Exhibit 10.3
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as amended and modified, this “Pledge Agreement”), dated
as of August 24, 2011, is by and among each party identified as a “Pledgor” on
the signature pages hereto and such other parties as may become Pledgors
hereunder after the date hereof (individually a “Pledgor”, and collectively the
“Pledgors”) and REGIONS BANK, as collateral agent (in such capacity, the
“Collateral Agent”) for the holders of the Secured Obligations.
W I T N E S S E T H
WHEREAS, a senior secured credit facility has been established pursuant to the
terms of that certain Credit Agreement dated as of the date hereof (as amended
and modified, the “Credit Agreement”) among Pike Electric Corporation, a
Delaware corporation (the “Borrower”), certain Subsidiaries of the Borrower from
time to time party hereto, as Guarantors, the Lenders identified therein and
Regions Bank, as Administrative Agent and Collateral Agent; and
WHEREAS, this Pledge Agreement is required under the terms of the Credit
Agreement;
NOW, THEREFORE, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions and Interpretive Provisions.
(a) Definitions. Capitalized terms used and not otherwise defined herein shall
have the meanings provided in the Credit Agreement. In addition, the following
terms, which are defined in the UCC as in effect in the State of North Carolina
on the date hereof, are used as defined therein: Financial Asset, Proceeds and
Security. As used herein:
“Administrative Agent” has the meaning provided in the introductory paragraph
hereto, together with its successors and assigns in such capacity.
“Borrower” has the meaning provided in the recitals hereto.
“Collateral Agent” has the meaning provided in the introductory paragraph
hereto, together with its successors and assigns in such capacity.
“Credit Agreement” has the meaning provided in the recitals hereof.
“Pledge Agreement” has the meaning provided in the introductory paragraph
hereto.
“Pledged Collateral” has the meaning provided in Section 2.
“Pledged Shares” has the meaning provided in Section 2.
“Pledgor” and “Pledgors” have the meanings provided in the introductory
paragraph hereto, together with their respective successors and assigns.

 

 

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“Secured Obligations” means the Obligations and, without duplication, all costs
and expenses incurred in connection with enforcement and collection of the
Secured Obligations, including fees and expenses of counsel.
“Securities Act” means the Securities Act of 1933, as amended.
“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of North Carolina unless application of the choice of law provisions of
the North Carolina Uniform Commercial Code would require application of the laws
of another jurisdiction.
(b) Interpretive Provisions, etc. Each of the terms and provisions of
Section 1.3 of the Credit Agreement are incorporated herein by reference to the
same extent and with the same effect as if fully set forth herein.
2. Pledge and Grant of Security Interest. To secure the prompt payment and
performance in full when due, whether by lapse of time, acceleration, mandatory
prepayment or otherwise, of the Secured Obligations, each Pledgor hereby grants,
pledges and assigns to the Collateral Agent, for the benefit of the holders of
the Secured Obligations, a continuing security interest in, and a right to
set-off against, any and all right, title and interest of such Pledgor in and to
the following, whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “Pledged Collateral”):
(a) Pledged Shares. (i) One hundred percent (100%) (or, if less, the full amount
owned by such Pledgor) of the issued and outstanding Capital Stock owned by such
Pledgor of each Domestic Subsidiary as set forth on Schedule 2(a) attached
hereto, and (ii) 65% (or, if less, the full amount owned by such Pledgor) of the
issued and outstanding shares of Capital Stock entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2)) (“Voting Equity”) owned by the
Pledgor of each First-Tier Foreign Subsidiary as set forth on Schedule 2(a)
attached hereto, in each case, together with the certificates (or other
agreements or instruments), if any, representing such Capital Stock, and all
options and other rights, contractual or otherwise, with respect thereto
(collectively, together with the Capital Stock described in Section 2(b) and
Proceeds described in Section 2(c) below, the “Pledged Shares”), including the
following:
(A) all shares, securities, membership interests or other equity interests
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares, or
resulting from a stock split, revision, reclassification or other exchange
therefor, and any subscriptions, warrants, rights or options issued to the
holder of, or otherwise in respect of, the Pledged Shares; and
(B) without affecting the obligations of the Pledgors under any provision
prohibiting such action hereunder or under the Credit Agreement, in the event of
any consolidation or merger involving the issuer of any Pledged Shares and in
which such issuer is not the surviving entity, all Capital Stock of the
successor entity formed by or resulting from such consolidation or merger to the
extent such Capital Stock could be pledged under clause (a) above.
(b) Additional Shares. (i) one hundred percent (100%) (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding Capital Stock owned
by such Pledgor of any Person that hereafter becomes a Domestic Subsidiary and
(ii) 65% (or, if less, the full amount owned by such Pledgor) of the Voting
Equity owned by such Pledgor of any Person that hereafter becomes a First-Tier
Foreign Subsidiary, including the certificates (or other agreements or
instruments) representing such Capital Stock.

 

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(c) Proceeds. All Proceeds of any and all of the foregoing.
Without limiting the generality of the foregoing, it is hereby specifically
understood and agreed that a Pledgor may from time to time hereafter deliver
additional Capital Stock to the Collateral Agent as collateral security for the
Secured Obligations. Upon delivery to the Collateral Agent, such additional
Capital Stock shall be deemed to be part of the Pledged Collateral of such
Pledgor and shall be subject to the terms of this Pledge Agreement whether or
not Schedule 2(a) is amended to refer to such additional Capital Stock.
3. Security for Secured Obligations. The security interest created hereby in the
Pledged Collateral of each Pledgor constitutes continuing collateral security
for all of the Secured Obligations.
4. Delivery of the Pledged Collateral. Each Pledgor hereby agrees that:
(a) Delivery. Such Pledgor shall deliver to the Collateral Agent
(i) simultaneously with or [prior to / promptly after] the execution and
delivery of this Pledge Agreement, all certificates, if any, representing the
Pledged Shares of such Pledgor and (ii) promptly upon the receipt thereof by or
on behalf of a Pledgor, all other certificates and instruments constituting
Pledged Collateral of a Pledgor. Prior to delivery to the Collateral Agent, all
such certificates and instruments constituting Pledged Collateral of a Pledgor
shall be held in trust by such Pledgor for the benefit of the Collateral Agent
and the holders of the Secured Obligations pursuant hereto. All such
certificates shall be delivered in suitable form for transfer by delivery or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, substantially in the form provided in Exhibit 4(a) attached hereto.
(b) Additional Securities. If such Pledgor shall receive by virtue of its being
or having been the owner of any Pledged Collateral, any (i) certificate,
including any certificate representing a dividend or distribution in connection
with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares or other equity interests,
stock splits, spin-off or split-off, promissory notes or other instruments;
(ii) option or right, whether as an addition to, substitution for, or an
exchange for, any Pledged Collateral or otherwise; (iii) dividends payable in
securities; or (iv) distributions of securities in connection with a partial or
total liquidation, dissolution or reduction of capital, capital surplus or
paid-in surplus, then such Pledgor shall receive such certificate, instrument,
option, right or distribution in trust for the benefit of the Collateral Agent
and the holders of the Secured Obligations, shall segregate it from such
Pledgor’s other property and shall deliver it forthwith to the Collateral Agent
in the exact form received together with any necessary endorsement and/or
appropriate stock power duly executed in blank, substantially in the form
provided in Exhibit 4(a), to be held by the Collateral Agent as Pledged
Collateral and as further collateral security for the Secured Obligations.
(c) Financing Statements. Each Pledgor authorizes the Collateral Agent to
prepare and file one or more UCC financing statements or other applicable
financing statements disclosing the Collateral Agent’s security interest in the
Pledged Collateral. Each Pledgor shall execute and deliver to the Collateral
Agent such other filings as may be reasonably requested by the Collateral Agent
in order to perfect and protect the security interest created hereby in the
Pledged Collateral of such Pledgor.

 

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5. Representations and Warranties. Each Pledgor hereby represents and warrants
to the Collateral Agent, for the benefit of the Collateral Agent and the holders
of the Secured Obligations, that so long as any Secured Obligation remains
outstanding and until all of the Revolving Commitments have been terminated:
(a) Authorization of Pledged Shares. The Pledged Shares are duly authorized and
validly issued, are fully paid and nonassessable and are not subject to the
preemptive rights of any Person.
(b) Title. Each Pledgor has good and indefeasible title to the Pledged
Collateral of such Pledgor and is the legal and beneficial owner of such Pledged
Collateral free and clear of any Lien, other than Permitted Liens. There exists
no “adverse claim” within the meaning of Section 8-102 of the UCC with respect
to the Pledged Shares of such Pledgor.
(c) Pledgor’s Authority. No authorization, approval or action by, and no notice
or filing with any Governmental Authority or with the issuer of any Pledged
Shares is required either (i) for the pledge made by a Pledgor or for the
granting of the security interest by a Pledgor pursuant to this Pledge Agreement
(except as have been already obtained or made) or (ii) for the exercise by the
Collateral Agent of its rights and remedies hereunder (except as may be required
by applicable law affecting the offering and sale of securities).
(d) Security Interest/Priority. This Pledge Agreement creates a valid security
interest in favor of the Collateral Agent for the benefit of the holders of the
Secured Obligations, in the Pledged Collateral. The delivery to the Collateral
Agent of certificates, if any, evidencing the Pledged Collateral, together with
duly executed stock powers in respect thereof, will perfect and establish the
first priority (subject only to Permitted Liens) of the Collateral Agent’s
security interest in any certificated Pledged Collateral that constitutes a
Security. The filing of appropriate UCC financing statements in the appropriate
filing offices in the jurisdiction of organization of the applicable Pledgor or
obtaining “control” over such interests in accordance with the provisions of
Section 8-106 of the UCC will perfect and establish the first priority (subject
only to Permitted Liens) of the Collateral Agent’s security interest in any
uncertificated Pledged Collateral that constitutes a Security. The filing of
appropriate UCC financing statements in the appropriate filing offices in the
jurisdiction of organization of the applicable Pledgor will perfect and
establish the first priority (subject only to Permitted Liens) of the Collateral
Agent’s security interest in any Pledged Collateral that does not constitute a
Security. Except as set forth in this subsection (d) and except as may be
required by applicable foreign laws affecting the pledge of Capital Stock of the
First-Tier Foreign Subsidiaries, no action is necessary to perfect the security
interests granted by the Pledgors under this Pledge Agreement.
(e) Partnership and Membership Interests. Except as previously disclosed to the
Collateral Agent, none of the Pledged Shares consisting of partnership or
limited liability company interests (i) is dealt in or traded on a securities
exchange or in a securities market, (ii) by its terms expressly provides that it
is a security governed by Article 8 of the UCC, (iii) is an investment company
security, (iv) is held in a securities account or (v) constitutes a “Security”
or a “Financial Asset” (as each such term is defined in the UCC).
(f) No Other Interests. No Domestic Subsidiary owns any Capital Stock in any
Subsidiary other than as set forth on Schedule 2(a) attached hereto.
6. Covenants. Each Pledgor hereby covenants that, so long as any of the Secured
Obligations remains outstanding and until all of the Revolving Commitments have
been terminated, such Pledgor shall:
(a) Defense of Title. Warrant and defend title to and ownership of the Pledged
Collateral of such Pledgor at its own expense against the claims and demands of
all other parties claiming an interest therein, keep the Pledged Collateral free
from all Liens, except for Permitted Liens, and not sell, exchange, transfer,
assign, lease or otherwise dispose of Pledged Collateral of such Pledgor or any
interest therein, except as permitted under the Credit Agreement and the other
Credit Documents.

 

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(b) Further Assurances. Promptly authorize or execute and deliver at its expense
all further instruments and documents and take such further action as the
Collateral Agent may deem reasonably necessary and desirable to (i) perfect and
protect its security interest in the Pledged Collateral; (ii) enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder in
respect of the Pledged Collateral of such Pledgor; and (iii) otherwise effect
the purposes of this Pledge Agreement, including upon the occurrence and during
the continuance of an Event of Default, if requested by the Collateral Agent,
delivering to the Collateral Agent irrevocable proxies in respect of the Pledged
Collateral of such Pledgor.
(c) Amendments. Not make or consent to any amendment or other modification or
waiver with respect to any of the Pledged Collateral of such Pledgor or enter
into any agreement or allow to exist any restriction with respect to any of the
Pledged Collateral of such Pledgor other than pursuant hereto or as may be
permitted under the Credit Agreement.
(d) Compliance with Securities Laws. File all reports and other information now
or hereafter required to be filed by such Pledgor with the United States
Securities and Exchange Commission and any other state, federal or foreign
agency in connection with such Pledgor’s ownership of the Pledged Collateral.
(e) Issuance or Acquisition of Capital Stock. Not, without executing and
delivering, or causing to be executed and delivered, to the Collateral Agent
such agreements, documents and instruments as the Collateral Agent may
reasonably request for the purpose of perfecting its security interest therein,
issue or acquire any Capital Stock constituting Pledged Collateral consisting of
an interest in a partnership or a limited liability company that (i) is dealt in
or traded on a securities exchange or in a securities market, (ii) by its terms
expressly provides that it is a security governed by Article 8 of the UCC,
(iii) is an investment company security, (iv) is held in a securities account or
(v) constitutes a “Security” or a “Financial Asset” (as each such term is
defined in the UCC).
7. Advances and Performance by the Collateral Agent. On failure of any Pledgor
to perform any of the covenants and agreements contained herein, the Collateral
Agent may, at its sole option and in its sole discretion, upon notice to the
Pledgors, perform the same and in so doing may expend such sums as the
Collateral Agent may reasonably deem advisable in the performance thereof,
including the payment of any insurance premiums, the payment of any taxes, a
payment to obtain a release of a Lien or potential Lien, expenditures made in
defending against any adverse claim and all other expenditures that the
Collateral Agent may make for the protection of the security hereof or may be
compelled to make by operation of law. All such sums and amounts so expended
shall be repayable by the Pledgors on a joint and several basis (subject to
Section 26) promptly upon timely notice thereof and demand therefor, shall
constitute additional Secured Obligations and shall bear interest from the date
said amounts are expended at the Default Rate for Revolving Loans that are Base
Rate Loans. No such performance of any covenant or agreement by the Collateral
Agent on behalf of any Pledgor, and no such advance or expenditure therefor,
shall relieve the Pledgors of any default under the terms of this Pledge
Agreement, the other Credit Documents or any other documents relating to the
Secured Obligations. The Collateral Agent may make any payment hereby authorized
in accordance with any bill, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent such
payment is being contested in good faith by a Pledgor in appropriate proceedings
and against which adequate reserves are being maintained in accordance with
GAAP.

 

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8. Remedies.
(a) General Remedies. Upon the occurrence and during the continuation of an
Event of Default, the Collateral Agent, for the benefit of the holders of the
Secured Obligations, shall have, in addition to the rights and remedies provided
herein, in the Credit Documents, in any other documents relating to the Secured
Obligations, or by applicable law (including levy of attachment and
garnishment), the rights and remedies of a secured party under the UCC of the
jurisdiction applicable to the affected Pledged Collateral.
(b) Sale of Pledged Collateral. Upon the occurrence and during the continuation
of an Event of Default, without limiting the generality of this Section 8 and
without notice, the Collateral Agent may, in its sole discretion, sell or
otherwise dispose of or realize upon the Pledged Collateral, or any part
thereof, in one or more parcels, at public or private sale, at any exchange or
broker’s board or elsewhere, at such price or prices and on such other terms as
the Collateral Agent may deem commercially reasonable, for cash, credit or for
future delivery or otherwise in accordance with applicable law. To the extent
permitted by applicable law, any holder of the Secured Obligations may in such
event, bid for the purchase of such securities. Each Pledgor agrees that, to the
extent notice of sale shall be required by applicable law and has not been
waived by such Pledgor, any requirement of reasonable notice shall be met if
notice, specifying the place of any public sale or the time after which any
private sale is to be made, is personally served on or mailed, postage prepaid,
to such Pledgor, in accordance with the notice provisions of Section 11.1 of the
Credit Agreement at least ten (10) Business Days before the time of such sale or
other event giving rise to the requirement of such notice. The Collateral Agent
shall not be obligated to make any sale of Pledged Collateral of such Pledgor
regardless of notice of sale having been given. The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
(c) Private Sale. Upon the occurrence and during the continuation of an Event of
Default, the Pledgors recognize that the Collateral Agent may deem it
impracticable to effect a public sale of all or any part of the Pledged Shares
or any of the securities constituting Pledged Collateral and that the Collateral
Agent may, therefore, determine to make one or more private sales of any such
Pledged Collateral to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire such Pledged Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Pledgor acknowledges that any such private sale may be at prices
and on terms less favorable to the seller than the prices and other terms that
might have been obtained at a public sale and, notwithstanding the foregoing,
agrees that such private sale shall be deemed to have been made in a
commercially reasonable manner and that the Collateral Agent shall have no
obligation to delay sale of any such Pledged Collateral for the period of time
necessary to permit the issuer of such Pledged Collateral to register such
Pledged Collateral for public sale under the Securities Act. Each Pledgor
further acknowledges and agrees that any offer to sell such Pledged Collateral
that has been (i) publicly advertised on a bona fide basis in a newspaper or
other publication of general circulation in the financial community of New York,
New York (to the extent that such offer may be advertised without prior
registration under the Securities Act), or (ii) made privately in the manner
described above shall be deemed to involve a “public sale” under the UCC,
notwithstanding that such sale may not constitute a “public offering” under the
Securities Act, and the Collateral Agent may, in such event, bid for the
purchase of such Pledged Collateral.
(d) Retention of Pledged Collateral. To the extent permitted under applicable
law, in addition to the rights and remedies hereunder, upon the occurrence and
during the continuation of an Event of Default, the Collateral Agent may, after
providing the notices required by Sections 9-620 and 9-621 of the UCC or
otherwise complying with the requirements of applicable law of the relevant
jurisdiction, accept or retain all or any portion of the Pledged Collateral in
satisfaction of the Secured Obligations. Unless and until the Collateral Agent
shall have provided such notices, however, the Collateral Agent shall not be
deemed to have accepted or retained any Pledged Collateral in satisfaction of
any Secured Obligations for any reason.

 

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(e) Deficiency. In the event that the proceeds of any sale, collection or
realization are insufficient to pay all amounts to which the Collateral Agent or
the holders of the Secured Obligations are legally entitled, the Pledgors shall
be jointly and severally liable for the deficiency (subject to clause (e)
immediately above and Section 26), together with interest thereon at the Default
Rate for Revolving Loans that are Base Rate Loans, together with the reasonable
costs and expenses of collection and reasonable attorneys’ fees and
disbursements. Any surplus remaining after the full payment and satisfaction of
the Secured Obligations shall be returned to the Pledgors or to whomsoever a
court of competent jurisdiction shall determine to be entitled thereto.
9. Rights of the Collateral Agent.
(a) Power of Attorney. In addition to other powers of attorney contained herein,
each Pledgor hereby designates and appoints the Collateral Agent, on behalf of
the holders of the Secured Obligations, and each of its designees or agents, as
attorney-in-fact of such Pledgor, irrevocably and with power of substitution,
with authority to take any or all of the following actions upon the occurrence
and during the continuation of an Event of Default to the extent permitted by
applicable law:
(i) to demand, collect, settle, compromise and adjust, and give discharges and
releases concerning the Pledged Collateral, all as the Collateral Agent may
reasonably deem appropriate;
(ii) to commence and prosecute any actions at any court for the purposes of
collecting any of the Pledged Collateral and enforcing any other right in
respect thereof;
(iii) to defend, settle or compromise any action brought and, in connection
therewith, give such discharge or release as the Collateral Agent may reasonably
deem appropriate;
(iv) to pay or discharge taxes, liens, security interests or other encumbrances
levied or placed on or threatened against the Pledged Collateral;
(v) to direct any parties liable for any payment in connection with any of the
Pledged Collateral to make payment of any and all monies due and to become due
thereunder directly to the Collateral Agent or as the Collateral Agent shall
direct;
(vi) to receive payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out of any
Pledged Collateral;
(vii) to sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the Pledged Collateral;
(viii) to authorize or to execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements, security and
pledge agreements, affidavits, notices and other agreements, instruments and
documents that the Collateral Agent may reasonably deem appropriate in order to
perfect and maintain the security interests and liens granted in this Pledge
Agreement and in order to fully consummate all of the transactions contemplated
therein;

 

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(ix) to exchange any of the Pledged Collateral or other property upon any
merger, consolidation, reorganization, recapitalization or other readjustment of
the issuer thereof and, in connection therewith, deposit any of the Pledged
Collateral with any committee, depository, transfer agent, registrar or other
designated agency upon such terms as the Collateral Agent may reasonably deem
appropriate;
(x) to vote for a shareholder resolution, or to sign an instrument in writing,
sanctioning the transfer of any or all of the Pledged Collateral into the name
of the Collateral Agent or one or more of the holders of the Secured Obligations
or into the name of any transferee to whom the Pledged Collateral or any part
thereof may be sold pursuant to Section 8; and
(xi) to do and perform all such other acts and things as the Collateral Agent
may reasonably deem appropriate or convenient in connection with the Pledged
Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable for so long as any of the Secured Obligations shall remain
outstanding and until all of the Revolving Commitments shall have been
terminated. The Collateral Agent shall be under no duty to exercise or withhold
the exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the Collateral Agent in this Pledge Agreement, and shall
not be liable for any failure to do so or any delay in doing so. The Collateral
Agent shall not be liable for any act or omission or for any error of judgment
or any mistake of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross negligence or
willful misconduct. This power of attorney is conferred on the Collateral Agent
solely to protect, preserve and realize upon its security interest in the
Pledged Collateral.
(b) Assignment by the Collateral Agent. The Collateral Agent may from assign the
Secured Obligations and its security interests in the Pledged Collateral in
connection with its resignation as Collateral Agent pursuant to Section 10.6 of
the Credit Agreement, and the assignee thereof shall be entitled to all of the
rights and remedies of the Collateral Agent under this Pledge Agreement in
relation thereto.
(c) The Collateral Agent’s Duty of Care. Other than the exercise of reasonable
care to assure the safe custody of the Pledged Collateral while being held by
the Collateral Agent hereunder, the Collateral Agent shall have no duty or
liability to preserve rights pertaining thereto, it being understood and agreed
that the Pledgors shall be responsible for preservation of all rights in the
Pledged Collateral, and the Collateral Agent shall be relieved of all
responsibility for the Pledged Collateral upon surrendering it or tendering the
surrender of it to the Pledgors. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own property,
of like value, which shall be no less than the treatment employed by a
reasonable and prudent agent in the industry, it being understood that the
Collateral Agent shall not have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Pledged Collateral, whether or not the Collateral
Agent 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 of
the Pledged Collateral.

 

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(d) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and be continuing, to the
extent permitted by applicable law, each Pledgor may exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral; and
(ii) Upon the occurrence and during the continuation of an Event of Default and
following delivery to such Pledgor by the Collateral Agent of notice of its
intent to exercise such rights, all rights of a Pledgor to exercise the voting
and other consensual rights that it would otherwise be entitled to exercise
pursuant to clause (i) of this subsection shall cease and all such rights shall
thereupon become vested in the Collateral Agent, which shall then have the sole
right to exercise such voting and other consensual rights.
(e) Dividend Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and be continuing and
subject to Section 4(b), each Pledgor may receive and retain any and all
dividends (other than stock dividends and other dividends constituting Pledged
Collateral addressed herein) or interest paid in respect of the Pledged
Collateral to the extent they are allowed under the Credit Agreement.
(ii) Upon the occurrence and during the continuation of an Event of Default:
(A) all rights of a Pledgor to receive the dividends and interest payments that
it would otherwise be authorized to receive and retain pursuant to clause (i) of
this subsection shall cease and all such rights shall thereupon be vested in the
Collateral Agent, which shall then have the sole right to receive and hold as
Pledged Collateral such dividends and interest payments; and
(B) all dividends and interest payments that are received by a Pledgor contrary
to the provisions of clause (A) of this subsection shall be received in trust
for the benefit of the Collateral Agent and the holders of the Secured
Obligations, shall be segregated from other property or funds of such Pledgor,
and shall be forthwith paid over to the Collateral Agent as Pledged Collateral
in the exact form received, to be held by the Collateral Agent as Pledged
Collateral and as further collateral security for the Secured Obligations.
10. Rights of Required Lenders. All rights of the Collateral Agent hereunder, if
not exercised by the Collateral Agent, may be exercised by the holders of the
Secured Obligations with the consent of the Required Lenders, in which event the
holders of the Secured Obligations shall have all of the rights and obligations
of, and the benefit of indemnities, waivers and releases in favor of, the
Collateral Agent hereunder.
11. Application of Proceeds. After the occurrence and during the continuation of
an Event of Default, any payments in respect of the Secured Obligations and any
proceeds of the Pledged Collateral, when received by the Collateral Agent or any
of the holders of the Secured Obligations in cash or its equivalent, will be
applied in reduction of the Secured Obligations in the order set forth in
Section 9.3 of the Credit Agreement, and each Pledgor irrevocably waives the
right to direct the application of such payments and proceeds and acknowledges
and agrees that the Collateral Agent shall have the continuing and exclusive
right to apply and reapply any and all such payments and proceeds in the
Collateral Agent’s sole discretion, notwithstanding any entry to the contrary
upon any of its books and records.

 

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12. Release of Pledged Collateral. Upon request, the Collateral Agent shall
promptly deliver to the applicable Pledgor (at the Pledgor’s expense)
appropriate release documentation and any certificates or other documents
delivered to the Collateral Agent by such Pledgor to the extent the release or
disposition of Pledged Collateral is permitted under, and on the terms and
conditions set forth in, the Credit Documents; provided that any such release,
or the substitution of any of the Pledged Collateral for other Collateral, will
not alter, vary or diminish in any way the force, effect, lien, pledge or
security interest of this Pledge Agreement as to any and all Pledged Collateral
not expressly released or substituted, and this Pledge Agreement shall continue
as a first priority lien (subject to Permitted Liens) on any and all Pledged
Collateral not expressly released or substituted.
13. Costs and Expenses. At all times hereafter, whether or not upon the
occurrence of an Event of Default, the Pledgors agree to promptly pay upon
demand any and all reasonable costs and expenses (including reasonable
attorneys’ fees and disbursements) of the Collateral Agent and the holders of
the Secured Obligations (a) as required under Section 11.2 of the Credit
Agreement and (b) as reasonably necessary to protect the Collateral or to
exercise any rights or remedies under this Pledge Agreement or with respect to
any of the Collateral. All of the foregoing costs and expenses shall constitute
Secured Obligations hereunder.
14. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement in every respect and
shall remain in full force and effect so long as any of the Secured Obligations
remains outstanding and until all of the Revolving Commitments have been
terminated, or the Collateral Agent may release or terminate the security
interests hereunder as may be provided under the Credit Agreement. Upon such
payment and termination, this Pledge Agreement shall be automatically terminated
and the Collateral Agent shall, upon the request and at the expense of the
Pledgors, forthwith release all of its liens and security interests hereunder
and shall authorize or execute and deliver all UCC termination statements and/or
other documents reasonably requested by the Pledgors evidencing such
termination. Notwithstanding the foregoing, all releases and indemnities
provided hereunder shall survive termination of this Pledge Agreement.
(b) This Pledge Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in part, of
any of the Secured Obligations is rescinded or must otherwise be restored or
returned by the Collateral Agent or any holder of the Secured Obligations as a
preference, fraudulent conveyance or otherwise under any Debtor Relief Law, all
as though such payment had not been made; provided that in the event payment of
all or any part of the Secured Obligations is rescinded or must be restored or
returned, all reasonable costs and expenses (including reasonable attorneys’
fees and disbursements) incurred by the Collateral Agent or any holder of the
Secured Obligations in defending and enforcing such reinstatement shall be
deemed to be included as a part of the Secured Obligations.
15. Amendments and Waivers. This Pledge Agreement and the provisions hereof may
not be amended, waived, modified, changed, discharged or terminated except by
written agreement of (a) the Pledgors and (b) the Collateral Agent (with the
consent or at the direction of the requisite Lenders under the Credit
Agreement).
16. Successors in Interest. This Pledge Agreement shall create a continuing
security interest in the Collateral and shall be binding upon each Pledgor, its
successors and assigns, and shall inure, together with the rights and remedies
of the Collateral Agent and the holders of the Secured Obligations hereunder, to
the benefit of the Collateral Agent and the holders of the Secured Obligations
and their successors and permitted assigns; provided, however, that none of the
Pledgors may assign its rights or delegate its duties hereunder without the
prior written consent of the requisite Lenders under the Credit Agreement or as
expressly provided under the Credit Agreement.

 

10

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17. Release. To the fullest extent permitted by applicable law, each Pledgor
hereby releases the Collateral Agent and each holder of the Secured Obligations,
and their respective successors, assigns, officers, attorneys, employees and
agents, from any liability for any act or omission or any error of judgment or
mistake of fact or of law relating to this Pledge Agreement or the Collateral,
except for any liability arising from the gross negligence or willful misconduct
of the Collateral Agent or such holder of the Secured Obligations.
18. Notices. All notices required or permitted to be given under this Pledge
Agreement shall be given as provided in Section 11.1 of the Credit Agreement.
19. Counterparts. This Pledge Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument.
20. Headings. The headings of the sections and subsections herein are provided
for convenience of reference only and shall not in any way affect the meaning or
construction of any provision of the Pledge Agreement.
21. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial; Etc.
(a) GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES THEREOF.
(b) CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY
GUARANTOR ARISING OUT OF OR RELATING HERETO MAY BE BROUGHT IN ANY UNITED STATES
FEDERAL COURT SITTING IN OR WITH DIRECT OR INDIRECT JURISDICTION OVER THE
WESTERN DISTRICT OF NORTH CAROLINA OR ANY STATE OR SUPERIOR COURT SITTING IN
MECKLENBURG COUNTY, NORTH CAROLINA. BY EXECUTING AND DELIVERING THIS PLEDGE
AGREEMENT, EACH GUARANTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
IRREVOCABLY (a) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS; (b) WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS; (c) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO THE APPLICABLE GUARANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE
WITH SECTION 11.1 OF THE CREDIT AGREEMENT IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER THE APPLICABLE GUARANTOR IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
AND (d) AGREES THAT THE COLLATERAL AGENT AND THE HOLDERS OF THE SECURED
OBLIGATIONS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO BRING PROCEEDINGS AGAINST ANY GUARANTOR IN THE COURTS OF ANY OTHER
JURISDICTION.

 

11

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(c) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER HEREOF. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER HEREOF, INCLUDING CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT
TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS PLEDGE AGREEMENT, AND THAT EACH WILL CONTINUE TO
RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL
AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT
DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE
UNDER THE CREDIT AGREEMENT. IN THE EVENT OF LITIGATION, THIS PLEDGE AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
22. Severability. In case any provision in or obligation hereunder shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
23. Entirety. This Pledge Agreement and the other Credit Documents constitute
the entire agreement of the parties relating to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, relating to
the subject matter hereof.
24. Survival of Representations and Warranties and Indemnities. All
representations and warranties made hereunder or other document delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery hereof and thereof. Such representations and warranties have been or
will be relied upon by the Administrative Agent, the Collateral Agent and each
holder of the Secured Obligations, regardless of any investigation made by the
Administrative Agent, the Collateral Agent or any such holder of a Secured
Obligation or on their behalf and notwithstanding that the Administrative Agent,
the Collateral Agent or any holder of a Secured Obligation may have had notice
or knowledge of any Default at the time of any Credit Extension, and shall
continue in full force and effect so long as any of the Secured Obligations
(other than any obligations with respect to the indemnities and the
representations and warranties set forth in the Credit Documents) remains
outstanding and until all of the Revolving Commitments have been terminated.
Notwithstanding the foregoing, all releases and indemnities provided hereunder
shall survive termination of this Pledge Agreement.
25. Other Security. To the extent that any of the Secured Obligations are now or
hereafter secured by property other than the Pledged Collateral (including real
and other personal property owned by a Pledgor), or by a guarantee, endorsement
or property of any other Person, then the Collateral Agent shall have the right
to proceed against such other property, guarantee or endorsement upon the
occurrence and during the continuation of an Event of Default, and the
Collateral Agent shall have the right, in its sole discretion, to determine
which rights, security, liens, security interests or remedies the Collateral
Agent shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or the
Secured Obligations or any of the rights of the Collateral Agent or the holders
of the Secured Obligations under this Pledge Agreement, under any of the other
Credit Documents or under any other document relating to the Secured
Obligations.

 

12

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26. Joint and Several Obligations of Pledgors.
(a) Subject to subsection (c) of this Section 26, each of the Pledgors is
accepting joint and several liability hereunder in consideration of the
financial accommodation to be provided by the holders of the Secured
Obligations, for the mutual benefit, directly and indirectly, of each of the
Pledgors and in consideration of the undertakings of each of the Pledgors to
accept joint and several liability for the obligations of each of them.
(b) Subject to subsection (c) of this Section 26, each of the Pledgors jointly
and severally hereby irrevocably and unconditionally accepts, not merely as a
surety but also as a co-debtor, joint and several liability with the other
Pledgors with respect to the payment and performance of all of the Secured
Obligations arising under this Pledge Agreement, the other Credit Documents and
any other documents relating to the Secured Obligations, it being the intention
of the parties hereto that all the Secured Obligations shall be the joint and
several obligations of each of the Pledgors without preferences or distinction
among them.
(c) Notwithstanding any provision to the contrary contained herein, in any other
of the Credit Documents or in any other documents relating to the Secured
Obligations, the obligations of each Pledgor that is a Guarantor under the
Credit Agreement and the other Credit Documents shall be limited to an aggregate
amount equal to the largest amount that would not render such obligations
subject to avoidance under Section 548 of the Bankruptcy Code of the United
States or any other applicable Debtor Relief Laws (including any comparable
provisions of any applicable state laws).
27. Joinder. At any time after the date of this Pledge Agreement, one or more
additional Persons may become party hereto by executing and delivering to the
Collateral Agent a joinder agreement or other documentation in form and
substance satisfactory to the Collateral Agent. Immediately upon such execution
and delivery of such joinder agreement or such other documentation (and without
any further action), each such additional Person will become a party to this
Pledge Agreement as a “Pledgor” and have all of the rights and obligations of a
Pledgor hereunder and this Pledge Agreement and the schedules hereto shall be
deemed amended by such joinder agreement or such other documentation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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Each of the parties hereto has caused a counterpart of this Pledge Agreement to
be duly executed and delivered as of the date first above written.

          PLEDGORS:  PIKE ELECTRIC CORPORATION,
a Delaware corporation
      By:   /s/ Anthony K. Slater         Name:   Anthony K. Slater       
Title:   Chief Financial Officer and Executive Vice President        PIKE
ENTERPRISES, INC.
a North Carolina corporation
      By:   /s/ Anthony K. Slater         Name:   Anthony K. Slater       
Title:   Chief Financial Officer and Executive Vice President        PIKE
ELECTRIC, LLC,
a North Carolina limited liability company
      By:   /s/ James T. Benfield         Name:   James T. Benfield       
Title:   President        PIKE ENERGY SOLUTIONS, LLC,
a North Carolina limited liability company
      By:   /s/ Jimmy R. Hicks         Name:   Jimmy R. Hicks        Title:  
President        PIKE ENERGY SOLUTIONS, INC.,
a California corporation
      By:   /s/ Jimmy R. Hicks         Name:   Jimmy R. Hicks        Title:  
President        KLONDYKE CONSTRUCTION LLC,
an Arizona limited liability company
      By:   /s/ Steven M. McClain         Name:   Steven M. McClain       
Title:   Vice President   

PIKE ELECTRIC CORPORATION
PLEDGE AGREEMENT

 

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            ELEMENTAL ENERGY, INC.,
an Arizona corporation
      By:   /s/ Steven M. McClain         Name:   Steven M. McClain       
Title:   President        PIKE TANZANIA, LLC,
a North Carolina limited liability company
      By:   /s/ Anthony K. Slater         Name:   Anthony K. Slater       
Title:   Vice President        PINE VALLEY POWER, INC.,
a Utah corporation
      By:   /s/ Michael B. Horan         Name:   Michael B. Horan       
Title:   President        PIKE EQUIPMENT AND SUPPLY COMPANY, LLC,
a North Carolina limited liability company
      By:   /s/ J. Clifford Edwards         Name:   J. Clifford Edwards       
Title:   President   

PIKE ELECTRIC CORPORATION
PLEDGE AGREEMENT

 

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Accepted and agreed to as of the date first above written.
REGIONS BANK,
as Collateral Agent

         
By:
  /s/ P.S. Phillippi
 
Name: P.S. Phillippi
Title:   SVP    

PIKE ELECTRIC CORPORATION
PLEDGE AGREEMENT

 

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SCHEDULES AND EXHIBITS

      Schedule 2(a)  
Pledged Shares
   
 
Exhibit 4(a)  
Form of Stock Power

 

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SCHEDULE 2(a)
PLEDGED SHARES
2(a)(i): Domestic Subsidiaries:

                              Class of           Percentage         Stock or    
  Number   of   Owner of   Type of   Certificate   of Shares   Ownership Issuer
of Capital Stock   Capital Stock   Interest   Number   Owned   Interest
1. Pike Enterprises, Inc.
  Pike Electric Corporation   Common   C-1   1,000   100%
2. Pike Electric, LLC
  Pike Enterprises, Inc.   Membership Interest   2494   N/A   100%
3. Pike Equipment and Supply Company, LLC
  Pike Electric, LLC   Membership Interest   2   N/A   100%
4. Pike Energy Solutions, LLC
  Pike Enterprises, Inc.   Membership Interest   3   N/A   100%
5. Pike Energy Solutions, Inc.
  Pike Energy Solutions, LLC   Common   C-1   100   100%
6. Pike Tanzania, LLC
  Pike Enterprises, Inc.   Membership Interest   1   N/A   100%
7. Klondyke Construction LLC
  Pike Enterprises, Inc.   Membership Interest   2   N/A   100%
8. Elemental Energy, Inc.
  Klondyke Construction LLC   Common   1   1,000   100%
9. Pine Valley Power, Inc.
  Pike Enterprises, Inc.   Common   2   10,000   100%

 

2(a)-1

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2(a)(ii): First-Tier Foreign Subsidiaries:

                                                      Class of            
Number     Percentage               Stock or             of     of       Owner
of     Type of     Certificate     Shares     Ownership   Issuer of Capital
Stock   Capital Stock     Interest     Number     Owned     Interest  
1. Pike Capital International S.à r.l.
  Pike Enterprises, Inc.     Registered Shares       1       2,632       66 %

 

2(a)-2

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EXHIBIT 4(a)
IRREVOCABLE STOCK POWER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of capital stock of
                                         [ISSUER], a                     
corporation:

     
No. of Shares
  Certificate No.

and irrevocably appoints                                          its agent and
attorney-in-fact to transfer all or any part of such capital stock and to take
all necessary and appropriate action to effect any such transfer. The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.
The effectiveness of a transfer pursuant to this stock power shall be subject to
any and all transfer restrictions referenced on the face of the certificates
evidencing such interest or in the certificate of incorporation or bylaws of the
subject corporation, to the extent they may from time to time exist.

            [HOLDER]
      By:           Name:           Title: