Exhibit 2
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of January 31, 2001, made by ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
("Pledgor") in favor of AT&T Corp., a New York corporation ("Lender").
WHEREAS, Pledgor is the beneficial owner and record holder of 100% of the
issued and outstanding shares of capital stock (the "Pledged Shares") of Swift
Telecommunications, Inc., a New York corporation ("Swift");
WHEREAS, Lender and Swift have entered into an Asset Purchase Agreement,
dated December 13, 2000 (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, Swift has issued to Lender a
promissory note in the original principal amount of $35,000,000 (the "Swift
Note"), and, pursuant to a Security Agreement of even date herewith (the "Swift
Security Agreement"), granted to Lender a first priority security interest in
the assets of Swift securing all of the obligations to Lender under the Swift
Note;
WHEREAS, Swift, ▇▇▇▇.▇▇▇ Inc., ML Acquisition Corp. and ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
have entered into an Agreement and Plan of Merger, dated as of January 31, 2001
(the "Merger Agreement"), contemplating the merger (the "Merger") of Swift with
and into ML Acquisition Corp. ("Acquisition Sub"), a wholly owned subsidiary of
▇▇▇▇.▇▇▇, Inc., a Delaware corporation ("▇▇▇▇.▇▇▇");
WHEREAS, on the date of consummation of the Merger (the "Merger Closing
Date"), Pledgor will acquire certain shares of common stock of ▇▇▇▇.▇▇▇ (the
"▇▇▇▇.▇▇▇ Pledged Shares") in exchange for the Swift Pledged Shares;
WHEREAS, contemporaneously herewith ▇▇▇▇.▇▇▇ is executing and delivering
to Lender (i) an Amended and Restated Promissory Note (the "▇▇▇▇.▇▇▇ Note"),
which will supersede and replace the Swift Note in the event that Swift merges
into ▇▇▇▇.▇▇▇ or a subsidiary of ▇▇▇▇.▇▇▇ or is acquired by ▇▇▇▇.▇▇▇ or a
subsidiary of ▇▇▇▇.▇▇▇; and (ii) a Pledge Agreement (the "▇▇▇▇.▇▇▇ Pledge
Agreement");
WHEREAS, as a condition precedent to the obligations of the Lender under
the Purchase Agreement, including, without limitation, its acceptance of the
Swift Note and the ▇▇▇▇.▇▇▇ Note, Lender requires Pledgor to pledge, as security
for the obligations owing to Lender under the Swift Note and the ▇▇▇▇.▇▇▇ Note,
pursuant to the terms set forth herein, all of his shares of capital stock in
the Company (the "Pledged Shares") as security therefor pursuant to the terms
set forth herein;
NOW, THEREFORE, in consideration of the premises and in order to induce
Lender to consummate the transactions contemplated by the Purchase Agreement,
including, without limitation, its acceptance of the Note, and in exchange for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Pledgor hereby agrees with Lender as follows:
1. Definitions
All capitalized terms used in this Agreement which are not otherwise
defined herein shall have the meanings ascribed to them in the Note or, if not
therein defined, Article 9 of the Uniform Commercial Code (the "Code") currently
in effect in the State of New York, as applicable.
"Company" means (i) prior to the consummation of the Merger, Swift, and
(ii) upon the consummation of the Merger, ▇▇▇▇.▇▇▇.
"Note" means (i) prior to the consummation of the Merger, the Swift Note,
and (ii) upon the consummation of the Merger, the ▇▇▇▇.▇▇▇ Note.
2. Pledge
(a) As security for the prompt payment in full and performance of the
Obligations (as defined in Section 3) when due (whether at stated maturity, by
acceleration or otherwise), Pledgor hereby transfers, grants, bargains, sells,
conveys, hypothecates, pledges, sets over and delivers to Lender, its successors
and assigns, and hereby grants to Lender, its successors and assigns, a Lien and
charge upon and first priority security interest in the following, whether now
owned or hereafter created, acquired or reacquired (the "Collateral"):
(i) the Pledged Shares and any certificates representing the Pledged
Shares, and all dividends, cash, instruments, securities and other
property from time to time received, receivable or otherwise distributed
in respect of, in exchange for, or upon the conversion of any or all of
the Pledged Shares;
(ii) any and all additional shares of capital stock of Swift from
time to time acquired by Pledgor by purchase, stock dividend or otherwise;
(iii) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described above but excluding (x) cash in an aggregate amount not to
exceed $840,000 received by Pledgor pursuant to the Merger Agreement upon
the closing of the transactions described therein and proceeds from the
sale or winding-up of GN Comtext S.r.L., subject to the requirements set
forth in Section (1)(d)(i) of the Note; and (y) promissory notes in an
aggregate principal amount not to exceed $9,200,000, received by Pledgor
pursuant to the Merger Agreement upon the closing of the transactions
described therein; provided that Pledgor receives at least 15,750,000
shares of ▇▇▇▇.▇▇▇ Inc. common stock upon the closing of the transactions
described in the Merger Agreement, all of which stock and any other
proceeds not referenced in clauses (x) or (y) above shall be Collateral);
and
(iv) all books, correspondence, credit files, records, invoices and
other papers, including, without limitation, all tapes, cards, computer
runs and other papers and documents relating to any of the foregoing in
the possession or under
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the control of Pledgor or any entity from time to time acting for Pledgor
or the Company.
(b) Pledgor agrees that the pledge hereunder shall continue to be
effective or shall be reinstated (to the extent that the pledge has been
released as a result of such payment), as the case may be, if at any time any
payment (in whole or in part) of any of the Obligations is rescinded or must
otherwise be restored by Lender, including upon the insolvency, bankruptcy or
reorganization of the Company, all as though such payment had not been made.
(c) Upon payment in full of the principal and interest due under the Note
at each installment set forth in Column 1 of the following table, and provided
that each of the following conditions (each, a "Release Condition") is met: (i)
no Event of Default has occurred under the Note and is continuing; (ii) no more
than two Events of Default have occurred during the immediately preceding twelve
months (other than any failure of Company to make due and punctual payment of
any principal or interest due and payable under the Note, which default
continues for a period of less than eight (8) business days), and (iii) no more
than four Events of Default have occurred since the issuance of the Note (other
than any failure of Company to make due and punctual payment of any principal or
interest due and payable under the Note, which default continues for a period of
less than eight (8) business days), and (iv) the Pledged Shares are publicly
traded on NASDAQ or the New York Stock Exchange, Lender will release to Pledgor
a number of Pledged Shares equal to the lesser of (x) the number of Pledged
Shares equal to the percentage of the initial Pledged Shares set forth in Column
2 opposite such installment and (y) the number of Pledged Shares in excess of
the number of Pledged Shares required to satisfy the minimum Market Value for
the remaining Pledged Shares set forth in Column 3 opposite such installment, in
each case after making appropriate adjustments to the number of Pledged Shares
for splits, combinations and other recapitalizations or reclassifications of the
capital stock of the issuer of such Shares. For purposes of this paragraph and
paragraph (d) below, the reference to Pledged Shares shall mean the shares of
▇▇▇▇.▇▇▇ common stock received by Pledgor in exchange for the original Pledged
Shares pursuant to the Merger Agreement that are delivered to Lender and become
Pledged Shares hereunder.
Column 1: Column 2: Column 3:
Number of Installment Percentage of Shares Value of Remaining
--------------------- -------------------- ------------------
Pledged Shares (millions)
-------------------------
12th 25.0 $15.0
18th 12.5 12.5
24th 12.5 10.0
30th 12.5 7.5
36th 12.5 5.0
42nd 12.5 2.5
48th 12.5 0
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(d) Notwithstanding the foregoing paragraph, if all of the Release
Conditions have been satisfied and the Market Value per Pledged Share on the
date of payment in full of the principal and interest due under the Note at the
24th, 30th, 36th or 42nd installment is at least $3.75 per share, after making
appropriate adjustments to the number of Pledged Shares for splits, combinations
and other recapitalizations or reclassifications of the capital stock of the
issuer of such Pledged Shares, then Lender will release to Pledgor all of the
remaining Pledged Shares upon such payment of the installment then due.
(e) "Market Value" shall mean the average last sale price for the 20
consecutive trading days ending three trading days immediately before the date
upon which the applicable payment installment was made by the Company, which
price shall be adjusted as appropriate for stock splits, stock dividends,
recapitalizations, mergers and similar transactions and for ex-dividend trading.
(f) Lender agrees to subordinate the Collateral as follows: Lender will
use reasonable efforts, for no less than one hundred twenty (120) days, to sell
or dispose of other collateral received by Lender under any of the Loan
Documents ("Other Collateral"), including shares of ML Acquisition Corp., to
satisfy the Obligations (as defined herein), in the event of a default under the
Note, before selling or disposing of the Collateral to satisfy the Obligations.
Once the Obligations have been fully satisfied, Lender agrees to assign its
remaining rights and interest in the Other Collateral to Pledgor.
3. Security for Obligations
This Agreement and the security interest created hereby in the Pledged
Shares constitutes continuing collateral security for all of the following
obligations, whether now existing or hereafter incurred (the "Obligations"):
(a) the prompt payment by Pledgor, as and when due and payable, of all
amounts from time to time owing by Pledgor in respect of this Agreement;
(b) the prompt payment by (i) Swift, as and when due and payable, of all
amounts from time to time owing by Swift in respect of the Swift Note, the Swift
Pledge Agreement and the Swift Security Agreement, in each case, as the same may
be amended from time to time (ii) ▇▇▇▇.▇▇▇, as and when due and payable, of all
amounts from time to time owing by ▇▇▇▇.▇▇▇ in respect of the ▇▇▇▇.▇▇▇ Note and
the ▇▇▇▇.▇▇▇ Pledge Agreement, in each case, as the same may be amended from
time to time, (iii) Swift EasyLink Co., Inc., a Delaware corporation ("SECI"),
as and when due and payable, of all amounts from time to time owing by SECI in
respect of the Guaranty and Security Agreement entered into as of the date
hereof between SECI and Lender and (iv) Swift Comtext Limited, a company
registered in England and Wales ("Comtext"), as and when due and payable, of all
amounts from time to time owing by Comtext in respect of the Guaranty and
Security Agreement entered into as of the date hereof between Comtext and Lender
(collectively, the "Loan Documents"), including, without limitation,
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obligations to which the Pledgor is or may become a party, whether for
principal, interest, costs, fees, expenses, indemnifications, or otherwise as
and when the same shall become due and payable in accordance with the terms
thereof, whether at maturity or by prepayment, acceleration, declaration of
default or otherwise; and
(c) the due performance and observance by Pledgor of all of his other
obligations from time to time existing in respect of all Loan Documents.
Without limiting the generality of the foregoing, this Agreement secures
the payment of all amounts that constitute part of the Obligations, including,
without limitation, amounts that would be owed by Swift under the Note but for
the fact that they are unenforceable due to the existence of a bankruptcy,
reorganization or similar proceeding involving Swift.
4. Delivery of Collateral
All certificates or instruments from time to time representing or
evidencing the Collateral shall be delivered to and held by or on behalf of
Lender pursuant hereto and shall be in suitable form for transfer by delivery,
or shall be accompanied by duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to Lender. Lender shall have
the right, at any time in its discretion and without notice to Pledgor, to
transfer to or to register in the name of Lender or any of its nominees any or
all of the Collateral, subject only to the rights specified in Section 7(a);
provided, that notwithstanding the foregoing, until any transfer of beneficial
ownership with respect to the Collateral pursuant to any exercise of remedies
under Section 11, Pledgor shall continue to be the beneficial owner of the
Collateral. In addition, Lender shall have the right at any time to exchange
certificates or instruments representing or evidencing Collateral for
certificates or instruments of smaller or larger denominations. Pledgor will
promptly give to Lender copies of any notices or other communications received
by it with respect to the Collateral.
5. Representations and Warranties and Covenants
Pledgor represents, warrants and covenants to Lender as follows:
(a) Pledgor is, and will at all times continue to be, the legal and
beneficial owner of the presently existing Collateral pledged by Pledgor
hereunder, free and clear of any Lien except for the security interest created
by this Agreement. Pledgor will make no assignment, pledge, hypothecation or
transfer of, or create or permit to exist any security interest in, or other
Lien on, the Collateral, other than pursuant hereto; provided that nothing
contained herein shall prohibit Pledgor from exchanging the Pledged Shares for
at least 15,750,000 shares of common stock of ▇▇▇▇.▇▇▇ pursuant to the Merger
Agreement in connection with the merger of the Company with and into Acquisition
Sub in accordance with the Merger Agreement, whereupon such shares of ▇▇▇▇.▇▇▇
shall become "Pledged Shares" hereunder.
(b) The pledge of the Pledged Shares pursuant to this Agreement, together
with the delivery of the Pledged Shares pursuant to Section 4, creates, and will
continue
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to create, a valid and perfected first priority Lien upon and security interest
in the Collateral, in favor of Lender and securing the payment of the
Obligations, enforceable as such against all creditors of Pledgor and any
persons purporting to purchase or otherwise acquire any capital stock of the
Company from Pledgor. Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will defend his
title or interest thereto or therein against any and all Liens (other than the
Lien created by this Agreement), however arising.
(c) No consent of any other Person (including, without limitation,
stockholders or creditors of Pledgor) and no consent, authorization, approval,
or other action by, and no notice to or filing with, any Governmental Authority
is or was required (i) for the pledge by him of the Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement by
him, (ii) for the perfection or maintenance of the security interest created
hereby (including the first priority nature of such security interest) or (iii)
for the exercise by Lender of the voting or other rights provided for in this
Agreement or the remedies in respect of the Collateral pursuant to this
Agreement (except as may be required in connection with any disposition of the
Pledged Shares by laws affecting the offering and sale of securities generally).
(d) For so long as Pledgor is the majority owner of Swift, Pledgor shall
cause Swift to perform fully and timely its obligations under the Loan
Documents.
(e) The Pledged Shares represent all of the issued and outstanding shares
of capital stock of Swift. There are no (i) securities convertible into or
exchangeable for any shares of capital stock of Swift, or any options, warrants,
rights, calls, rights or exchange, conversion rights or other commitments
entitling any person to purchase or otherwise acquire any shares of capital
stock of Swift, issued and outstanding; (ii) restrictions on the transferability
of the Collateral to Lender or with respect to the foreclosure, transfer or
disposition thereof by Lender (other than any applicable Federal or state
securities laws); or (iii) shareholders agreements, voting trusts, proxy
agreements or other agreements or understandings which affect or relate to the
voting or giving of written consents with respect to any of the Collateral.
(f) All of the Pledged Shares have been duly authorized and validly issued
and are fully paid and nonassessable, and all information set forth herein
relating to the Pledged Shares is accurate and complete in all material respects
as of the date hereof.
6. Further Assurances
Pledgor agrees that at any time and from time to time, at his expense, he
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary, or that Lender may at any time
reasonably request, in order to more fully perfect and protect any security
interest granted or purported to be granted hereby or to preserve and defend
against any Person his title to the Collateral and the rights purported to be
granted therein by this Agreement to Lender or to enable Lender to exercise and
enforce its rights and remedies hereunder with respect to any Collateral,
including, without limitation, all rights and remedies action specified in
Section 11. In
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addition, Pledgor covenants, as to himself and the Collateral pledged by him
hereunder, that he will not, by action or omission, cause Swift or any of its
Subsidiaries to violate any of the provisions of this Agreement, the Note or the
other Loan Documents and that he will take all actions, including, without
limitation, the voting of his shares of capital stock in the Company, or refrain
from taking any action, as the case may be, so as to effect the provisions of
this Agreement, the Note and the other Loan Documents.
7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default under the Note has occurred and is
continuing:
(i) Pledgor shall be entitled to exercise or refrain from exercising
any and all voting and other consensual rights pertaining to the
Collateral or any part thereof for any purpose not inconsistent with the
terms of this Agreement or the other Loan Documents; provided, however,
that Pledgor will not be entitled to exercise any such right if such
exercise could materially and adversely affect the rights inuring to a
holder of the Pledged Shares or the rights and remedies of Lender under
this Agreement or the ability of Lender to exercise the same; and
(ii) Pledgor shall be entitled to receive and retain any and all
cash dividends and interest, cash, instruments and other property paid in
respect of the Collateral, to the extent and only to the extent that such
are permitted by, and otherwise paid in accordance with, the terms and
conditions of the Loan Documents and applicable laws, and provided that
any and all
(A) dividends and interest paid or payable other than in cash
in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange
for, any Collateral,
(B) dividends and other distributions paid or payable in cash
in respect of any Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of
capital, return of capital, capital surplus or paid-in-surplus,
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any
Collateral, and
(D) other distributions made on or in respect of the Pledged
Shares, whether paid or payable in cash or otherwise, whether
resulting from a subdivision, combination or reclassification of the
outstanding capital stock of the Company or received in exchange for
Pledged Shares or any part thereof, or in redemption thereof, or as
a result of any merger, consolidation, acquisition or other exchange
of assets to which the Company may be a party or otherwise,
shall be, and shall be forthwith delivered to Lender to hold as,
Collateral in accordance with Section 4 and shall, if received by Pledgor,
be received in trust
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for the benefit of Lender, be segregated from the other property or funds
of Pledgor, and be forthwith delivered to Lender as Collateral in the same
form as so received (with any necessary endorsement or assignment) in
accordance with Section 4. Notwithstanding the foregoing, Pledgor shall be
entitled to retain and not deliver to Lender (x) cash in an aggregate
amount not to exceed $840,000 received by Pledgor pursuant to the Merger
Agreement upon the closing of the transactions described therein and
proceeds from the sale or winding-up of GN Comtext S.r.L., subject to the
requirements set forth in Section (1)(d)(i) of the Note; and (y)
promissory notes in an aggregate principal amount not to exceed $9,200,000
received by Pledgor pursuant to the Merger Agreement upon the closing of
the transactions described therein; provided that Pledgor receives at
least 15,750,000 shares of ▇▇▇▇.▇▇▇ common stock upon such closing, all of
which stock and any other proceeds not referenced in clauses (x) or (y)
above shall be forthwith delivered to Lender to hold as Collateral in
accordance with Section 4 and shall, if received by Pledgor, be received
in trust for the benefit of Lender, be segregated from the other property
or funds of Pledgor, and be forthwith delivered to Lender as Collateral in
the same form as so received (with any necessary endorsement or
assignment) in accordance with Section 4.
(b) In the event that an Event of Default under the Note shall have
occurred and be continuing:
(i) All rights of Pledgor with respect to the Pledged Shares to
exercise or refrain from exercising the voting and other consensual rights
which Pledgor would otherwise be entitled to exercise pursuant to Section
7(a)(i), and to receive the cash dividends, interest, cash, instruments
and other property which he would otherwise be authorized to receive and
retain pursuant to Section 7(a)(ii), shall cease, and all such rights
shall thereupon become vested in Lender, who shall thereupon have the sole
right to exercise or refrain from exercising such voting and other
consensual rights and to receive and hold as Collateral such cash
dividends and interest payments; and
(ii) All dividends and interest payments received by Pledgor
contrary to Section 7(b)(i) shall be received in trust for the benefit of
Lender, shall be segregated from other funds of Pledgor and shall be
forthwith paid over to Lender as Collateral in the same form as so
received (with any necessary endorsement or assignment).
(c) Pledgor shall execute and deliver (or cause to be executed and
delivered) to Lender all such proxies and other instruments as Lender may
reasonably request for the purpose of enabling Lender to exercise the voting and
other rights which he is entitled to exercise pursuant to Section 7(b)(i) and to
receive the cash dividends or interest payments that he is authorized to receive
and retain pursuant to Sections 7(a)(ii) and 7(b)(ii).
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8. Lender Appointed Attorney-in-Fact
If at any time Swift or Pledgor shall fail to pay in full when due or
otherwise timely perform any of the Obligations, Lender shall automatically and
without further action become Pledgor's attorney-in-fact, with full authority in
the place and stead of Pledgor and in the name of Pledgor or otherwise, from
time to time in the discretion of Lender to take any action and to execute any
instrument which Lender deems to be necessary or advisable for accomplishing the
purposes of this Agreement (subject to the rights of Pledgor under Section 7),
including, without limitation, to receive, endorse, collect, ask for, demand,
and ▇▇▇ for all moneys due or to become due or instruments made payable to
Pledgor representing any dividend, interest payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same, to settle, compromise, prosecute or defend any action, claim or proceeding
with respect thereto, and to sell, assign, endorse, pledge, transfer and to make
any agreement respecting, or otherwise deal with, the same. All acts of such
attorney or designee are hereby ratified and approved, and such attorney or
designee shall not be liable for any acts of omission or commission (other than
acts or omissions constituting gross negligence or willful misconduct as
determined by a final judgment or a court of competent jurisdiction). This power
is coupled with an interest and is irrevocable until all of the Obligations are
paid in full.
9. Lender May Perform
If Pledgor fails to perform any agreement or obligation contained herein,
Lender may (without obligation to do so and without releasing Pledgor from its
obligation to do so) itself perform, or cause performance of, such agreement or
obligation, in the name of Pledgor or Lender, and the expenses of Lender
incurred in connection therewith, together with interest on such amounts from
the date of payment or incurrence, at a rate of interest per annum equal to the
interest then in effect under the Note, shall constitute additional Obligations
secured by this Agreement and shall be payable by Pledgor under Section 12,
including, without limitation, any costs or expenses of litigation associated
therewith.
10. Lender's Duties
The powers conferred on Lender hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Lender shall have no duty as to any Collateral, as to ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Collateral, whether or not Lender has
or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. Lender has no obligation to perform any of the
obligations or duties of Pledgor as a shareholder of Swift.
11. Remedies Upon Default
In the event that an Event of Default under the Note shall have occurred
and be continuing:
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(a) Lender may (but shall not be obligated to) exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all of the rights and remedies of a secured party in
default under the Uniform Commercial Code in effect in the State of New York (or
such other applicable jurisdiction as Lender may determine) at that time (the
"Code"), and may also, without demand of performance or other demand,
advertisement or notice except as specified below (all of which demands,
advertisements, and/or notices are hereby expressly waived by Pledgor), sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange, broker's board or at any of Lender's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as Lender may
deem appropriate. Lender shall be authorized at any such sale (if it deems
advisable to do so) to restrict the prospective bidders or purchasers to persons
who will represent and agree that they are purchasing the Collateral for their
own account for investment and not with a view to distribution or sale thereof,
and upon consummation of any such sale Lender shall have the right to assign,
transfer and deliver to the purchaser or purchasers thereof the Collateral so
sold. Each such purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Pledgor, and, to the
extent permitted by applicable law, the Pledgor hereby waives all rights of
redemption, stay, valuation and appraisal Pledgor now has or may at any time in
the future have under any rule of law or statute now existing or hereinafter
enacted. Pledgor agrees that, to the extent notice of sale shall be required by
law, at least ten days' notice to Pledgor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. Lender shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Lender 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.
(b) Any cash held by Lender as Collateral and all cash proceeds received
by Lender in respect of any sale of, collection from, or other realization upon,
all or any part of the Collateral after payment from such proceeds of Lender's
out-of-pocket costs and expenses in connection with such sale, including,
without limitation, reasonable attorneys' fees and expenses, may, in the
discretion of Lender, be held by Lender as collateral for, and/or then or at any
time thereafter be applied in whole or in part by Lender against, all or any
part of the Obligations in such manner as Lender may elect in its sole
discretion.
(c) In the event that the proceeds of any such sale, collection or
realization are sufficient to pay all amounts to which Lender is legally
entitled, Pledgor shall be entitled to receive any such proceeds over and above
such amounts.
12. Expenses
Without limiting the generality of the foregoing, Pledgor may apply the
proceeds of any such sale, collection or realization of the Collateral to pay
the amount of any and all costs and expenses, including the fees, costs,
expenses and other client charges of counsel for Lender and of any experts and
agents (including, without limitation,
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any Person which may act as agent of Lender), that Lender may incur in
connection with (i) the administration of this 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
Lender hereunder or (iv) the failure by Pledgor to perform or observe any of the
provisions hereof. Any amounts payable under this Section 12 shall be included
in the Obligations and shall bear interest from the payment of such costs or
expenses at a rate equal to the lower of 18% per annum or the highest interest
rate permitted under applicable law. In addition, in the event that the proceeds
of any such sale, collection or realization of the Collateral are insufficient
to pay all of the Obligations, Pledgor will, upon demand, pay to Lender the
amounts that Lender may incur in connection with the failure by Pledgor to
perform or observe any provisions hereof, but only to the extent that the
Obligations have not been paid.
13. Continuing Security Interest; Termination
(a) All rights of Lender hereunder, the grant of a security interest in
the Collateral and all obligations of Pledgor hereunder, shall be absolute and
unconditional irrespective of (i) any agreement with respect to any of the
Obligations or any instrument relating to the foregoing, (ii) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from any Loan Document or any other agreement or instrument relating to any of
the foregoing, (iii) any exchange, release or nonperfection of any other
collateral, or any release or amendment or waiver of or consent to or departure
from any guaranty, for all or any of the Obligations or (iv) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, Pledgor in respect of the Obligations or in respect of this
Agreement.
(b) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the earlier of
(A) the date the Company has indefeasibly paid in full in cash all of the
Obligations or (B) the date the Pledged Shares have been transferred to Lender
or its designee, (ii) be binding upon Pledgor and his heirs, successors and
assigns, and (iii) inure, together with the rights and remedies of Lender
hereunder, to the benefit of, and be enforceable by, Lender and its successors
and assigns. Pledgor agrees that the security interest in the Collateral shall
continue to be effective or shall be reinstated (in accordance with Section 2
(b)), as the case may be, if at any time any payment (in whole or in part) of
any of the Obligations is rescinded or must otherwise be restored by Lender for
any reason, all as though such payment had not been made. Subject to the
foregoing, upon the satisfaction in full of the Obligations, the Agreement and
the security interest granted hereby shall terminate and all rights to the
Collateral shall revert to Pledgor. Upon any such termination, Lender will, at
Pledgor's request and expense, release to Pledgor all Collateral then held by it
and execute and deliver to Pledgor such documents as Pledgor shall reasonably
request to evidence such termination. Any execution and delivery of documents
pursuant to this Section 13 shall be without recourse to or warranty by Lender.
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14. Amendments, Etc.
No amendment or waiver of any provision of this Agreement, and no consent
to any departure by Pledgor herefrom, shall in any event be effective unless the
same shall be in writing and signed by Pledgor and Lender, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
15. Notices
All notices and other communications under this Agreement shall be in
writing and shall be deemed given when delivered personally, mailed by
registered or certified mail, return receipt requested, sent by recognized
overnight delivery service (signature of receipt requested) or, to the extent
receipt is confirmed, by telecopy or telefax (provided that such party also
sends a copy by personal delivery or registered or certified mail, return
receipt requested, or recognized overnight delivery service, signature of
receipt requested), to the following addresses (or to such other address as a
party may have specified by notice given to the other party pursuant to this
provision):
Pledgor:
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Rhine & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
Lender:
AT&T Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
General Attorney
AT&T Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Room 3235C2
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
16. Governing Law, Choice Of Forum, No Trial By Jury
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS
CONFLICT OF LAWS PRINCIPLES, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
(b) ANY LEGAL ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT LOCATED IN NEW
YORK COUNTY, STATE OF NEW YORK, AND EACH PARTY AGREES NOT TO ASSERT, BY WAY OF
MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH ACTION, SUIT OR PROCEEDING, ANY
CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF SUCH COURTS, THAT
ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE ACTION,
SUIT OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE
ACTION, SUIT OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT OR THE SUBJECT
MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND HEREBY WAIVES ANY
OFFSETS IN ANY SUCH ACTION, SUIT OR PROCEEDING. EACH PARTY FURTHER IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH ACTION, SUIT OR
PROCEEDING. ANY AND ALL SERVICE OF PROCESS AND ANY OTHER NOTICE IN ANY SUCH
ACTION, SUIT OR PROCEEDING SHALL BE EFFECTIVE AGAINST ANY PARTY IF GIVEN
PERSONALLY OR BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY
ANY OTHER MEANS OF MAIL THAT REQUIRES A SIGNED RECEIPT, POSTAGE PREPAID, MAILED
TO SUCH PARTY AS HEREIN PROVIDED, OR BY PERSONAL SERVICE ON SUCH PARTY WITH A
COPY OF SUCH PROCESS MAILED TO SUCH PARTY BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, POSTAGE PREPAID. NOTHING HEREIN CONTAINED SHALL BE
DEEMED TO AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY
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MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANY OTHER PARTY IN ANY JURISDICTION OTHER THAN NEW YORK IN CONNECTION
WITH ACTIONS INITIATED BY THIRD PARTIES IN SUCH OTHER JURISDICTIONS.
(c) BY HIS EXECUTION AND DELIVERY OF THIS AGREEMENT, PLEDGOR HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVES ANY RIGHTS HE MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR
IN CONNECTION WITH, THIS AGREEMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT, ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PLEDGOR
OR LENDER IN CONNECTION HEREWITH OR THEREWITH. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR LENDER TO MAKE ADVANCES UNDER THE NOTE.
17. Waiver
Pledgor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any Obligations or the Pledgor's obligations
hereunder and any requirement that Lender protect, secure, perfect or insure any
security interest or Lien, or any property subject thereto, or exhaust any right
or take any action against the Company or Pledgor or any other Person.
18. Rights Cumulative
No failure on the part of Lender to exercise, and no delay in exercising,
any right or power hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right or power preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of Lender provided herein are cumulative and are in addition to,
and not exclusive of, any rights or remedies provided by law. No provision for a
specific remedy shall be deemed to limit Lender's remedies at law or in equity.
The rights of Lender hereunder are not conditional or contingent on any attempt
by Lender to exercise any of its rights under any other document against Pledgor
or against any other Person.
19. Assignment
This Agreement shall be binding on Pledgor and his heirs, successors and
permitted assigns (including any trustee succeeding to the rights of Pledgor
pursuant to Chapter 13 of the Bankruptcy Code), and shall inure, together with
all rights and remedies of Lender hereunder, to the benefit of Lender and its
successors and assigns, provided that Pledgor may not assign any of his rights
or obligations hereunder without the prior written consent of Lender and any
purported assignment without such consent
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shall be null and void. Lender may without notice to Pledgor transfer its rights
under this Agreement only to an Affiliate. Any reference to the Company or any
other Loan Party within this Agreement shall be deemed to include any permitted
assignee of such Loan Party and any reference to any Loan Document shall include
any amendment thereto.
20. Survival of Representations and Warranties
All representations and warranties of Pledgor contained herein or made in
connection herewith shall survive the making of and shall not be waived by the
execution and delivery of this Agreement or any other Loan Document or any
investigation by Lender. All covenants and agreements of Pledgor contained
herein shall continue in full force and effect from and after the date hereof
until fully satisfied in accordance with the terms hereof.
21. Severability
Whenever possible each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by, illegal, unenforceable or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition, illegality, uneforceability or invalidity under such law,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
22. Interpretation
Pledgor and Lender have participated jointly in the negotiation and
drafting of this Agreement. In the event that any ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of authorship of any provisions of
this Agreement.
23. Headings
Section headings in this Agreement are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
24. Counterparts
This Agreement may be executed in counterparts (and by different parties
hereto on different counterparts), each of which shall constitute an original,
but all of which, when taken together, shall constitute a single contract.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopy shall be as effective as delivery of a manually executed counterpart of
this Agreement.
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25. Entire Agreement
This Agreement and other Loan Documents (together with any schedules and
exhibits hereto and thereto) embody the entire agreement between the parties
hereto and thereto relating to the transactions provided for herein and therein
and supersede all prior understandings and agreements, whether written or oral,
between the parties hereto and thereto with respect to such transactions.
[Signature page follows]
16
IN WITNESS WHEREOF, Pledgor has executed this Agreement in favor of Lender
as of the date first above written.
/s/ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
-------------------
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
ACCEPTED AND AGREED:
AT&T CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: ADIS Vice President
17