Exhibit 4.3
PLEDGE AND
SECURITY AGREEMENT
Dated as of June 3, 1997
From
ITC/\DELTACOM, INC.,
as Pledgor
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to
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
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T A B L E O F C O N T E N T S
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Page
SECTION 1. Definitions; Appointment; Deposit and Investment................ 2
1.1. Definitions..................................................... 2
1.2. Appointment of the Trustee...................................... 4
1.3. Pledge and Grant of Security Interest........................... 4
1.4. Deposit of Funds................................................ 5
SECTION 2. Security for Obligation......................................... 5
SECTION 3. Delivery of Collateral.......................................... 5
SECTION 4. Maintaining the Cash Collateral Account......................... 5
SECTION 5. Investing of Amounts in the Cash Collateral Account............. 6
SECTION 6. Delivery of Collateral Investments; Filing...................... 6
SECTION 7. Disbursements................................................... 7
SECTION 8. Representations and Warranties.................................. 10
SECTION 9. Further Assurances.............................................. 12
SECTION 10. Covenants....................................................... 12
SECTION 11. Power of Attorney............................................... 13
SECTION 12. No Assumption of Duties; Reasonable Care........................ 14
SECTION 13. Indemnity....................................................... 14
SECTION 14. Remedies upon Event of Default.................................. 15
SECTION 15. Expenses........................................................ 16
SECTION 16. Security Interest Absolute...................................... 16
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Section Page
SECTION 17. Miscellaneous Provisions........................................ 16
17.1. Notices......................................................... 16
17.2. No Adverse Interpretation of Other Agreements................... 17
17.3. Severability.................................................... 17
17.4. Headings........................................................ 17
17.5. Counterpart Originals........................................... 17
17.6. Benefits of Pledge and Security Agreement....................... 17
17.7. Amendments, Waivers and Consents................................ 17
17.8. Interpretation of Agreement..................................... 18
17.9. Continuing Security Interest; Termination....................... 18
17.10. Survival Provisions............................................. 18
17.11. Waivers......................................................... 19
17.12. Authority of the Trustee........................................ 19
17.13. Intentionally Omitted........................................... 19
17.14. Final Expression................................................ 19
17.15. Rights of Holders of the Notes.................................. 20
17.16. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER
OF JURY TRIAL; WAIVER OF DAMAGES................................ 20
PLEDGE AND SECURITY AGREEMENT
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This PLEDGE AND SECURITY AGREEMENT (this "Pledge and Security
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Agreement") is made and entered into as of June 3, 1997 by and among
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ITC/\DELTACOM, Inc., a Delaware corporation (the "Pledgor"), having its
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principal office at 000 Xxxx Xxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxx, 00000, ITC
HOLDING COMPANY, INC., each of the Reorganization Subsidiaries (as defined
herein), XXXXXX XXXXXXX & CO. INCORPORATED, XXXXXXX LYNCH, PIERCE, XXXXXX &
XXXXX INCORPORATED, FIRST UNION CAPITAL MARKETS CORP. and NATIONSBANC CAPITAL
MARKETS, INC., acting as the Placement Agents (collectively, the "Placement
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Agents"), in favor of UNITED STATES TRUST COMPANY OF NEW YORK, a banking and
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trust company duly organized and existing under the laws of the State of New
York ("U.S. Trust"), having an office at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX
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10036, as trustee (the "Trustee") for the holders (the "Holders") of the Notes
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(as defined herein) issued by the Pledgor under the Indenture referred to below.
W I T N E S S E T H
WHEREAS, the Pledgor and the Placement Agents are parties to a
Placement Agreement dated May 29, 1997 (the "Placement Agreement"), pursuant to
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which the Pledgor will issue and sell to the Placement Agents $200,000,000 in
aggregate principal amount of 11% Senior Notes due 2007 (the "Notes");
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WHEREAS, the Pledgor and the 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
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Pledgor is issuing the Notes on the date hereof;
WHEREAS, pursuant to the Placement Agreement and the Indenture, the
Pledgor is required to direct that on the Closing Date (as defined in the
Placement Agreement) $194,000,000 (the "Funds") be deposited with the Trustee to
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be held by the Trustee for the benefit of the Holders of the Notes to secure the
Pledgor's obligation to (i) provide for payment in full of the first six
scheduled interest payments due on the Notes, (ii) secure repayment of the
principal, premium 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 and (iii) redeem all of the Notes in the
event that the Reorganization (as defined in the Indenture) is not consummated
or certain other conditions are not satisfied, or if appears in the sole
judgement of the Pledgor that the Reorganization will not
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be consummated or such other conditions will not be satisfied, by September 15,
1997 (the "Termination Date") (collectively, the "Obligations"); and
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WHEREAS, to secure the Obligations of the Pledgor, the Pledgor has
agreed to (i) pledge to the Trustee for its benefit and the ratable benefit of
the Holders of the Notes, a security interest in the Funds and other Collateral
(as hereinafter defined) and (ii) execute and deliver this Pledge and Security
Agreement in order to secure the payment and performance by the Pledgor of all
the Obligations.
AGREEMENT
NOW, THEREFORE, in consideration of the promises herein contained, and
in order to induce the Holders of the Notes to purchase the Notes, the Pledgor,
the Placement Agents and the Trustee hereby agree, for the benefit of the
Trustee and for the ratable benefit of the Holders of the Notes, as follows:
SECTION 1. Definitions; Appointment; Deposit and Investment.
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1.1. Definitions.
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"Cash Collateral Account" means an account established and maintained
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by the Trustee in the name "UST Tstee ITC Sr Nts Cash Collatl," which
account shall at all times be under the sole dominion and control of the
Trustee and subject to the terms and conditions of this Pledge and Security
Agreement.
"Cash Equivalents" means any of the following investments, to the
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extent owned free and clear of all liens other than liens created
hereunder: (a) U.S. Government Obligations and (b) commercial paper in an
aggregate amount of no more than $5 million per issuer outstanding at any
time, issued by any corporation organized under the laws of any State of
the United States and rated at least "Prime-1" (or the then equivalent
grade) by Xxxxx'x Investors Service, Inc. or "A-1" (or the then equivalent
grade) by Standard & Poor's Ratings Service; provided that prior to the
consummation of the Reorganization, no such investment shall mature after
the Termination Date.
"First Union Release" shall mean an agreement, document or instrument
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executed by First Union National Bank of North Carolina, CoBank, ACB or
other authorized person pursuant to or in connection with the Credit
Agreement (the "Credit Agreement"), dated as of January 29, 1996, by and
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among Valley Finance, Inc., ITC Holding Company, Inc. and certain
subsidiaries of ITC Holding Company, Inc., including certain of the
Reorganization Subsidiaries, as borrowers, the Lenders referred
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to therein, First Union National Bank of North Carolina, as Administrative
Agent, and CoBank, ACB, as Documentation Agent, which shall (i) irrevocably
release from the lien of the Credit Agreement and any related notes,
guarantees and collateral documents, including any agreements, instruments
or documents executed and delivered pursuant to or in connection therewith,
all of the property and assets of the Reorganization Subsidiaries and all
of the capital stock or other ownership interests in the Reorganization
Subsidiaries, (ii) irrevocably release the Reorganization Subsidiaries as
obligors under, and from and against all other obligations incurred under
or in respect of, the Credit Agreement and any related notes, guarantees
and collateral documents, including any agreements, instruments or
documents executed and delivered pursuant to or in connection therewith,
and (iii) irrevocably release the Reorganization Subsidiaries from any
obligation to comply with any term, provision or condition in the Credit
Agreement and any related notes, guarantees and collateral documents,
including any agreements, instruments or documents executed and delivered
pursuant to or in connection therewith.
"Government Book-Entry Security" means U.S. Government Obligations
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maintained in book-entry form through the United States Federal Reserve
Banks pursuant to (A) the United States Treasury Department regulations
codified at 31 C.F.R. Part 357, as modified by the amendments promulgated
at 61 Fed. Reg. 43, 626-43, 638 (Aug. 23, 1996), or (B) substantially
identical regulations promulgated by any other agency or instrumentality of
the United States whose securities qualify as "U.S. Government Obligations"
hereunder.
"Material Regulatory Approvals" shall mean (i) all consents and
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approvals required by the Federal Communications Commission and any other
federal governmental authority or agency and (ii) all consents and
approvals required by the state public utilities commissions of Alabama,
Florida, Georgia, Louisiana, Mississippi, North Carolina and South Carolina
and any other state governmental authority or agency in any such state, in
each case with respect to consummation of the Reorganization.
"Officer's Certificate" shall mean a certificate signed by the
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President or any Vice President of the Pledgor stating that (i) the
Reorganization has been consummated; (ii) all Material Regulatory Approvals
have been received; (iii) the First Union Release has been obtained; and
(iv) consummation of the Reorganization does not violate or conflict with
or give rise to a right to terminate any material agreement or instrument
to which the Pledgor, any of the Reorganization Subsidiaries or any of
their subsidiaries is a party.
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"Opinion of Counsel" shall mean, collectively, (i) an opinion of Xxxxx
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& Xxxxxxx L.L.P. substantially in the form attached hereto as Exhibit A-1,
(ii) an opinion of Xxxxxxxx & Xxxxxxxxx, P.C. substantially in the form
attached hereto as Exhibit A-2 and (iii) an opinion of Stowers, Hayes,
Xxxxx & Xxxxx substantially in the form attached hereto as Exhibit A-3.
"Reorganization Subsidiaries" means Deltacom, Inc., Eastern Telecom,
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Inc., ITC Transmission Systems, Inc., ITC Transmission Systems II, Inc.,
Interstate FiberNet and Gulf States Transmission Systems, Inc.
"Trustee" shall mean the Person named as the "Trustee" in the first
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paragraph of this Agreement until a successor Trustee shall have become
such, and thereafter "Trustee" shall mean the Person who is then the
Trustee hereunder.
"U.S. Government Obligations" means securities that are (i) direct
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obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United
States of America the payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States of America.
All capitalized terms used herein without definition shall have the
respective meanings ascribed to them in the Indenture. Unless otherwise defined
herein or in the Indenture, (i) terms used in Articles 8 or 9 of the Uniform
Commercial Code as in effect in the State of New York (the "U.C.C.") are used
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herein as therein defined and (ii) terms used in "Revised Article 8," as such
term is defined in 31 C.F.R. (S) 357.2, as modified by the amendments
promulgated at 61 Fed. Reg. 43, 628 (Aug. 23, 1996), are used herein as therein
defined.
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1.2. Appointment of the Trustee. The Pledgor and the Placement
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Agents hereby appoint the Trustee as Trustee in accordance with the terms and
conditions set forth herein and the Trustee hereby accepts such appointment.
1.3. Pledge and Grant of Security Interest. The Pledgor hereby
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pledges to the Trustee for its benefit and for the ratable benefit of the
Holders of the Notes, and 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 certificated securities, uncertificated
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securities, investment property, general intangibles or otherwise: (a) the Cash
Collateral Account, all funds held therein and all certificates and instruments,
if any, from time to time representing or evidencing the Cash Collateral
Account, (b) the Collateral Investments Account and all Collateral Investments
(as hereinafter defined) and all certificates and instruments, if any,
representing or evidencing the Collateral Investments, and any and all security
entitlements to the Collateral Investments, and any and all related securities
accounts in which security entitlements to the Collateral Investments are
carried, (c) all cash, 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, and (d) all proceeds of
and other distributions on or with respect to any of the foregoing (and any
other proceeds or distributions), including, without limitation, all dividends,
interest, principal payments, cash, options, warrants, rights, instruments,
subscriptions and other property or proceeds from time to time received,
receivable or otherwise distributed or distributable in respect of or in
exchange for any of the foregoing or any security entitlement thereto.
1.4. Deposit of Funds. On the Closing Date, Pledgor shall direct
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that all Funds be deposited into the Cash Collateral Account.
SECTION 2. Security for Obligations. This Pledge and Security
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Agreement secures the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of all the
Obligations.
SECTION 3. Delivery of Collateral. All certificates or instruments
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representing or evidencing the Collateral, including, without limitation,
amounts invested as provided in Section 5, shall be delivered to and held by or
on behalf of the Trustee 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 sufficient to
establish and maintain in favor of the Trustee a valid security interest in such
Collateral, and
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shall be credited to a securities account (the "Collateral Investments Account")
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designated by the Trustee.
SECTION 4. Maintaining the Cash Collateral Account. (a) So long as
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any Obligation shall remain unpaid, the Cash Collateral Account shall be
maintained with the Trustee.
(b) It shall be a term and condition of the Cash Collateral Account,
notwithstanding any term or condition to the contrary in any other agreement
relating to the Cash Collateral Account, and except as otherwise provided by the
provisions of Section 7 and Section 14, that no amount (including interest on
Collateral Investments) 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
Cash Collateral Account.
The Cash Collateral 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 5. Investing of Amounts in the Cash Collateral Account. If
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requested by the Pledgor, the Trustee will, subject to the provisions of Section
7 and Section 14, from time to time (a) invest amounts on deposit in the Cash
Collateral Account in such Cash Equivalents, each in the name of or for the
account of the Trustee, as the Pledgor may select and the Trustee may approve
and (b) invest interest paid on the Cash Equivalents referred to in clause (a)
above, and reinvest other proceeds of any such Cash Equivalents that may mature
or be sold, in each case in such Cash Equivalents, each in the name of or for
the account of the Trustee, as the Pledgor may select and the Trustee may
approve (the Cash Equivalents referred to in clauses (a) and (b) above being
collectively "Collateral Investments"); provided, however, that following
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disbursement of proceeds by the Trustee in accordance with Section 7(c), the
amount on deposit in the Collateral Investments Account must include U.S.
Government Obligations sufficient, in the opinion of a nationally recognized
firm of independent public accountants selected by the Pledgor, to provide for
the payment in full of the first six scheduled interest payments on all of the
Notes then outstanding. Interest and proceeds that are not invested or
reinvested in Collateral Investments as provided above shall be deposited and
held in the Cash Collateral Account. The Trustee shall in no event be liable
for any loss in the investment or reinvestment of amounts held in the Cash
Collateral Account.
SECTION 6. Delivery of Collateral Investments; Filing. (a) The
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Trustee shall become the holder of the Collateral Investments (or applicable
security entitlements thereto) through the following delivery procedures: (i)
in the case of Collateral Investments which are certificated securities in
registered form, delivery of the applicable certificate(s), specially
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endorsed to the Trustee or registered in the name of the Trustee, to the
possession of (A) the Trustee, (B) a securities intermediary or financial
intermediary acting on behalf of the Trustee, or (C) another person, other than
a securities intermediary or financial intermediary, which person acknowledges
that it holds for the Trustee; (ii) in the case of Collateral Investments which
are uncertificated securities, registration of one of the following as owner of
such uncertificated securities: the Trustee or a person designated by the
Trustee, or person other than a securities intermediary or financial
intermediary, that becomes the registered owner of such uncertificated
securities and acknowledges that it holds the same for the Trustee; and (iii) in
the case of Collateral Investments in the form of Government Book-Entry
Securities, the making by a financial intermediary or securities intermediary
(other than a clearing corporation) to whose account such Government Book-Entry
Securities have been credited on the books of a Federal Reserve Bank (or on the
books of another such financial intermediary or securities intermediary (other
than a clearing corporation)), of book entries indicating that such Government
Book-Entry Securities have been credited to an account of the Trustee, and the
sending by such financial intermediary or securities intermediary to the Trustee
of confirmation of such transfer to the Trustee's account.
(b) Prior to receiving any Collateral Investments (or any security
entitlements thereto), as provided in subsection (a) of this Section 6, the
Trustee shall establish the Collateral Investments Account on its books as an
account segregated from all other custodial or collateral accounts at its office
at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000. Upon delivery of any Collateral
Investments to the Trustee (or the Trustee's acquisition of a security
entitlement thereto), the Trustee shall make appropriate book entries indicating
that such Collateral Investment and/or such security entitlement has been
credited to and is held in the Collateral Investments Account. Subject to the
terms and conditions of this Pledge and Security Agreement, all Collateral
Investments held by the Trustee pursuant to this Pledge and Security Agreement
shall be held in the Collateral Investments Account under exclusive dominion and
control of the Trustee and for the benefit of the Trustee and the ratable
benefit of the Holders of the Notes and segregated from all other funds or other
property otherwise held by the Trustee.
(c) All Collateral shall be retained in the Cash Collateral Account
and the Collateral Investments Account pending disbursement pursuant to the
terms hereof.
(d) Concurrently with the execution and delivery of this Pledge and
Security Agreement, the Pledgor is delivering to the Trustee acknowledgement
copies or stamped receipt copies of proper financing statements, duly filed on
or before the Closing Date in accordance with the Uniform Commercial Code as in
effect in the State of New York and the State of Georgia, covering the
categories of Collateral described in this Pledge and Security Agreement.
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SECTION 7. Disbursements. The Trustee shall hold the assets in the
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Cash Collateral Account and the Collateral Investments Account and release the
same, or a portion thereof, only as follows:
(a) At least five 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 executed by the Pledgor (an "Issuer
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Order"), direct the Trustee to release from the Cash Collateral Account,
and if necessary liquidate Collateral Investments in the Collateral
Investments Account indicated in the Issuer Order, and pay to the Holders
of the Notes funds sufficient to provide for payment in full of such
interest then due on the Notes. Upon receipt of an Issuer Order, the
Trustee will take any action necessary to provide for the payment of the
interest on the Notes in accordance with the payment provisions of the
Indenture to the Holders of the Notes from (and to the extent of) funds
available in the Cash Collateral Account and/or the Collateral Investments
Account. Nothing in this Section 7 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 Cash Collateral Account and/or the Collateral
Investments Account ("Pledgor Funds"), the Pledgor may, after payment in
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full of such interest payment or portion thereof from proceeds of the
Collateral or such Pledgor Funds or both, direct the Trustee to release to
the Pledgor or to another party at the direction of the Pledgor (the
"Pledgor's Designee") funds from the Cash Collateral Account, and if
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necessary liquidate Collateral Investments in the Collateral Investments
Account indicated in the Issuer Order, in an amount less than or equal to
the amount of Pledgor Funds applied to such interest payment. Upon receipt
of an Issuer Order by the Trustee, the Trustee shall pay over to the
Pledgor or the Pledgor's Designee, as the case may be, the requested amount
from funds in the Cash Collateral Account and/or the Collateral Investments
Account. Concurrently with any release of funds to the Pledgor pursuant to
this Section 7(b), the Pledgor shall deliver to the Trustee a certificate
signed by an officer of the Pledgor stating that such release has been duly
authorized by the Pledgor and will not contravene any provision of
applicable law or the Certificate of Incorporation of the Pledgor or any
material agreement or other material instrument binding upon the Pledgor or
any of its subsidiaries or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Pledgor or
any of its subsidiaries or result in the creation or imposition of any Lien
on any assets of the Pledgor, except for the security interest granted
under the Pledge and Security Agreement.
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(c) If the Trustee receives, prior to 9:00 A.M. New York City time on
the Termination Date, the Officer's Certificate and the Opinion of Counsel,
the Trustee shall (x) purchase U.S. Government Obligations in amounts and
maturities sufficient upon the receipt of scheduled interest and principal
payments on such securities, in the opinion of a nationally recognized firm
of independent public accountants selected by the Pledgor, to provide for
payment in full of the first six scheduled interest payments due on all
Notes then outstanding (including any interest that may be due in the
event the Exchange Offer is not consummated or the Shelf Registration
Statement is not declared effective as required by the Registration Rights
Agreement) and (y) disburse from the Cash Collateral Account and/or the
Collateral Investments Account to, or at the written direction of, the
Pledgor by the close of business on the date such U.S. Government
Obligations are purchased funds and/or Cash Equivalents, to the extent the
proceeds from the sale of the Cash Equivalents held in the Collateral
Investments Account would exceed the amount sufficient to purchase the U.S.
Government Obligations referred to in clause (x) above; provided, however,
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that if the Officer's Certificate and the Opinion of Counsel are received
by the Trustee (i) on a day other than a Business Day or (ii) after 9:00
A.M. New York City time on such date, then, in either instance, the Trustee
may disburse the proceeds by the close of business on the next Business
Day.
(d) (i) On the Termination Date (or, in the event the Trustee
receives a certificate signed by the President or any Vice President of the
Pledgor stating that an Officer's Certificate will not be delivered to the
Trustee by the Termination Date, on the date the Trustee receives such
certificate), if the conditions required for release of funds and/or Cash
Equivalents as provided in clause (c) above have not been satisfied, the
Trustee shall mail a notice by first class mail to each Holder's last
address as it appears on the Security Register (as determined in the
Indenture) stating that all of the outstanding Notes shall be redeemed
within 60 days after the date of such notice (the "Redemption Date"), on
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not less than 30 nor more than 60 days' prior notice, at 101% of the
principal amount thereof plus accrued interest thereon from the Closing
Date to the Redemption Date (the "Special Redemption Price"), and shall
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state that the Notes must be surrendered to the Trustee in order to collect
the Special Redemption Price.
(ii) On the Business Day prior to the Redemption Date, the Trustee
shall release all Collateral to the Paying Agent. The Notes shall be
redeemed as specified in the Indenture.
(e) If the Pledgor is required to effect the redemption contemplated
by clause (d) above and for any reason the amount of Collateral to be
released is insufficient to pay the aggregate Special Redemption Price to
redeem all of the outstanding Notes as provided in the Indenture, the
Pledgor, each Reorganization
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Subsidiary and ITC Holding Company, Inc. jointly and severally agree to pay
to the Paying Agent, on or prior to the Redemption Date, the amount of
funds necessary to permit all outstanding Notes to be redeemed in
accordance with the provisions of the Indenture.
(f) If at any time following disbursement by the Trustee in accordance
with clause (c) above, the principal of and earnings on the Collateral
exceed 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
first six scheduled interest payments due on the Notes, the Pledgor may
direct the Trustee to release any such overfunded amount to the Pledgor or
to such other party as the Pledgor may direct. Upon receipt of an Issuer
Order, the Trustee shall pay over to the Pledgor or the Pledgor's
Designee, as the case may be, any such overfunded amount.
(g) Upon payment in full of the first six scheduled interest payments
on the Notes in a timely manner, the security interest in the Collateral
evidenced by this Pledge and Security 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 any Collateral from the Cash Collateral Account and/or the
Collateral Investments Account in accordance with the terms of this Pledge
and Security Agreement, whether upon release of Collateral to Holders as
payment of interest or otherwise, the security interest evidenced by this
Pledge and Security Agreement in such released Collateral will
automatically terminate and be of no further force and effect.
(h) At least three Business Days prior to the due date of any of the
first six scheduled interest payments on the Notes, the Pledgor covenants
to give the Trustee (by Issuer Order) notice as to whether payment of
interest will be made pursuant to Section 7(a) or 7(b) and as to the
respective amounts of interest that will be paid pursuant to Section 7(a)
or 7(b). If no such notice is given, the Trustee will act pursuant to
Section 7(a) as if it had received an Issuer Order pursuant thereto for the
payment in full of the interest then due.
(i) The Trustee shall not be required to liquidate any Collateral
Investment in order to make any scheduled payment of interest or any
release hereunder unless instructed to do so by Issuer Order or pursuant to
Section 14 hereof.
(j) Nothing contained in Section 1, Section 5, Section 6, this Section
7 or any other provision of this Pledge and Security Agreement shall (i)
afford the Pledgor any right to issue entitlement orders with respect to
any security entitlement to any of
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the Collateral Investments or any securities account in which any such
security entitlement may be carried, or otherwise afford the Pledgor
control of any such security entitlement or (ii) otherwise give rise to any
rights of the Pledgor with respect to any of the Collateral Investments,
any security entitlement thereto or any securities account in which any
such security entitlement may be carried, other than the Pledgor's
beneficial interest under this Pledge and Security Agreement in collateral
pledged to and subject to the exclusive dominion and control (consistent
with this Pledge and Security Agreement) of the Trustee in its capacity as
such (and not as a securities intermediary). The Pledgor acknowledges,
confirms and agrees that the Trustee holds a security entitlement to the
Collateral Investments solely as trustee for the Holders of the Notes and
not as a securities intermediary or financial intermediary.
SECTION 8. Representations and Warranties. The Pledgor hereby
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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 and Security Agreement
will not contravene any provision of applicable law or the Certificate of
Incorporation of the Pledgor or any material agreement or other material
instrument binding upon the Pledgor or any of its subsidiaries or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Pledgor or any of its subsidiaries, or result in the
creation or imposition of any Lien on any assets of the Pledgor, except for
the security interests granted under this Pledge and Security Agreement; no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required (i) for the performance by the
Pledgor of its obligations under this Pledge and Security Agreement, (ii)
for the pledge by the Pledgor of the Collateral pursuant to this Pledge and
Security 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 and
Security Agreement or the remedies in respect of the Collateral pursuant to
this Pledge and Security Agreement.
(b) 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 granted under this Pledge and Security Agreement). No
financing statement covering the Pledgor's interest in the Collateral is on
file in any public office other than the financing statements, if any,
filed pursuant to this Pledge and Security Agreement.
(c) This Pledge and Security Agreement has been duly authorized,
validly executed and delivered by the Pledgor and (assuming the due
authorization and valid
12
execution and delivery of this Pledge and Security Agreement by the Trustee
and the Placement Agents and enforceability of this Pledge and Security
Agreement against the Trustee and the Placement Agents in accordance with
its terms) constitutes a valid and binding agreement of the Pledgor,
enforceable against the Pledgor in accordance with its terms, except as (i)
the enforceability hereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, preference, reorganization, moratorium or similar
laws now or hereafter in effect relating to or affecting creditors' rights
or remedies generally, (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability and the discretion
of the court before which any proceeding therefor may be brought, (iii) the
exculpation provisions and rights to indemnification hereunder may be
limited by U.S. federal and state securities laws and public policy
considerations and (iv) the waivers of rights and defenses contained in
Section 14(b), Section 17.11 and Section 17.16 hereof may be limited by
applicable law.
(d) Upon the filing of financing statements, if any, required by the
U.C.C. in the appropriate offices in the State of New York and the State of
Georgia, and the delivery to the Trustee of the Collateral, in accordance
with this Pledge and Security Agreement, the pledge of and grant of a
security interest in the Collateral securing the payment of the Obligations
for the benefit of the Trustee and the Holders of the Notes will constitute
a first priority perfected security interest in such Collateral,
enforceable as such against all creditors of the Pledgor (and any persons
purporting to purchase any of the Collateral from the Pledgor), other than
as permitted by the Indenture.
(e) There are no legal or governmental proceedings pending or, to the
best of the Pledgor's knowledge, threatened to which the Pledgor or any of
the Reorganization Subsidiaries is a party or to which any of the
properties of the Pledgor or any Reorganization Subsidiary is subject that
would materially adversely affect the power or ability of the Pledgor to
perform its obligations under this Pledge and Security Agreement or to
consummate the transactions contemplated hereby.
(f) The pledge of the Collateral pursuant to this Pledge and Security
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.
(g) No Event of Default exists.
SECTION 9. Further Assurances. The Pledgor will, promptly upon
------------------
request by the Trustee (which request the Trustee may submit at the direction of
the Holders of a majority in principal amount of the Notes then outstanding),
execute and deliver or cause to be executed
13
and delivered, or use its reasonable best efforts to procure, all assignments,
instruments and other documents, deliver any instruments to the Trustee and take
any other actions that are necessary or desirable to perfect, continue the
perfection of, or protect the first priority of the Trustee's security interest
in and to the Collateral, to protect the Collateral against the rights, claims
or interests of third persons (other than any such rights, claims or interests
created by or arising through the Trustee) or to effect the purposes of this
Pledge and Security Agreement. The Pledgor also 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). The Pledgor will promptly pay all reasonable costs incurred
in connection with any of the foregoing within 45 days of receipt of an invoice
therefor. The Pledgor also agrees, whether or not requested by the 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 10. Covenants. The Pledgor covenants and agrees with the
---------
Trustee and the Holders of the Notes that from and after the date of this Pledge
and Security 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
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 upon 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 and Security Agreement);
provided, however, that the Pledgor may transfer and assign its beneficial
-------- -------
interest in the Collateral, subject in all respects to the rights and
interests of the Trustee and the Holders of the Notes hereunder, to a
wholly owned subsidiary of the Pledgor (the "Assignee") if (w) the Assignee
agrees in writing that the first six scheduled interest payments due on the
Notes shall be paid from the Collateral and assumes the Pledgor's
obligations under this Pledge and Security Agreement (but not the Pledgor's
recourse obligations under the Notes), (x) the assignment of the beneficial
interest in the Collateral and such agreement by the Assignee and the
payment of the interest payments from the Collateral would not violate any
agreement or instrument to which the Pledgor or the Assignee is a party,
(y) the Assignee agrees, in writing, with the Trustee (for itself and the
Holders of the Notes) that (I) it will not enter into any agreement that
would interfere with or prohibit payment of the first six scheduled
14
interest payments due on the Notes from the Collateral, (II) 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 (III) it will not create or permit to exist any Lien
upon 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 and Security Agreement); 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 11. 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) to exercise to the fullest extent permitted by law all of the
following powers upon and at any time after the occurrence and during the
continuance of an Event of Default: (a) collection of proceeds of any
Collateral; (b) conveyance of any item of Collateral to any purchaser thereof;
(c) giving of any notices or recording of any Liens under Section 6 hereof; and
(d) paying or discharging taxes or Liens levied or placed upon the Collateral,
the legality or validity thereof and the amounts necessary to discharge the same
to be determined by the 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. The Trustee's authority
under this Section 11 shall include, without limitation, the authority to
endorse and negotiate any checks or other instruments representing proceeds of
Collateral, 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 actions arising from or incident to the powers
granted to the Trustee in this Pledge and Security Agreement. This power of
attorney is coupled with an interest and is irrevocable by the Pledgor.
SECTION 12. No Assumption of Duties; Reasonable Care. The rights and
----------------------------------------
powers granted to the Trustee hereunder are being granted in order to establish,
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
15
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.
SECTION 13. Indemnity. The Pledgor shall indemnify, hold harmless
---------
and defend the Trustee and its directors, officers, agents and employees, from
and against any and all claims, actions, obligations, liabilities and expenses,
including reasonable defense costs, reasonable investigative fees and costs, and
reasonable legal fees and damages arising from the Trustee's performance as
Trustee under this Pledge and Security Agreement, except to the extent that such
claim, action, obligation, liability or expense is directly attributable to the
bad faith, gross negligence or wilful misconduct of such indemnified person.
16
SECTION 14. 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 and Security Agreement as an "Event of
--------
Default") shall have occurred and be continuing:
-------
(a) The Trustee and the Holders of the Notes shall have, in addition
to all other rights given by law or by this Pledge and Security Agreement
or the Indenture, all of the rights and remedies with respect to the
Collateral of a secured party under the U.C.C. in effect in the State of
New York at that time. In addition, with respect to any Collateral that
shall then be in or shall thereafter come into the possession or custody of
the Trustee, the Trustee may and, at the direction of the Holders of a
majority in principal amount of the Notes then outstanding, shall, sell or
cause the same to be sold at any broker's board or at public or private
sale, in one or more sales or lots, at such price or prices as the Trustee
may deem best, for cash or on credit or for future delivery, without
assumption of any credit risk. The purchaser of any or all Collateral so
sold shall thereafter hold the same absolutely, free from any claim,
encumbrance or right of any kind whatsoever created by or through the
Pledgor. Unless any of the Collateral threatens, in the reasonable
judgment of the Trustee, to decline speedily in value or is or becomes of a
type sold on a recognized market, the Trustee will give the Pledgor
reasonable notice of the time and place of any public sale thereof, or of
the time after which any private sale or other intended disposition is to
be made. Any sale of the Collateral conducted in conformity with
reasonable commercial practices of banks, insurance companies, commercial
finance companies, or other financial institutions disposing of property
similar to the Collateral shall be deemed to be commercially reasonable.
Any requirements of reasonable notice shall be met if such notice is mailed
to the Pledgor as provided in Section 17.1 hereof at least ten (10) days
before the time of the sale or disposition. 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 expenses (including court costs and reasonable
attorneys' fees, expenses and disbursements) of, or incident to, the
enforcement of any of the provisions hereof shall be recoverable from the
proceeds of the sale or other disposition of the Collateral.
(b) The Pledgor further agrees to use its reasonable best efforts to
do or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Collateral pursuant to this
Section 14 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 14 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
17
a consequence, that each and every covenant contained in this Section 14
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 15. 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
and Security 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 16. 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:
(a) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Indenture;
(c) any exchange, surrender, release or non-perfection of any Liens on
any other collateral for all or any of the Obligations; or
(d) 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 and Security
Agreement.
SECTION 17. Miscellaneous Provisions.
------------------------
17.1. Notices. Any notice or communication shall be sufficiently
-------
given if in writing and delivered in person or mailed by first class mail,
commercial courier service or telecopier communication, addressed as follows:
if to the Pledgor:
-----------------
ITC/\DeltaCom, Inc.
18
000 Xxxx Xxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxx
if to the Trustee:
-----------------
United States Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mr. Xxxxx Xxxxx
17.2. No Adverse Interpretation of Other Agreements. This Pledge and
---------------------------------------------
Security 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
and Security Agreement.
17.3. Severability. The provisions of this Pledge and Security
------------
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 and Security Agreement in any jurisdiction.
17.4. Headings. The headings in this Pledge and Security Agreement
--------
have been inserted for convenience of reference only, are not to be considered a
part hereof and shall in no way modify or restrict any of the terms or
provisions hereof.
17.5. Counterpart Originals. This Pledge and Security Agreement may
---------------------
be signed in two or more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and the same agreement.
17.6. Benefits of Pledge and Security Agreement. Nothing in this
-----------------------------------------
Pledge and Security 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 and Security Agreement.
17.7. Amendments, Waivers and Consents. Any amendment or waiver of
--------------------------------
any provision of this Pledge and Security Agreement and any consent to any
departure by the Pledgor from any provision of this Pledge and Security
Agreement shall be effective only if made or duly given in compliance with all
of the terms and provisions of the Indenture, and neither the Trustee nor any
Holder of Notes shall be deemed, by any act, delay, indulgence,
19
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. Consistent with the foregoing, this Pledge and
Security Agreement may be amended, its provisions may be waived and departures
from its provisions may be consented to by action of the Pledgor and the Trustee
and (if applicable) the Holders of the Notes, all as provided in the Indenture,
and no such amendment, waiver or consent shall require any action or approval of
the Placement Agents. 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 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.
17.8. Interpretation of Agreement. To the extent a term or provision
---------------------------
of this Pledge and Security 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 and Security Agreement shall not be relevant to determine the
meaning of this Pledge and Security Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
17.9. Continuing Security Interest; Termination. (a) This Pledge
-----------------------------------------
and Security Agreement shall create a continuing security interest in and to the
Collateral and shall, except as otherwise provided in the Indenture or in this
Pledge and Security Agreement, remain in full force and effect until the payment
in full in cash of the Obligations. This Pledge and Security 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 and Security Agreement 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 and Security Agreement
and the Indenture. 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.
20
17.10. Survival Provisions. All representations, warranties and
-------------------
covenants of the Pledgor contained herein shall survive the execution and
delivery of this Pledge and Security Agreement, and shall terminate only upon
the termination of this Pledge and Security Agreement. The obligations of the
Pledgor under Sections 13 and 15 hereof shall survive the termination of this
Agreement.
17.11. Waivers. The Pledgor waives presentment and demand for
-------
payment of any of the Obligations, protest and notice of dishonor or default
with respect to any of the Obligations, and all other notices to which the
Pledgor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
17.12. Authority of the 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 and Security 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, gross 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 reasonably believed by it or them to be genuine and correct and to
have been signed or sent by the proper person or persons. The Trustee shall
have no duty to cause any financing statement or continuation statement to be
filed in respect of the Collateral.
(b) The Pledgor acknowledges that the rights and responsibilities of
the Trustee under this Pledge and Security 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 and Security 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.
17.13. Intentionally Omitted.
21
17.14. Final Expression. This Pledge and Security 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 and
Security Agreement and is intended as a complete and exclusive statement of the
terms and conditions thereof.
17.15. 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.
17.16. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
---------------------------------------------------------
TRIAL; WAIVER OF DAMAGES. (a) THIS PLEDGE AND SECURITY AGREEMENT 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 AND SECURITY AGREEMENT, AND WHETHER ARISING
IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. NOTWITHSTANDING THE FOREGOING: THE MATTERS
IDENTIFIED IN 31 C.F.R. (S)(S) 357.10 AND 357.11 (AS IN EFFECT ON THE DATE OF
THIS AGREEMENT) SHALL BE GOVERNED SOLELY BY THE LAWS SPECIFIED THEREIN.
(b) THE PLEDGOR HAS APPOINTED CORPORATION SERVICE COMPANY, 00 XXXXX
XXXXXX, 0XX XXXXX, XXXXXX, XX 00000 AS ITS AGENT FOR SERVICE OF PROCESS IN ANY
SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AND SECURITY 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
22
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 AND SECURITY 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 AND
SECURITY 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,
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR WAIVES THE
POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE 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 AND SECURITY 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 AND SECURITY 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.
[SIGNATURE PAGE FOLLOWS]
23
IN WITNESS WHEREOF, the Pledgor, ITC Holding Company, Inc., each of the
Reorganization Subsidiaries, the Placement Agents and the Trustee have each
caused this Pledge and Security Agreement to be duly executed and delivered as
of the date first above written.
ITC/\DeltaCom, Inc.
By /s/ Xxxxxx Xxxxxx
-------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
ITC Holding Company, Inc.
By /s/ Xxxxxxxx X. Xxxxxx, III
--------------------------------
Name: Xxxxxxxx X. Xxxxxx, III
Title: Chairman
DeltaCom, Inc.
By /s/ Xxxxxx Xxxxxx
-------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
Eastern Telecom, Inc.
By /s/ Xxxxxx Xxxxxx
-------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
Interstate FiberNet
By ITC Transmission Systems, Inc.,
its general partner
By /s/ Xxxxxx Xxxxxx
-----------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
24
Gulf States Transmission Systems, Inc.
By /s/ Xxxxxx Xxxxxx
-------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
ITC Transmission Systems, Inc.
By /s/ Xxxxxx Xxxxxx
-------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
ITC Transmission Systems II, Inc.
By /s/ Xxxxxx Xxxxxx
-------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
Placement Agents:
----------------
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
First Union Capital Markets Corp.
NationsBanc Capital Markets, Inc.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By: /s/ Xxxxxx Xxxxxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Principal
25
Trustee:
-------
United States Trust Company of New York, as Trustee
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Name: Xxxxxx X. Xxxxx
Title: Sr. VP
