[Draft--7/20/98]
COLLATERAL PLEDGE AND SECURITY AGREEMENT, dated as of
, 1998, among NorthEast Optic Network, Inc.,
a Delaware corporation ("NEON" and the "Pledgor"),
and U.S. Bank Trust National Association, as trustee
(the "Trustee"), for the holders of the Notes (as
defined herein) (the "Pledge Agreement" or the
"Agreement"). Capitalized terms used but not
otherwise defined herein shall have the meanings
given to such terms in the Indenture (as defined
herein).
W I T N E S S E T H :
WHEREAS the Pledgor and the Trustee have entered into that certain
Indenture dated as of , 1998 (as amended, restated, supplemented
or otherwise modified from time to time, the "Indenture"), pursuant to which the
Pledgor is issuing $165,000,000 in aggregate principal amount of its % Senior
Notes due 2008 (the "Notes");
WHEREAS the Pledgor has agreed, pursuant to the Indenture to (i)
purchase a portfolio of U.S. Government Obligations, (the "Pledged Securities")
with scheduled principal and interest payments on such Pledged Securities that
will result in the receipt of cash in an amount and at a time sufficient, upon
receipt of the scheduled interest and principal payments in respect of the
Pledged Securities, based upon the certificate furnished to the Representatives
and the Trustee of an internationally recognized firm of independent certified
public accountants selected by the Pledgor, to provide for payment in full of
the seven regularly scheduled interest payments due on the Notes from
, 1999 through , 2002 (the "Secured Payments") and
(ii) place the Pledged Securities in the Pledge Account (as defined herein) held
by the Trustee for the benefit of the holders of the Notes;
WHEREAS the Pledgor is to be the sole legal and beneficial owner of the
Pledged Securities; and
WHEREAS, to secure the payment and performance by the Pledgor of its
respective obligations under the Indenture and the Notes (collectively, the
"Obligations"), the Pledgor has agreed to pledge to the Trustee for the ratable
benefit of the holders of the Notes a security interest in the Pledged
Securities and the Pledge Account and execute and deliver this Pledge Agreement.
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NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Pledge and Grant of Security Interest. The Pledgor hereby pledges to
the Trustee for the ratable benefit of the holders of the Notes, and grants to
the Trustee for the ratable benefit of the holders of the Notes, a continuing
first priority security interest in and to (i) all of the Pledgor's right, title
and interest in the Pledged Securities and the Pledge Account, (ii) all
certificates or other evidence of ownership representing the Pledged Securities
and the Pledge Account and (iii) all products and proceeds of any of the Pledged
Securities, including, without limitation, all dividends, interest, principal
payments, cash, options, warrants, rights, instruments, subscriptions and other
property or proceeds from time to time received, receivable or otherwise
distributed or distributable in respect of or in exchange for any or all of the
Pledged Securities (collectively, the "Collateral").
2. Security for Obligations. This Pledge Agreement and the Collateral
secure the prompt and complete payment and performance when due (whether at
stated maturity, by acceleration or otherwise) of all of the Obligations.
3. Delivery of Collateral; Pledge Account; Interest. (a) All
certificates or instruments representing or evidencing the Pledged Securities
shall be delivered to and held by or on behalf of the Trustee pursuant hereto
and shall be in suitable form for transfer and delivery, or shall be accompanied
by instruments of transfer or assignment duly executed in blank all in form
satisfactory to the Trustee, or shall be delivered to the Trustee through the
book-entry facilities of the applicable depositary.
(b) Concurrently with the execution and delivery of this Pledge
Agreement, the Trustee shall establish an account entitled the "NEON PLEDGE
ACCOUNT" for the deposit of the Pledged Securities (the "Pledge Account") at its
offices at . Subject to the other terms and conditions
of this Pledge Agreement, all funds or other property accepted by the Trustee
pursuant to this Pledge Agreement shall be held in the Pledge Account for the
ratable benefit of the holders of the Notes. The Pledged Securities shall be
registered in the name of the Trustee or its nominee, as Trustee for the benefit
of the holders of the Notes, and the proceeds of any such Pledged Securities
shall remain on deposit in the Pledge Account until withdrawn in accordance with
this Agreement. If and to the
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extent the Pledged Securities comprise certificated securities (as defined in
Section 8-102 of the Uniform Commercial Code in the State of New York), such
Pledged Securities shall be registered in the name of the Trustee or its
nominee, as Trustee for the benefit of the holders of the Notes, and possession
thereof shall be maintained by the Trustee within the State of New York.
(c) All interest earned on or other distributions or amounts paid
with respect to any Collateral shall be retained in the Pledge Account and may
be reinvested by and at the direction of the Pledgor in other Pledged
Securities; provided that the Pledgor may only so reinvest such interest,
distributions or amounts if, based on the report of an internationally
recognized firm of independent public accountants selected by the Pledgor and
addressed to the Trustee, scheduled principal and interest payments on the
Pledged Securities retained in the Pledge Account will result in receipt of
United States dollars in an amount and at a time sufficient to provide for
payment in full when due of each of the Secured Payments (or, in the event any
such Secured Payments have been made, the remaining unpaid Secured Payments).
4. Disbursements. (a) Not less than three Business Days prior to the
date of any of the Secured Payments, the Pledgor may direct the Trustee in
writing to transfer from the Pledge Account to the Trustee in its capacity as
Paying Agent (or, if applicable, any successor Paying Agent), United States
dollars in immediately available funds necessary to provide for payment in full
of or any portion of the next regularly scheduled interest payment on the Notes.
Upon receipt of such written request, the Trustee shall take such action as is
necessary to provide for the timely payment of such amount of United States
dollars in immediately available funds directly to the Trustee as Paying Agent
(or, if applicable, any successor Paying Agent) from proceeds of the Pledged
Securities held in the Pledge Account.
(b) If the Pledgor elects to pay any of the Secured Payments (or any
portion thereof) from a source of funds other than the Pledge Account (the
"Pledgor's Funds"), then the Pledgor may on at least two Business Days' prior
written notice, after payment of such Secured Payment or portion thereof
(evidenced by an Officers' Certificate delivered to the Trustee stating that
such regularly scheduled interest payment or portion thereof has been made in
accordance with the terms of the Indenture), direct the Trustee in writing to
release to the Pledgor or as it may direct an amount of funds or Pledged
Securities, at the
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Pledgor's sole option, from the Pledge Account less than or equal to the amount
of Pledgor's Funds so expended, without accounting for any Pledgor's Funds so
expended in payment of Defaulted Interest. Upon receipt of such written
direction from the Pledgor, together with the certificate described in the
preceding sentence, the Trustee shall take such action as is necessary to
provide for the prompt payment to the Pledgor of the amount of funds or Pledged
Securities requested from the Pledge Account.
(c) If at any time the scheduled payments of principal of and
interest on the Pledged Securities exceeds 100% of the amount in cash
sufficient, based on the report of an internationally recognized firm of
independent certified public accountants selected by the Pledgor and addressed
to the Trustee, to provide for timely payment in full of the Secured Payments
(or, in the event any Secured Payments have been made, an amount in cash
sufficient to provide for timely payment in full of the remaining unpaid Secured
Payments), the Pledgor may direct the Trustee in writing to release to the
Pledgor or as it directs an amount of funds or Pledged Securities, at the
Pledgor's sole option, less than or equal to such excess. Upon receipt of such
written direction from the Pledgor, together with such report of such
internationally recognized firm of independent certified public accountants, the
Trustee shall take such action as is necessary to provide for the prompt payment
to the Pledgor of the amount of funds or Pledged Securities requested from the
Pledge Account.
(d) Upon payment in full of the Secured Payments, evidenced by an
Officers' Certificate delivered to the Trustee stating that such regularly
scheduled interest payments have been made in full in accordance with the
Indenture, the security interest in the Collateral evidenced by this Pledge
Agreement shall terminate and be of no further force and effect. Furthermore,
upon release of any Collateral from the Pledge Account in accordance with the
terms of this Pledge Agreement, the security interest evidenced by this Pledge
Agreement in the Collateral so released shall terminate and be of no further
force and effect.
5. Representations and Warranties. The Pledgor hereby represents and
warrants that:
(a) the execution, delivery and performance by the Pledgor of
this Pledge Agreement has been duly authorized by the Pledgor and does
not contravene or constitute a default under any provision of
applicable law, regulation, the certificate of incorporation or
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the by-laws, as the case may be, of the Pledgor, or of any judgment,
injunction, order, decree or any material agreement or instrument
binding upon the Pledgor, and does not result in the creation or
imposition of any Lien on any asset of the Pledgor, except for the
security interests granted under this Pledge Agreement;
(b) no financing statement covering the Pledged Securities is
on file in any public office, other than financing statements filed
pursuant to this Pledge Agreement;
(c) upon the delivery to the Trustee of the certificates, if
any, representing the Pledged Securities, any filing of financing
statements required by the Uniform Commercial Code (the "UCC") and
notation on the records of the Trustee that it holds the Pledged
Securities as pledgee, the pledge of the Collateral pursuant to this
Pledge Agreement will constitute a valid and perfected first priority
security interest in and to the Collateral, securing the payment and
performance of the Obligations for the ratable benefit of the holders
of the Notes, enforceable as such against all creditors of the Pledgor
and any persons purporting to purchase any of the Collateral from the
Pledgor;
(d) no consent of any other person and no consent,
authorization, approval, or other action by, and no notice to or filing
with, any governmental authority or regulatory body in the United
States, Canada or otherwise, including, without limitation, any taxing
authority, is required to be obtained or made by the Pledgor as of the
date hereof either (i) for the pledge by the Pledgor of the Collateral
pursuant to this Pledge Agreement or for the execution, delivery or
performance of this Pledge Agreement by the Pledgor (except for any
filings and notations necessary to perfect the security interest
created hereby in the Collateral) or (ii) for the exercise by the
Trustee of the rights provided for in this Pledge Agreement or the
remedies in respect of the Collateral pursuant to this Pledge
Agreement; and
(e) the pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by any applicable law or government
regulation, release, interpretation or opinion of the Board of
Governors of the Federal Reserve System or other regulatory agency in
the United States, Canada or otherwise (including, without limitation,
any taxing authority or Regulations G, T, U
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and X of the Board of Governors of the Federal Reserve System).
6. Further Assurances. The Pledgor agrees to promptly take such actions
and to execute and deliver or cause to be executed and delivered, or use its
best efforts to procure, such stock or bond powers, proxies, assignments,
instruments and such other or different writings as the Trustee may reasonably
request, all in form and substance satisfactory to the Trustee, deliver any
instruments to the Trustee and take any other actions that are necessary or, in
the opinion of the Trustee, desirable, to perfect, continue the perfection of,
confirm and assure the first priority of the Trustee's security interest in the
Collateral, to protect the Collateral against the rights, claims or interests of
third persons, or to otherwise effect the purposes of this Pledge Agreement.
Notwithstanding the foregoing, the Trustee shall have no duty or obligation to
ensure the maintenance or perfection of any security interest hereunder.
7. Covenants. The Pledgor covenants and agrees with the Trustee and the
holders of the Notes from and after the date of this Pledge Agreement until the
earlier of payment in full of cash of (A) each of the Secured Payments under the
terms of the Indenture or (B) all Obligations due and owing under the Indenture
and the Notes in the event such Obligations become due and payable prior to the
payment in full of any of the Secured Payments as follows:
(a) The Pledgor agrees that it (i) will not sell or otherwise
dispose of, or grant any option or other interest with respect to, any of the
Collateral, (ii) will not create or permit to exist any Lien upon or with
respect to any of the Collateral, except for the Liens created pursuant to this
Pledge Agreement and (iii) will at all times be the sole beneficial owner of the
Collateral.
(b) The Pledgor agrees that it will not (i) enter into any
agreement or understanding that purports to or may restrict or inhibit the
Trustee's rights or remedies hereunder, including, without limitation, the
Trustee's right to sell or otherwise dispose of the Collateral, or (ii) with
regard to the Collateral, fail to pay or discharge any tax, assessment or levy
of any nature due with respect thereto later than five days prior to the date of
any proposed sale under any judgment, writ or warrant of attachment.
8. Power of Attorney. (a) The Pledgor hereby appoints and constitutes
the Trustee as the Pledgor's
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attorney-in-fact to exercise to the fullest extent permitted by law all of the
following powers upon and at any time after the occurrence and during the
continuance of an Event of Default:
(i) collection of proceeds of any Collateral;
(ii) conveyance of any item of Collateral to any purchaser
thereof as specified herein;
(iii) giving of any notices or recording of any Liens pursuant
to Section 6 hereof;
(iv) making any payments or taking any acts pursuant to
Section 9 hereof; and
(v) paying or discharging taxes or Liens levied or placed upon
the Collateral, the legality or validity thereof and the amounts
necessary to discharge the same to be determined by the Trustee in its
sole and reasonable discretion, and any such payments made by the
Trustee shall become Obligations of the Pledgor to the Trustee, due and
payable immediately upon demand.
(b) The Trustee's authority under this Section 8 shall include,
without limitation, the authority to endorse and negotiate any checks or
instruments representing proceeds of Collateral in the name of the Pledgor,
execute and give receipt for any certificate of ownership or any document
constituting Collateral, transfer title to any item of Collateral, to the extent
permitted by applicable law, sign the Pledgor's name on all financing statements
or any other documents deemed necessary or appropriate by the Trustee to
preserve, process or perfect the security interest in the Collateral, and to
file the same, and to prepare, sign the Pledgor's name and file any notice of
Lien, and to take any other actions arising from or incident to the powers
granted to the Trustee in this Pledge Agreement. This power of attorney is
coupled with an interest and shall be irrevocable by the Pledgor.
9. Trustee May Perform. If the Pledgor fails to perform any agreement
contained herein, the Trustee may, but shall not be obligated to, itself perform
or cause performance of such agreement, and the reasonable expenses incurred by
or on behalf of the Trustee in connection therewith shall be payable by the
Pledgor under Section 13 hereof.
10. No Assumption of Duties; Reasonable Cure. The rights and powers
granted to the Trustee hereunder are
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being granted in order to preserve and protect the security interest of the
holders of Notes in and to the Collateral granted hereby and shall not be
interpreted to, and shall not, impose any duties on the Trustee in connection
therewith other than those imposed under applicable law.
11. Indemnity. The Pledgor shall indemnify, defend and hold harmless
the Trustee and its directors, officers, agents and employees from and against
all claims, actions, obligations, losses, liabilities and expenses, including
costs, fees and disbursements of counsel, the costs of investigations, and
claims for damages, arising from the Trustee's performance under this Pledge
Agreement, except insofar as the same may have been caused by such indemnified
person's own negligent action, its own negligent failure to act or its own
willful misconduct. The obligations of the Pledgor under this Section 11 shall
survive the resignation or removal of the Trustee and the termination of this
Agreement.
12. Remedies upon Event of Default. If an Event of Default shall have
occurred:
(a) The Trustee shall have and may exercise with reference to the
Collateral any or all of the rights and remedies of a secured party under the
UCC in effect in the State of New York, and as otherwise granted herein or under
any other applicable law or under any other agreement now or hereafter in effect
executed by the Pledgor, including, without limitation, the right and power to
sell, at public or private sale or sales, or otherwise dispose of, or otherwise
utilize the Collateral and any part or parts thereof, in any manner authorized
or permitted under said UCC after default by a debtor, and to apply the proceeds
thereof toward payment of any costs and expenses and attorneys' fees and
expenses thereby incurred by the Trustee and toward payment of the Obligations
in such order or manner as the Trustee may elect. Specifically, and without
limiting the foregoing, the Trustee shall have the right to take possession of
all or any part of the Collateral or any security therefor and of all books,
records, papers and documents of the Pledgor or in the Pledgor's possession or
control relating to the Collateral that are not already in the Trustee's
possession, and for such purposes may enter upon any premises upon which any of
the Collateral or any security therefor or any of said books, records, papers
and documents are situated and remove the same therefrom without any liability
for trespass or damages thereby occasioned. To the extent permitted by law, the
Pledgor expressly waives any notice of sale or other disposition of the
Collateral and all other rights or remedies of the Pledgor or
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formalities prescribed by law relative to sale or disposition of the Collateral
or exercise of any other right or remedy of the Trustee existing after Default
or Event of Default hereunder. To the extent any such notice is required and
cannot be waived, the Pledgor agrees that if such notice is given in the manner
provided in Section 17 hereof at least three days before the time of the sale or
disposition, such notice shall be deemed reasonable and shall fully satisfy any
requirement for giving of said notice. The Trustee shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. The
Trustee may adjourn any public or private sale. The Pledgor further agrees to
use its best efforts to do or cause to be done all such other acts as may be
necessary to effect the intention of this Section 12.
(b) All rights to marshalling of assets of the Pledgor, including
any such right with respect to the Collateral, are hereby waived by the Pledgor.
The Pledgor shall not contest or support any other person in contesting the
validity or priority of the security interests created under this Pledge
Agreement.
(c) Any money collected by the Trustee pursuant to this Section 12
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal
(or premium, if any) or interest, upon presentation of the Notes and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
(i) FIRST: to the payment of the amounts then due and unpaid
for interest on the Notes, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Notes for
interest; and
(ii) SECOND: to the payment of the amounts then due and unpaid
for principal of (and premium, if any) on the Notes, ratably without
preference or priority of any kind, according to the amounts due and
payable on such Notes for principal (and premium, if any); and
(iii) THIRD: to the payment of all amounts due the Trustee
under Sections 11 and 13 of the Pledge Agreement; and
(iv) FOURTH: to the Pledgor.
The Trustee may fix a record date and payment date for any payment to
holders of the Notes pursuant to this Section 12. At least 15 calendar days
before such record
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date, the Trustee at the expense of the Pledgor shall send to each holder of a
Note by first class mail, postage prepaid, a notice prepared by the Pledgor that
states such record date, the payment date and amount to be paid.
13. Fees and Expenses. The Pledgor shall, upon demand, pay to the
Trustee the amount of its fees (which shall be in an amount previously agreed to
by the Pledgor and the Trustee) and any and all reasonable expenses (including,
without limitation, the reasonable fees, expenses and disbursements of counsel,
experts and agents retained by the Trustee) that the Trustee may incur in
connection with (i) the administration of this Pledge Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Trustee and the holders of the Notes hereunder or (iv)
the failure by the Pledgor to perform or observe any of the provisions hereof.
The obligations of the Pledgor under this Section 13 shall survive the
resignation or removal of the Trustee and the termination of this Agreement.
14. Security Interest Absolute. All rights of the Trustee and the
holders of the Notes, and the security interests created hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the
Indenture or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the
Indenture;
(c) any exchange, surrender, release or
nonperfection of any Liens on any other collateral for
all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Obligations or of this Pledge Agreement.
15. Continuing Security Interest; Termination. (a) This Pledge
Agreement shall create a continuing security interest in and to the Collateral
and shall, unless otherwise provided in the Indenture or in this Pledge
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Agreement, remain in full force and effect until the earlier of payment in full
in cash of (i) each of the Secured Payments to the holders thereof under the
terms of the Indenture or (ii) all Obligations due and owing under the Indenture
and the Notes in the event such Obligations become payable prior to the payment
of any of the Secured Payments. This Pledge Agreement shall be binding upon the
Pledgor, its successors and assigns, and shall inure, together with the rights
and remedies of the Trustee hereunder, to the benefit of the Trustee and the
holders of the Notes and their respective successors, transferees and assigns.
(b) This Pledge Agreement shall terminate upon the earlier of (i)
payment in full in cash of each of the Secured Payments to the holders thereof
under the terms of the Indenture or (ii) the date on which all Obligations due
and owing under the Indenture and the Notes have been paid in full in the event
such Obligations become payable prior to the payment of any of the Secured
Payments. At such time, the Trustee shall, at the written request of the
Pledgor, reassign and redeliver to the Pledgor all of the Collateral hereunder
that has not been sold, disposed of, retained or applied by the Trustee in
accordance with the terms of this Pledge Agreement and the Indenture. Such
reassignment and redelivery shall be without warranty (either express or
implied) by or recourse to the Trustee, except as to the absence of any prior
assignments by the Trustee of its interest in the Collateral, and shall be at
the expense of the Pledgor.
16. 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. None of the Trustee or 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 it or them hereunder, except for its
or their own negligent action, negligent failure to act or willful misconduct;
provided that (i) each such person shall not be liable for any error of judgment
made in good faith by it unless it is proved that such person was negligent in
ascertaining the pertinent facts and (ii) the Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance with
a direction or request received by it pursuant to Section 6.05 of the Indenture
or Section 16(d) hereof. The Trustee shall not be
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responsible for the validity, effectiveness or sufficiency hereof or of any
document or security furnished pursuant hereto. The Trustee and its directors,
officers, employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document believed by it or them to be genuine and
correct and to have been signed or sent by the proper Person or Persons.
(b) The Pledgor acknowledges that the rights and responsibilities
of the Trustee under this Pledge Agreement with respect to any action taken by
the Trustee or the exercise or nonexercise by the Trustee of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Pledge Agreement shall, as between the Trustee and the
holders of the Notes, be governed by the Indenture and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Trustee and the Pledgor, the Trustee shall be conclusively presumed to be
acting as agent for the holders of the Notes with full and valid authority so to
act or refrain from acting, and the Pledgor shall not be obligated or entitled
to make any inquiry respecting such authority.
(c) The Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement and no implied covenants
or obligations shall be read in this Agreement against the Trustee. The Trustee
shall not be deemed to have knowledge of a Default or an Event of Default under
the Indenture unless informed in writing by the Pledgor or the holder of any
Note or unless a Trust Officer shall have actual knowledge thereof.
(d) The Trustee shall not be required to exercise any remedies
hereunder unless requested in writing to do so by the holders of not less than a
majority in principal amount of the outstanding Notes and only if furnished with
indemnity satisfactory to the Trustee. The Trustee may consult with counsel and
shall not be liable for any action taken in good faith in reliance upon advice
of counsel except for its bad faith, its own negligent action, its own negligent
failure to act or its own wilful misconduct. The Trustee makes no representation
or warranty and shall have no responsibility concerning the value or validity of
the Collateral or the validity or perfection of the pledge thereof.
(e) Any resignation or removal of the Trustee under the Indenture
shall result in the simultaneous resignation or removal, as the case may be, of
the Trustee hereunder and any appointment of a successor Trustee under
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the Indenture shall result in the simultaneous appointment of the same successor
Trustee hereunder.
(f) 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 a reasonable
person accords its own property, it being understood that neither the Trustee
nor the holders of the Notes shall have responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relative to any Collateral, whether or not any such Person has
or is deemed to have knowledge of such matters, or (ii) taking any necessary
steps to preserve rights against any parties with respect to any Collateral.
(g) Notwithstanding anything herein to the contrary, the
exculpations, immunities and protections available to the Trustee under the
Indenture shall be available to the Trustee hereunder.
17. Notices. Any communication, notice or demand to be given hereunder
shall be in writing and delivered in person or mailed by first class mail,
postage prepaid, addressed as follows: If to the Trustee: ;
if to the Company: . Notice may also be
given in such other form and manner or to such other address as shall be
designated by any party hereto to each other party hereto in a written notice
delivered in accordance with the terms of the Indenture.
18. No Waiver; Cumulative Rights. No failure on the part of the Trustee
to exercise, and no delay in exercising, any right, remedy or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise by
the Trustee of any right, remedy or power hereunder preclude any other or future
exercise of any other right, remedy or power. Each and every right, remedy and
power hereby granted to the Trustee or allowed it by law or other agreement
shall be cumulative and not exclusive the one of any other, and may be exercised
by the Trustee from time to time.
19. Benefits of Pledge Agreement. Nothing in this Pledge Agreement,
whether express or implied, shall give to any Person other than the parties
hereto and their successors hereunder, and the holders of the Notes, any benefit
or any legal or equitable right, remedy or claim under this Pledge Agreement.
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20. Applicable Law. THIS PLEDGE AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. Calculation of Interest. For purposes of this Agreement, all
calculations of the Secured Payments shall be calculated on the basis of a
360-day year of 12 30-day months, with interest accruing on the Notes at the
rate of % per annum and being payable semiannually in arrears on ,
and of each year, and interest on overdue installments of
interest, to the extent lawful, accruing at the rate of % per annum. References
to payments "in full" in this Pledge Agreement shall include, to the extent
lawful, payments of accrued overdue interest.
22. Execution in Counterparts. This Pledge Agreement may be executed in
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute one and the same instrument.
23. Settlement. Amounts, if any, held in the Pledge Account pending
settlement of purchase of the Pledged Securities shall constitute Collateral
hereunder, shall be held by the Trustee for the benefit of the holders of the
Notes and a portion thereof equal to the aggregate price paid for such Pledged
Securities shall be released by the Trustee (without further direction or
instruction required from any other party hereto) against delivery of such
Pledged Securities, and any excess funds remaining in the Pledge Account after
giving effect to such settlement shall be promptly forwarded to the Pledgor at
the following account:
Bank:
ABA No.:
Account Name:
24. Trust Indenture Act. From and after qualification of the Indenture
under the Trust Indenture Act, the Pledgor shall provide the annual opinion
required by Section 314(b) of the Trust Indenture Act and shall comply with
Section 314(d) thereof, to the extent applicable, in connection with any release
or substitution of Collateral hereunder.
15
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed all as of the day and year first above written.
NORTHEAST OPTIC NETWORKS, INC.
by
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Name:
Title:
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee,
by
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Name:
Title:
