant to the Pledge Account. So long as the Pledge
Agreement remains in effect, neither the Pledgor nor the Bank shall terminate
the Pledge Account without thirty (30) days' prior written notice to the other
party and the Trustee. In the event of any conflict between the provisions of
this Agreement and any other agreement governing the Pledge Account, the
provisions hereof shall control. In the event the Trustee no longer serves as
Trustee for the Collateral, the Pledge Account and Pledged Securities carried
therein shall be transferred to a successor trustee satisfactory to the
Trustee, provided that prior to such transfer, such successor trustee executes
an agreement that is in all material respects the same as this Agreement or is
otherwise in form and substance satisfactory to the Trustee.
5. INDEMNITY. The Pledgor shall indemnify and hold the
Trustee and the Bank harmless from any and all losses, claims, damages,
liabilities, expenses and fees, including reasonable counsel fees, resulting
from the execution of or performance under this Agreement and delivery by the
Trustee of all or any part of the Collateral to the Bank pursuant to this
Agreement, except claims, losses or liabilities resulting from the Trustee's or
the Bank's negligence, bad faith or willful misconduct as determined by a final
judgment of a court of competent jurisdiction. This indemnification shall
survive the termination of this Agreement.
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3
6. PROTECTION OF BANK. Except as required by Paragraph 3
hereof, the Bank shall have no duty to determine that the amount and form of
assets constituting Collateral comply with any applicable requirements. The
Bank may rely and shall be protected in acting upon any notice, instruction, or
other communication which it reasonably believes to be genuine and authorized.
7. TERMINATION/RELEASE OF COLLATERAL. This Agreement shall
terminate automatically upon receipt by the Bank of written notice executed by
two officers of the Trustee holding titles of Vice President or higher that (a)
all of the obligations secured by the Collateral have been satisfied, or (b)
all of the Collateral has been released, whichever is sooner, and the Bank
shall thereafter be relieved of all duties and obligations hereunder.
8. WAIVER AND SUBORDINATION OF RIGHTS. The Bank hereby
waives its right to set off any obligations of the Pledgor to the Bank against
any or all assets held by the Trustee as Collateral, and hereby agrees that any
and all liens, encumbrances, claims or security interests which the Bank may
have against the Collateral, either now or in the future are and shall be
subordinate and junior to the prior payment in full of all obligations of the
Pledgor now or hereafter existing under the Indenture, Notes and all other
documents related thereto whether for principal, interest (including, without
limitation, interest, as provided in the Notes, whether or not such interest
accrues after the filing of such petition for purposes of the Bankruptcy Code
or is an allowed claim in such proceeding), indemnities, fees, premiums,
expenses or otherwise. The Bank will not agree with any third party that the
Bank will comply with any instructions or directions of any kind concerning the
Collateral originated by such third party without the prior written consent of
the Trustee. Except for the claims and interests of the Trustee and the
Pledgor in the Collateral, the Bank does not know of any claim to or security
interest or other interest in the Collateral.
9. EXPENSES. The Pledgor shall pay all fees, costs and
expenses (including reasonable fees and expenses of counsel) of enforcing the
Bank's rights and remedies upon any breach (by the Trustee or the Pledgor) of
any of the provisions of this Agreement.
10. NOTICES. All notices, demands, requests, consents,
approvals and other communications required or permitted hereunder must be in
writing and will be effective upon receipt if delivered personally, or if sent
by facsimile transmission with confirmation of delivery, or by nationally
recognized overnight courier service, to the Pledgor's and the Trustee's
addresses as set forth in the Pledge Agreement, and to the Bank's address as
set forth below, or to such other address as any party may give to the others
in writing for such purpose.
11. CHANGES IN WRITING. No modification, amendment or waiver
of any provision of this Agreement nor consent to any departure by any party
therefrom will be
23
4
effective unless made in writing signed by the parties hereto, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given.
12. ENTIRE AGREEMENT. This Agreement (including the documents
and instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof.
13. COUNTERPARTS. This Agreement may be signed in any number
of counterpart copies and by the parties hereto on separate counterparts
(including by facsimile transmission), but all such copies shall constitute one
and the same instrument.
14. SUCCESSORS AND ASSIGNS. This Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
15. GOVERNING LAW AND JURISDICTION. This Agreement has been
delivered to and accepted by the Trustee and will be deemed to be made in the
State of New York. THIS AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. Each of the parties hereby irrevocably submits for itself
and its property in any legal action or proceeding relating to this Agreement,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction and venue of the courts of the State of New
York, the courts of the United States of America in New York, and appellate
courts from any thereof.
16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) OF
ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION
WITH THIS
24
5
AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. EACH
PARTY HERETO ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of
the date first above written.
PLEDGOR:
ALLEGIANCE TELECOM, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
TRUSTEE:
THE BANK OF NEW YORK, as Trustee
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
BANK'S ADDRESS FOR BANK:
NOTICES:
THE BANK OF NEW YORK
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By:
21 West -------------------------------
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Name:
-----------------------------
Attention: ▇▇▇ ▇▇▇▇▇, Title:
Corporate Trust Administration ----------------------------
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
26
ANNEX 1
Pledged Securities
------------------------------------------------------------------------------
Security CUSIP No. Coupon (%) Maturity Amount
-------- --------- ---------- -------- ------
------------------------------------------------------------------------------
United States
Treasury
------------------------------------------------------------------------------
United States
Treasury
------------------------------------------------------------------------------
United States
Treasury
------------------------------------------------------------------------------
United States
Treasury
------------------------------------------------------------------------------
United States
Treasury
------------------------------------------------------------------------------
United States
Treasury
------------------------------------------------------------------------------