Exhibit 10.8


 


DEBTOR-IN-POSSESSION PLEDGE AGREEMENT


 


DEBTOR-IN-POSSESSION
PLEDGE AGREEMENT, dated as of October 30, 2009 (as amended, restated,
modified and/or supplemented from time to time, the “Agreement”), made
by each of the undersigned pledgors, each of which is a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code (as defined in the
Credit Agreement referred to below) (each, a “Pledgor” and collectively,
the “Pledgors”), in favor of BANK OF AMERICA, N.A., as Collateral Agent
(including any successor collateral agent, the “Pledgee”) for the
benefit of the Secured Creditors (as defined below).  Except as otherwise defined herein, terms
used herein and defined in the Credit Agreement (as defined below) shall be
used herein as therein defined.


 


W I T N E S S E T H :


 


WHEREAS,
FairPoint Communications, Inc., a Delaware corporation and a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code (“FairPoint”),
and FairPoint Logistics, Inc., a South Dakota corporation and a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code (“FairPoint
Logistics”; and together with FairPoint, each a “Borrower” and
collectively the “Borrowers”) and each of the other Pledgors have filed in the
United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy
Court”) a voluntary petition for relief under Chapter 11 of the Bankruptcy
Code and have continued in the possession of their assets and in the management
of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code,
and such reorganization cases are being jointly administered under Case Number
09-16335-brl (the “Cases”);


 


WHEREAS,
the Borrowers, the lenders from time to time party thereto (the “Lenders”)
and Bank of America, N.A., as Administrative Agent, have entered into a
Debtor-In-Possession Credit Agreement, dated as of October 27, 2009 (as
amended, modified, restated and/or supplemented from time to time, the “Credit
Agreement”), providing for the making of Loans to, and the issuance of, and
participation in, Letters of Credit for the account of the Borrowers and/or one
or more of their Subsidiaries, all as contemplated therein (the Lenders, the
Letter of Credit Issuer, the Administrative Agent, the Collateral Agent and the
Pledgee are herein called the “Secured Creditors”).


 


WHEREAS,
it is a condition precedent to the making of Loans and the issuance of, and
participation in, Letters of Credit under the Credit Agreement that each
Pledgor shall have executed and delivered to the Pledgee this Agreement.


 


WHEREAS,
each Pledgor desires to execute this Agreement to satisfy the condition
described in the preceding paragraph.


 


NOW,
THEREFORE, in consideration of the benefits accruing to each Pledgor, the
receipt and sufficiency of which are hereby acknowledged, each Pledgor hereby
makes the following representations and warranties to the Pledgee and hereby
covenants and agrees with the Pledgee as follows:


 


1.                                       SECURITY FOR OBLIGATIONS.  This Agreement is made by each Pledgor for
the benefit of the Secured Creditors to secure:


 

















 


(i)                                     the full and
prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations and liabilities of the Borrowers (in the case of
the Borrowers or an NSG Pledgor) or such Pledgor (in the case of a Pledgor that
is a Subsidiary Guarantor), now existing or hereafter incurred under, arising
out of or in connection with any Credit Document to which any Borrower or such
Pledgor, as the case may be, is a party (including, in the case of a Pledgor
that is a Subsidiary Guarantor, all such obligations of such Pledgor under the
Subsidiary Guaranty) and the due performance of and compliance by the Borrowers
or such Pledgor, as the case may be, with the terms of each such Credit
Document (all such obligations and liabilities under this clause (i) being
herein, collectively called the “Credit Document Obligations”);


 


(ii)                                  any and all
sums advanced by the Pledgee in order to preserve the Collateral (as
hereinafter defined) and/or its security interest therein;


 


(iii)                               in the event of
any proceeding for the collection of the Obligations (as defined below) or the
enforcement of this Agreement, after an Event of Default shall have occurred
and be continuing, the reasonable out-of-pocket expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral, or of any exercise by the Pledgee of its rights hereunder
(including the reasonable fees, disbursements and other charges if (x) counsel
to the Administrative Agent, the Pledgee and the Secured Creditors and (y) the
Financial Advisor); provided, that the Pledgors’ obligation to pay the
fees, disbursements and other charges of counsel to the Secured Creditors (but
not of counsel to the Administrative Agent or the Pledgee) shall be limited to
one outside counsel, which as of the Closing Date, is Wachtell Lipton, Rosen
and Katz; and


 


(iv)                              all amounts
paid by any Secured Creditor as to which such Secured Creditor has the right to
reimbursement under Section 11 of this Agreement;


 


all
such obligations, liabilities, sums and expenses set forth in clauses (i) through
(iv) of this Section 1 being herein collectively called the “Obligations”.


 


2.                                       DEFINITIONS.  All
capitalized terms used herein and not otherwise defined herein shall have the
meanings specified in the Credit Agreement. 
The following capitalized terms used herein shall have the definitions
specified below:


 


“Certificated
Security” shall have the meaning given such term in Section 8-102(a)(4) of
the UCC.


 


“Clearing
Corporation” shall have the meaning given such term in Section 8-102(a)(5) of
the UCC.


 


“Collateral”
shall have the meaning provided in Section 3.1.


 


“Collateral
Accounts” shall mean any and all accounts established and maintained by the
Pledgee in the name of any Pledgor to which Collateral may be credited.


 


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“Excluded
Entity” shall mean each of the corporations, partnerships, limited
liability companies or associations listed on Annex F hereto where the capital
stock or other equity interests of such corporations, partnerships, limited
liability companies or associations are not permitted by applicable law, rule or
regulation to be pledged by the direct or indirect Subsidiary of FairPoint that
owns such capital stock or other equity interests.


 


“Financial
Asset” shall have the meaning given such term in Section 8-102(a)(9) of
the UCC.


 


“Instrument”
shall have the meaning given such term in Section 9-102(a)(47) of the UCC.


 


“Investment
Property” shall have the meaning given such term in Section 9-102(a)(49)
of the UCC.


 


“Location”
of any Pledgor has the meaning given such term in Section 9-307 of the
UCC.


 


“Membership
Interest” shall mean the entire membership interest at any time owned by
any Pledgor in any limited liability company (other than, for the avoidance of
doubt, an Excluded Entity).


 


“Notes”
shall mean all promissory notes at any time issued to, or held by, any Pledgor.


 


“NSG
Pledgor” shall mean each Pledgor which is not a Subsidiary Guarantor.


 


“Obligations”
shall have the meaning provided in Section 1.


 


“Partnership
Interest” shall mean the entire partnership interest (whether general
and/or limited partnership interests) at any time owned by any Pledgor in any
partnership (other than, for the avoidance of doubt, an Excluded Entity).


 


“Pledged
LLC” shall mean any limited liability company (other than, for the
avoidance of doubt, an Excluded Entity) in which any Pledgor owns a membership
interest.


 


“Pledged
Membership Interests” shall mean all Membership Interests at any time
pledged or required to be pledged hereunder.


 


“Pledged
Notes” shall mean all Notes at any time pledged or required to be pledged
hereunder.


 


“Pledged
Partnership” shall mean any partnership (other than, for the avoidance of
doubt, an Excluded Entity) in which any Pledgor owns a partnership interest.


 


“Pledged
Partnership Interests” shall mean all Partnership Interests at any time
pledged or required to be pledged hereunder.


 


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“Pledged
Securities” shall mean all Pledged Stock, Pledged Notes, Pledged
Partnership Interests and Pledged Membership Interests.


 


“Pledged
Stock” shall mean all Stock at any time pledged or required to be pledged
hereunder.


 


“Proceeds”
shall have the meaning given such term in Section 9-102(a)(64) of the UCC.


 


“Registered
Organization” shall have the meaning given such term in Section 9-102(a)(70)
of the UCC.


 


“Securities”
shall mean all of the Stock, Notes, Partnership Interests and Membership
Interests.


 


“Securities
Intermediary” shall have the meaning given such term in Section 8-102(14)
of the UCC.


 


“Security
Entitlement” shall have the meaning given such term in Section 8-102(a)(17)
of the UCC.


 


“Stock”
shall mean (x) all of the issued and outstanding shares of stock at any
time owned by any Pledgor of any corporation (other than, for the avoidance of
doubt, an Excluded Entity).


 


“Transmitting
Utility” has the meaning given such term in Section 9-102(a)(80) of
the UCC.


 


“UCC”
shall mean the Uniform Commercial Code as in effect in the State of New York
from time to time; provided that all references herein to specific
Sections or subsections of the UCC are references to such Sections or
subsections, as the case may be, of the Uniform Commercial Code as in effect in
the State of New York on the date hereof.


 


“Uncertificated
Security” shall have the meaning given such term in Section 8-102(a)(18)
of the UCC.


 


3.                                       PLEDGE OF SECURITIES, ETC.


 


3.1                                 Pledge.  To secure the Obligations now or hereafter
owed or to be performed by such Pledgor, each Pledgor does hereby grant,
pledge, hypothecate, mortgage, charge and assign to the Pledgee for the benefit
of the Secured Creditors, and does hereby create a continuing security interest
in favor of the Pledgee for the benefit of the Secured Creditors in, all of its
right, title and interest in and to the following, whether now existing or
hereafter from time to time acquired (collectively, the “Collateral”):


 


(i)                                     all of the
Securities owned or held by such Pledgor from time to time and all options and
warrants owned by such Pledgor from time to time to purchase Securities (and
all certificates or instruments evidencing such Securities);


 


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(ii)                                  each Collateral
Account, including any and all assets of whatever type or kind deposited by
such Pledgor in any such Collateral Account, whether now owned or hereafter
acquired, existing or arising (including, without limitation, all Financial
Assets, Investment Property, monies, checks, drafts, Instruments or interests
therein of any type or nature deposited or required by the Credit Agreement or
any other Credit Document to be deposited in such Collateral Account, and all
investments and all certificates and other instruments (including depository
receipts, if any) from time to time representing or evidencing the same, and
all dividends, interest, distributions, cash and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the foregoing);


 


(iii)                               all of such
Pledgor’s (x) Partnership Interest and all of such Pledgor’s right, title
and interest in each Pledged Partnership and (y) Membership Interest and
all of such Pledgor’s right, title and interest in each Pledged LLC, in each
case including, without limitation:


 


(a)                                  all the capital
thereof and its interest in all profits, losses and other distributions to
which such Pledgor shall at any time be entitled in respect of such Partnership
Interest and/or Membership Interest;


 


(b)                                 all other
payments due or to become due to such Pledgor in respect of such Partnership
Interest and/or Membership Interest, whether under any partnership agreement,
limited liability company agreement or otherwise, whether as contractual
obligations, damages, insurance proceeds or otherwise;


 


(c)                                  all of its
claims, rights, powers, privileges, authority, options, security interest,
liens and remedies, if any, under any partnership agreement, limited liability
company agreement or at law or otherwise in respect of such Partnership
Interest and/or Membership Interest;


 


(d)                                 all present and
future claims, if any, of the Pledgor against any Pledged Partnership and any
Pledged LLC for moneys loaned or advanced, for services rendered or otherwise;


 


(e)                                  all of such
Pledgor’s rights under any partnership agreement or limited liability company
agreement or at law to exercise and enforce every right, power, remedy,
authority, option and privilege of such Pledgor relating to the Partnership Interest
and/or Membership Interest, including any power to terminate, cancel or modify
any partnership agreement or any limited liability company agreement, to
execute any instruments and to take any and all other action on behalf of and
in the name of such Pledgor in respect of any Partnership Interest or
Membership Interest and any Pledged Partnership and any Pledged LLC to make
determinations, to exercise any election (including, but not limited to,
election of remedies) or option or to give or receive any notice, consent,
amendment, waiver or approval, together with full power and authority to
demand, receive, enforce, collect or receipt for any of the foregoing, to
enforce or 


 


5

















 


execute
any checks, or other instruments or orders, to file any claims and to take any
action in connection with any of the foregoing; and


 


(f)                                    all other
property hereafter delivered in substitution for or in addition to any of the
foregoing, all certificates and instruments representing or evidencing such
other property and all cash, securities, interest, dividends, rights and other
property at any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof;


 


(iv)                              all Security
Entitlements owned by such Pledgor from time to time in any and all of the
foregoing; and


 


(v)                                 all Proceeds of
any and all of the foregoing.


 


3.2                                 Perfection and
Priority.  Upon the
entry of the Interim Order and the Final Order, as applicable, all Liens and
security interests granted to the Pledgee hereunder shall constitute valid and
perfected Liens on all of the Collateral having the priority specified therein
and shall automatically, and without further action by any Person, perfect such
Liens and security interests against the Collateral; provided, however, nothing
herein shall prevent the Pledgee from otherwise perfecting, maintaining,
protecting or enforcing the Liens and security interests in the Collateral
granted hereunder. Notwithstanding any failure on the part of any Pledgor to
take any action required by this Agreement, or perform or fulfill any of the
obligations of such Pledgor under or pursuant to this Agreement, the Liens and
security interests granted herein shall be deemed valid, enforceable and
perfected by entry of each Financing Order. 
No financing statement, notice of lien, mortgage, deed of trust or
similar instrument in any jurisdiction or filing office need be filed or any
other action taken in order to validate and perfect the Liens and security
interest granted by or pursuant to this Agreement or the Financing Orders.


 


3.3                                 Claim
Priorities. All Obligations shall constitute, in accordance
with Section 364(c)(1) of the Bankruptcy Code, claims against each
Pledgor in its Case that are administrative expense claims having priority over
any and all administrative expenses of the kind specified in Sections 503(b) or
507(b) of the Bankruptcy Code, subject only to the Carve-Out.


 


3.4                                 Modifications.


 


(a)                                  The Liens, lien
priority, administrative priorities and other rights and remedies granted to
the Pledgee pursuant to this Agreement and the Financing Orders (including the
existence, perfection and priority of the Liens provided herein and therein and
the administrative priority provided herein and therein) shall not be modified,
altered or impaired in any manner by any other financing or extension of credit
or incurrence of any Indebtedness by any of the Pledgors (pursuant to Section 364
of the Bankruptcy Code or otherwise), or by any dismissal or conversion of any
Case, or by any other act or omission whatsoever.  Without limitation, notwithstanding any such
order, financing, extension, incurrence, dismissal, conversion, act or
omission:


 


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(i)                                     except for the
Carve-Out having priority over the Obligations, no costs or expenses of
administration that have been or may be incurred in any of the Cases or any
conversion of the same or in any other proceedings related thereto, and no
priority claims, are or shall be prior to or on a parity with any claim of the
Secured Creditors against the Pledgors in respect of any Obligation;


 


(ii)                                  the Liens
granted herein and in the Financing Orders shall constitute valid and perfected
first priority Liens and security interests and shall be prior to all other
Liens, now existing or hereafter arising, in favor of any other creditor or any
other Person whatsoever (subject only to (A) valid, perfected,
nonavoidable and enforceable Liens existing as of the Petition Date, (B) the
extent such postpetition perfection is expressly permitted by the Bankruptcy
Code, valid, nonavoidable and enforceable Liens existing as of the Petition
Date, but perfected after the Petition Date, and (C) the Carve-Out);


 


(iii)                               the Liens
granted hereunder shall continue valid and perfected without the necessity that
financing statements be filed or that any other action be taken under
applicable nonbankruptcy law; and


 


(iv)                              notwithstanding
any failure on the part of any Credit Party or the Secured Creditors to
perfect, maintain, protect or enforce the Liens in the Collateral granted
hereunder, the Financing Orders shall, automatically and without further action
by any Person, perfect such Liens against the Collateral.


 


3.5                                 Procedures.  (a)  To the extent that any Pledgor at
any time or from time to time owns, acquires or obtains any right, title or
interest in any Collateral, such Collateral shall automatically (and without
the taking of any action by such Pledgor) be pledged pursuant to Section 3.1
of this Agreement and, in addition thereto, such Pledgor shall (to the extent
provided below) forthwith take the following actions as set forth below:


 


(i)                                     with respect to
a Certificated Security (other than a Certificated Security credited on the
books of a Clearing Corporation or Securities Intermediary), such Pledgor shall
physically deliver such Certificated Security to the Pledgee, endorsed to the
Pledgee or endorsed in blank;


 


(ii)                                  with respect to
an Uncertificated Security (other than an Uncertificated Security credited on
the books of a Clearing Corporation or Securities Intermediary), such Pledgor
shall cause the issuer of such Uncertificated Security to duly authorize,
execute, and deliver to the Pledgee, an agreement for the benefit of the
Pledgee and the other Secured Creditors substantially in the form of Annex E
hereto (appropriately completed to the satisfaction of the Pledgee and with
such modifications, if any, as shall be satisfactory to the Pledgee) pursuant
to which such issuer agrees to comply with any and all instructions originated
by the Pledgee without further consent by the registered owner and not to
comply with instructions regarding such Uncertificated Security (and any
Partnership Interests and Membership Interests issued by such issuer)
originated by any other Person other than a court of competent jurisdiction;


 


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(iii)                               with respect to
a Certificated Security, Uncertificated Security, Partnership Interest or
Membership Interest credited on the books of a Clearing Corporation or
Securities Intermediary (including a Federal Reserve Bank, Participants Trust
Company or The Depository Trust Company), such Pledgor shall promptly notify
the Pledgee thereof and shall promptly take (x) all actions required (i) to
comply with the applicable rules of such Clearing Corporation or
Securities Intermediary and (ii) to perfect the security interest of the
Pledgee under applicable law (including, in any event, under Sections 9-314(a),
(b) and (c), 9-106 and 8-106(d) of the UCC) and (y) such other
actions as the Pledgee deems necessary or desirable to effect the foregoing;


 


(iv)                              with respect to
a Partnership Interest or a Membership Interest (other than a Partnership
Interest or Membership Interest credited on the books of a Clearing Corporation
or Securities Intermediary), (1) if such Partnership Interest or
Membership Interest is represented by a certificate and is a Security for
purposes of the UCC, the procedure set forth in Section 3.5(a)(i) hereof;
and (2) if such Partnership Interest or Membership Interest is not
represented by a certificate or is not a Security for purposes of the UCC, the
procedure set forth in Section 3.5(a)(ii) hereof;


 


(v)                                 with respect to
any Note, physical delivery of such Note to the Pledgee, endorsed in blank, or,
at the request of the Pledgee, endorsed to the Pledgee; and


 


(vi)                              with respect to
cash proceeds from any of the Collateral described in Section 3.1 hereof, (i) the
establishment by the Pledgee of a cash account in the name of such Pledgor over
which the Pledgee shall have “control” within the meaning of the UCC and, at
any time any Event of Default is in existence, no withdrawals or transfers may
be made therefrom by any Person except with the prior written consent of the
Pledgee and (ii) the deposit of such cash in such cash account.


 


(b)                                 In addition to
the actions required to be taken pursuant to Section 3.5(a) hereof,
each Pledgor shall take the following additional actions with respect to the
Collateral:


 


(i)                                     with respect to
all Collateral of such Pledgor whereby or with respect to which the Pledgee may
obtain “control” thereof within the meaning of Section 8-106 of the UCC
(or under any provision of the UCC as same may be amended or supplemented from
time to time, or under the laws of any relevant State other than the State of
New York), such Pledgor shall take all actions as may be requested from time to
time by the Pledgee so that “control” of such Collateral is obtained and at all
times held by the Pledgee; and


 


(ii)                                  if requested by
Pledgee, each Pledgor shall from time to time cause appropriate financing
statements (on appropriate forms) under the Uniform Commercial Code as in
effect in the various relevant States, covering all Collateral hereunder (with
the form of such financing statements to be satisfactory to the Pledgee), to be
filed in the relevant filing offices so that at all times the Pledgee’s
security interest in all Investment Property and other Collateral which can be
perfected by the filing of such financing statements (in each case to the
maximum extent perfection by filing may be obtained 


 


8

















 


under
the laws of the relevant States, including, without limitation, Section 9-312(a) of
the UCC) is so perfected.


 


3.6                                 Subsequently
Acquired Collateral.  If any
Pledgor shall acquire (by purchase, stock dividend or otherwise) any additional
Collateral at any time or from time to time after the date hereof, such Pledgor
will forthwith thereafter take (or cause to be taken) all action with respect
to such Collateral in accordance with the procedures set forth in Section 3.5
hereof, and will promptly thereafter deliver to the Pledgee a certificate
executed by a principal executive officer of such Pledgor describing such
Collateral and certifying that the same have been duly pledged with the Pledgee
hereunder.


 


3.7                                 Certain
Representations and Warranties Concerning the Collateral.  Each Pledgor represents and warrants that on
the date hereof:  (a) each Subsidiary
of such Pledgor whose equity interest is required to be pledged hereunder, and
the direct ownership thereof, is listed on Annex A hereto; (b) the Stock
held by such Pledgor consists of the number and type of shares of the stock of
the corporations as described in Annex B hereto; (c) such Stock
constitutes that percentage of the issued and outstanding capital stock of the
issuing corporation as set forth in Annex B hereto; (d) the Notes held by
such Pledgor consist of the promissory notes described in Annex C hereto; (e) such
Pledgor is the holder of record and sole beneficial owner of the Stock and
Notes held by such Pledgor and there exists no options or preemption rights in
respect of any of the Stock; (f) the Partnership Interests and Membership
Interests, as the case may be, held by such Pledgor constitute that percentage
of the entire interest of the respective Pledged Partnership or Pledged LLC, as
the case may be, as is set forth under its name in Annex D hereto; (g) on
the date hereof, such Pledgor owns or possesses no other Securities except as
described on Annexes B, C and D hereto; and (h) the Pledgor has complied
with the respective procedure set forth in Section 3.5(a) hereof with
respect to each item of Collateral described in Annexes B, C and D hereto.


 


4.                                       APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC.  The Pledgee shall have the right to appoint
one or more sub-agents for the purpose of retaining physical possession of the
Pledged Securities, which may be held (in the discretion of the Pledgee) in the
name of the relevant Pledgor, endorsed or assigned in blank or in favor of the
Pledgee or any nominee or nominees of the Pledgee or a sub-agent appointed by
the Pledgee.


 


5.                                       VOTING, ETC., WHILE NO EVENT OF DEFAULT.  Unless and until there shall have occurred
and be continuing an Event of Default, each Pledgor shall be entitled to
exercise all voting rights attaching to any and all Pledged Securities owned by
it, and to give consents, waivers or ratifications in respect thereof, provided
that no vote shall be cast or any consent, waiver or ratification given or any
action taken which would violate, result in breach of any covenant contained
in, or be inconsistent with, any of the terms of this Agreement, the Credit
Agreement or any other Credit Document , or which would have the effect of
impairing the value of the Collateral or any part thereof or the position or
interests of the Pledgee or any other Secured Creditor therein.  All such rights of a Pledgor to vote and to
give consents, waivers and ratifications shall cease in case an Event of
Default shall occur and be continuing and Section 7 hereof shall become
applicable.


 


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6.                                       DIVIDENDS AND OTHER DISTRIBUTIONS.  Unless and until an Event of Default shall
have occurred and be continuing, all cash dividends, distributions or other
amounts payable in respect of the Pledged Securities shall be paid to the
respective Pledgor, provided that all dividends, distributions or other
amounts payable in respect of the Pledged Securities which are determined by
the Pledgee, in its absolute discretion, to represent in whole or in part an
extraordinary, liquidating or other distribution in return of capital not
permitted by the Credit Agreement shall be paid, to the extent so determined to
represent an extraordinary, liquidating or other distribution in return of
capital not permitted by the Credit Agreement, to the Pledgee and retained by
it as part of the Collateral (unless such cash dividends or distributions are
applied to repay the Obligations pursuant to Section 9 of this
Agreement).  The Pledgee shall also be
entitled to receive directly, and to retain as part of the Collateral:


 


(i)                                     all other or
additional stock, notes, membership interests, partnership interests or other
securities or property (other than cash) paid or distributed by way of dividend
or otherwise in respect of the Collateral;


 


(ii)                                  all other or
additional stock, notes, membership interests, partnership interests or other
securities or property (including cash) paid or distributed in respect of the
Collateral by way of stock-split, spin-off, split-up, reclassification,
combination of shares or similar rearrangement; and


 


(iii)                               all other or
additional stock, notes, membership interests, partnership interests or other
securities or property (including cash) which may be paid in respect of the
Collateral by reason of any consolidation, merger, exchange of stock,
conveyance of assets, liquidation or similar corporate reorganization.


 


Nothing
contained in this Section 6 shall limit or restrict in any way the Pledgee’s
right to receive the proceeds of the Collateral in any form in accordance with Section 3
of this Agreement.  All dividends,
distributions or other payments which are received by the respective Pledgor
contrary to the provisions of this Section 6 or Section 7 shall be
received in trust for the benefit of the Pledgee, shall be segregated from
other property or funds of such Pledgor and shall be forthwith paid over to the
Pledgee as Collateral in the same form as so received (with any necessary
endorsement).


 


7.                                       REMEDIES IN CASE OF AN EVENT OF DEFAULT.  In case an Event of Default shall have
occurred and be continuing, the Pledgee shall upon five (5) days’ notice
to the Pledgors (with a copy to counsel for the Committee and to the United
States Trustee for the Southern District of New York) be entitled to exercise
all of the rights, powers and remedies (whether vested in it by this Agreement
or any other Credit Document or by law) for the protection and enforcement of
its rights in respect of the Collateral, including, without limitation, all the
rights and remedies of a secured party upon default under the Uniform
Commercial Code of the State of New York, and the Pledgee shall be entitled,
without limitation, to exercise any or all of the following rights, which each
Pledgor hereby agrees to be commercially reasonable:


 


(i)                                     to receive all
amounts payable in respect of the Collateral otherwise payable under Section 6
to such Pledgor,


 


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(ii)                                  to transfer all
or any part of the Collateral into the Pledgee’s name or the name of its
nominee or nominees;


 


(iii)                               to accelerate
any Pledged Note which may be accelerated in accordance with its terms, and
take any other lawful action to collect upon any Pledged Note (including,
without limitation, to make any demand for payment thereon);


 


(iv)                              to vote all or
any part of the Collateral (whether or not transferred into the name of the
Pledgee) and give all consents, waivers and ratifications in respect of the
Collateral and otherwise act with respect thereto as though it were the
outright owner thereof (each Pledgor hereby irrevocably constituting and
appointing the Pledgee the proxy and attorney-in-fact of such Pledgor, with
full power of substitution to do so);


 


(v)                                 to set off any
and all Collateral against any and all Obligations, and to withdraw any and all
cash or other Collateral from any and all Collateral Accounts and to apply such
cash and other Collateral to the payment of any and all Obligations; and


 


(vi)                              at any time or
from time to time to sell, assign and deliver, or grant options to purchase,
all or any part of the Collateral, or any interest therein, at any public or
private sale, without demand of performance, advertisement or notice of intention
to sell or of the time or place of sale or adjournment thereof or to redeem or
otherwise (all of which are hereby waived by each Pledgor), for cash, on credit
or for other property, for immediate or future delivery without any assumption
of credit risk, and for such price or prices and on such terms as the Pledgee
in its absolute discretion may determine, provided that at least 10 days’
notice of the time and place of any such sale shall be given to such
Pledgor.  The Pledgee shall not be
obligated to make such sale of Collateral regardless of whether any such notice
of sale has theretofore been given.  Each
purchaser at any such sale shall hold the property so sold absolutely free from
any claim or right on the part of any Pledgor, and each Pledgor hereby waives
and releases to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after sale
hereunder, all rights, if any, of marshalling the Collateral and any other
security for the Obligations or otherwise, and all rights, if any, of stay
and/or appraisal which it now has or may at any time in the future have under rule of
law or statute now existing or hereafter enacted.  At any such sale, unless prohibited by
applicable law, the Pledgee on behalf of all Secured Creditors (or certain of
them) may bid for and purchase (by bidding in Obligations or otherwise) all or
any part of the Collateral so sold free from any such right or equity of
redemption.  Neither the Pledgee nor any
Secured Creditor shall be liable for failure to collect or realize upon any or
all of the Collateral or for any delay in so doing nor shall it be under any
obligation to take any action whatsoever with regard thereto.


 


8.                                       REMEDIES, ETC., CUMULATIVE.  Each right, power and remedy of the Pledgee
provided for in this Agreement or any other Credit Document, or now or
hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.  The exercise or beginning of the exercise by
the Pledgee or any other Secured Creditor of any one or more of the rights,
powers or remedies provided for in this Agreement or any other Credit Document
or now or hereafter 


 


11

















 


existing
at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any other Secured Creditor of
all such other rights, powers or remedies, and no failure or delay on the part
of the Pledgee or any other Secured Creditor to exercise any such right, power
or remedy shall operate as a waiver thereof. 
Unless otherwise required by the Credit Documents, no notice to or
demand on any Pledgor in any case shall entitle it to any other or further
notice or demand in similar other circumstances or constitute a waiver of any
of the rights of the Pledgee or any other Secured Creditor to any other further
action in any circumstances without demand or notice.  The Secured Creditors agree that this
Agreement may be enforced only by the action of the Administrative Agent or the
Pledgee, in each case acting upon the instructions of the Required Lenders and
that no other Secured Creditor shall have any right individually to seek to
enforce or to enforce this Agreement or to realize upon the security to be
granted hereby, it being understood and agreed that such rights and remedies
may be exercised by the Administrative Agent or the Pledgee for the benefit of
the Secured Creditors upon the terms of this Agreement.  Exercise by the Collateral Agent of the
powers granted under this Agreement is not a violation of the automatic stay
provided by Section 362 of the Bankruptcy Code and each Pledgor waives
applicability thereof.  The Secured
Creditors shall be entitled to all of the rights and benefits of section 552(b) of
the Bankruptcy Code, and the “equities of the case” exception under section 552(b) of
the Bankruptcy Code shall not apply to the Secured Creditors with respect to
proceeds, product, offspring or profits of any of the Collateral.


 


9.                                       APPLICATION OF PROCEEDS.  (a) All moneys collected by the Pledgee
or the Collateral Agent upon any sale or other disposition of the Collateral,
together with all other moneys received by the Pledgee or the Collateral Agent
hereunder, shall be applied as follows:


 


(i)                                     first, to the
payment of all Obligations owing to the Pledgee or the Collateral Agent of the
type described in clauses (ii) and (iii) of the definition of “Obligations”
contained in Section 1 hereof;


 


(ii)                                  second, to the extent
proceeds remain after the application pursuant to preceding clause (i), an
amount equal to the outstanding Obligations to the Secured Creditors shall be
paid to the Secured Creditors as provided in Section 9(c), with each
Secured Creditor receiving an amount equal to its outstanding Obligations or,
if the proceeds are insufficient to pay in full all such Obligations, its Pro Rata,
Share of the amount remaining to be distributed to be applied, with respect to
the Obligations, firstly, to the payment of interest in respect of the
unpaid principal amount of Loans outstanding, secondly, to the payment
of principal of Loans outstanding, then to the other Obligations; and


 


(iii)                               third, to the extent
proceeds remain after the application pursuant to the preceding clauses (i) and
(ii) and following the termination of this Agreement pursuant to Section 18
hereof, to the relevant Pledgor or, to the extent directed by such Pledgor or a
court of competent jurisdiction, to whomever may be lawfully entitled to
receive such surplus.


 


12

















 


(b)                                 For purposes of
this Agreement, “Pro Rata Share” shall mean, when calculating a Secured
Creditor’s portion of any distribution or amount, the amount (expressed as a
percentage) equal to a fraction the numerator of which is the then outstanding
amount of the relevant Obligations owed such Secured Creditor and the
denominator of which is the then outstanding amount of all Obligations.


 


(c)                                  All payments
required to be made to the Secured Creditors hereunder shall be made to the
Administrative Agent for the account of the respective Secured Creditors.


 


(d)                                 It is
understood that each Pledgor shall remain jointly and severally liable to the
extent of any deficiency between (x) the amount of the Obligations for
which it is liable directly or as a Guarantor that are satisfied with proceeds
of the Collateral and (y) the aggregate outstanding amount of the
Obligations.


 


10.                                 PURCHASERS OF COLLATERAL.  Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money
paid over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.


 


11.                                 INDEMNITY.  Each
Pledgor jointly and severally agrees (i) to indemnify and hold harmless
the Pledgee and the other Secured Creditors from and against any and all
claims, demands, losses, judgments and liabilities (including liabilities for penalties)
of whatsoever kind or nature, except (x) for  those arising from such Person’s gross
negligence or willful misconduct as determined by a court of competent
jurisdiction in a final and non-appealable decision and (ii) to the extent
such claims, demands, losses, judgments and liabilities arise out of or in
connection with any investigation, litigation or other proceeding that does not
involve an act or omission by a Borrower or any Affiliate thereof and that is
brought by one Lender (in its capacity as such) against any other Lenders (in
its capacity as such) and (ii) to reimburse the Pledgee for all reasonable
out-of-pocket costs and expenses, including reasonable attorneys’ fees, arising
in connection with any amendment, waiver or modification to this Agreement and
the administration thereof and the Pledgee and the other Secured Creditors for
all reasonable costs and expenses (including reasonable attorney’s fees)
growing out of or resulting from the exercise by the Pledgee of any right or
remedy granted to it hereunder or under any other Credit Document (including
the reasonable fees, disbursements and other charges of (x) counsel to the
Administrative Agent and the Pledgee and (y) the Financial Advisor); provided,
that the Pledgors’ obligation to pay the fees, disbursements and other charges
of counsel to the Secured Creditors (but not of counsel to the Administrative
Agent or the Pledgee) shall be limited to one outside counsel, which, as of the
Closing Date, is Wachtell, Lipton, Rosen & Katz).  In no event shall the Pledgee be liable, in
the absence of gross negligence or willful misconduct on its part (as
determined by a court of competent jurisdiction in a final and non-appealable
decision), for any matter or thing in connection with this Agreement other than
to account for moneys or other property actually received by it in accordance
with the terms hereof.  If and to the
extent that the obligations of any Pledgor under this Section 11 are
unenforceable 


 


13

















 


for
any reason, such Pledgor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible under
applicable law.


 


12.                                 FURTHER ASSURANCES; POWER OF ATTORNEY.  (a)  Each Pledgor agrees that it will
join with the Pledgee in executing and, at such Pledgor’s own expense, file and
refile under the Uniform Commercial Code such financing statements,
continuation statements and other documents in such offices as the Pledgee may
reasonably deem necessary or appropriate and wherever required or permitted by
law in order to perfect and preserve the Pledgee’s security interest in the
Collateral hereunder and hereby authorizes the Pledgee to file financing
statements and amendments thereto relative to all or any part of the Collateral
without the signature of such Pledgor where permitted by law, and agrees to do
such further acts and things and to execute and deliver to the Pledgee such
additional conveyances, assignments, agreements and instruments as the Pledgee
may reasonably require or deem advisable to carry into effect the purposes of
this Agreement or to further assure and confirm unto the Pledgee its rights,
powers and remedies hereunder or thereunder.


 


(b)                                 Each Pledgor
hereby appoints the Pledgee, such Pledgor’s attorney-in-fact, with full
authority in the place and stead of such Pledgor and in the name of such
Pledgor or otherwise, from time to time after the occurrence and during the
continuance of an Event of Default, in the Pledgee’s reasonable discretion to
take any action and to execute any instrument which the Pledgee may reasonably
deem necessary or advisable to accomplish the purposes of this Agreement.


 


13.                                 THE PLEDGEE AS COLLATERAL AGENT.  The Pledgee will hold in accordance with this
Agreement all items of the Collateral at any time received under this
Agreement.  It is expressly understood
and agreed that the obligations of the Pledgee as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement, are only those expressly set forth in this
Agreement.  The Pledgee shall act
hereunder on the terms and conditions set forth herein and in Section 10
of the Credit Agreement.  If any Pledgor
fails to perform or comply with any of its agreements contained in this
Agreement and the Pledgee, as provided for by the terms of this Agreement or
any other Credit Document, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the Pledgee
incurred in connection with such performance or compliance, together with
interest thereon at the rate then in effect in respect of the Loans, shall be
payable by such Pledgor to the Pledgee on demand and shall constitute
Obligations secured by the Collateral. 
Performance of such Pledgor’s obligations as permitted under this Section 13
shall in no way constitute for the purpose of the Cases a violation of the
automatic stay provided by Section 362 of the Bankruptcy Code and each
Pledgor hereby waives applicability thereof. 
Moreover, the Pledgee shall in no way be responsible for the payment of
any costs incurred in connection with preserving or disposing of Collateral
pursuant to Section 506(c) of the Bankruptcy Code and the Collateral
may not be charged for the incurrence of any such cost.


 


14.                                 TRANSFER BY THE PLEDGORS.  No Pledgor will sell or otherwise dispose of,
grant any option with respect to, or mortgage, pledge or otherwise encumber any
of the Collateral or any interest therein (except in accordance with the terms
of this Agreement and the other Credit Documents).


 


14

















 


15.                                 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS.  (a) Each Pledgor represents, warrants
and covenants that:


 


(i)                                     it is, or at
the time when pledged hereunder will be, the legal, beneficial and record owner
of, and has (or will have) good and marketable title to, all Securities pledged
by it hereunder, subject to no pledge, lien, mortgage, hypothecation, security
interest, charge, option or other encumbrance whatsoever, except (x) the
liens and security interests created by this Agreement and (y) liens in
favor of the Prepetition Agent;


 


(ii)                                  subject to the
entry of the Financing Orders by the Bankruptcy Court, it has full power,
authority and legal right to pledge all the Collateral pledged by it pursuant
to this Agreement;


 


(iii)                               this Agreement
has been duly authorized, executed and delivered by such Pledgor and, subject
to the Financing Orders,  constitutes a
legal, valid and binding obligation of such Pledgor enforceable in accordance
with its terms;


 


(iv)                              except to the
extent already obtained or made and, subject to the entry of the Financing
Orders, no consent of any other party (including, without limitation, any
stockholder, limited or general partner, member or creditor of such Pledgor or
any of its Subsidiaries) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required to be obtained by such
Pledgor in connection with (a) the execution, delivery or performance of
this Agreement, (b) the validity or enforceability of this Agreement, (c) the
perfection or enforceability of the Pledgee’s security interest in the
Collateral or (d) except for compliance with or as may be required by
applicable securities laws, the exercise by the Pledgee of any of its rights or
remedies provided herein;


 


(v)                                 the execution,
delivery and performance of this Agreement by such Pledgor will not violate any
provision of any applicable law or regulation or of any order, judgment, writ,
award or decree of any court, arbitrator or governmental instrumentality
applicable to such Pledgor, or of the certificate of incorporation, certificate
of formation, by-laws, certificate of limited partnership, partnership
agreement or limited liability company agreement, as the case maybe, of such
Pledgor or of any securities issued by such Pledgor or any of its Subsidiaries,
or of any mortgage, indenture, deed of trust or other material, agreement or
instrument or undertaking to which such Pledgor or any of its Subsidiaries is a
party or which purports to be binding upon such Pledgor or any of its
Subsidiaries or upon any of their respective assets (other than existing
Indebtedness set forth on Annex XI to the Credit Agreement) and will not result
in the creation or imposition of (or the obligation to create or impose) any
lien or encumbrance on any of the assets of such Pledgor or any of its
Subsidiaries except as contemplated by this Agreement;


 


(vi)                              all the shares
of the Stock have been duly and validly issued, are fully paid and
non-assessable and are subject to no options to purchase or similar rights;


 


15

















 


(vii)                           each of the
Pledged Notes constitutes, or when executed by the obligor thereof will
constitute, the legal, valid and binding obligation of such obligor,
enforceable in accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors’ rights and by
equitable principles (regardless of whether enforcement is sought in equity or
at law);


 


(viii)                        subject to the
entry of the Financing Orders by the Bankruptcy Court, it has the unqualified
right to pledge and grant a security interest in the Partnership Interests and
Membership Interests as herein provided without the consent of any other Person,
firm, association or entity which has not been obtained;


 


(ix)                                the Partnership
Interests and the Membership Interests pledged by it pursuant to this Agreement
have been validly acquired and are fully paid for and are duly and validly
pledged hereunder,


 


(x)                                   it is not in
default in the payment of any portion of any mandatory capital contribution, if
any, required to be made under any partnership agreement or limited liability
company agreement to which such Pledgor is a party, and such Pledgor is not in violation
of any other material provisions of any partnership agreement or limited
liability company agreement to which such Pledgor is a party, or otherwise in
default or violation thereunder, no Partnership Interest or Membership Interest
is subject to any defense, offset or counterclaim, nor have any of the
foregoing been asserted or alleged against such Pledgor by any Person with
respect thereto and as of the Closing Date, there are no certificates,
instruments, documents or other writings (other than the partnership agreements
and certificates, if any, delivered to the Collateral Agent) which evidence any
Partnership Interest or Membership Interest of such Pledgor;


 


(xi)                                other than
financing statements pursuant to Liens permitted under Section 7.03 of the
Credit Agreement, there are no currently effective financing statements under
the UCC covering any property which is now or hereafter may be included in the
Collateral and such Pledgor will not, without the prior written consent of the
Pledgee, execute and, until the Termination Date (as hereinafter defined),
there will not ever be on file in any public office, any enforceable financing
statement or statements covering any or all of the Collateral, except financing
statements filed or to be filed in favor of the Pledgee as secured party;


 


(xii)                             it shall give
the Pledgee prompt notice of any written claim relating to the Collateral and
shall deliver to the Pledgee a copy of each other demand, notice or document
received by it which may adversely affect the Pledgee’s interest in the
Collateral promptly upon, but in any event within 10 days after, such Pledgor’
s receipt thereof;


 


(xiii)                          it shall not
withdraw as a partner of any Pledged Partnership or member of any Pledged LLC,
or file or pursue or take any action which may, directly or indirectly, cause a
dissolution or liquidation of or with respect to any Pledged Partnership or 


 


16

















 


Pledged
LLC or seek a partition of any property of any Pledged Partnership or Pledged
LLC, except as permitted by the Credit Agreement;


 


(xiv)                         as of the date
hereof, all of its Partnership Interests and Membership Interests are
uncertificated (other than the Membership Interests of Northern New England
Telephone Operations LLC and Fretel Communications, LLC) and each Pledgor
covenants and agrees that it will not approve of any action by any Pledged
Partnership or Pledged LLC to convert such uncertificated interests into
certificated interests;


 


(xv)                            it will take no
action which would violate or be inconsistent with any of the terms of any
Credit Document, or which would have the effect of impairing the position or
interests of the Pledgee or any other Secured Creditor under any Credit
Document except as permitted by the Credit Agreement; and


 


(xvi)                         “control” (as
defined in Section 8-106 of the UCC) has been obtained by the Pledgee over
all of such Pledgor’s Collateral consisting of Securities (including, without
limitation, Notes which are Securities) with respect to which such “control”
may be obtained pursuant to Section 8-106 of the UCC, except to the extent
that the obligation of the applicable Pledgor to provide the Pledgee with “control”
of such Collateral has not yet arisen under this Agreement, provided
that in the case of the Pledgee obtaining “control” over Collateral consisting
of a Security Entitlement, such Pledgor shall have taken all steps in its
control so that the Pledgee obtains “control” over such Security Entitlement.


 


16.                                 PLEDGORS’ OBLIGATIONS ABSOLUTE, ETC.  The obligations of each Pledgor under this
Agreement shall be absolute and unconditional and shall remain in full force
and effect without regard to, and shall not be released, suspended, discharged,
terminated or otherwise affected by, any circumstance or occurrence whatsoever,
including, without limitation:


 


(i)                                     any renewal,
extension, amendment or modification of, or addition or supplement to or
deletion from any of the Credit Documents, or any other instrument or agreement
referred to therein, or any assignment or transfer of any thereof,


 


(ii)                                  any waiver,
consent, extension, indulgence or other action or inaction under or in respect
of any such agreement or instrument or this Agreement;


 


(iii)                               any furnishing
of any additional security to the Pledgee or its assignee or any acceptance
thereof or any release of any security by the Pledgee or its assignee; or


 


(iv)                              any limitation
on any party’s liability or obligations under any such instrument or agreement
or any invalidity or unenforceability, in whole or in part, of any such
instrument or agreement or any term thereof.


 


17.                                 REGISTRATION, ETC.  (a)  Subject to the terms of the
Financing Orders, if an Event of Default shall have occurred and be continuing
and any Pledgor shall have received from the Pledgee a written request or
requests that such Pledgor cause any registration, qualification or compliance
under any Federal or state securities law or laws to be effected with 


 


17

















 


respect
to all or any part of the Pledged Stock, such Pledgor as soon as practicable
and at its expense will use its best efforts to cause such registration to be
effected (and be kept effective) and will use its best efforts to cause such
qualification and compliance to be effected (and be kept effective) as may be
so requested and as would permit or facilitate the sale and distribution of
such Pledged Stock, including, without limitation, registration under the
Securities Act, as then in effect (or any similar statute then in effect),
appropriate qualifications under applicable blue sky or other state securities
laws and appropriate compliance with any other governmental requirements, provided
that the Pledgee shall furnish to such Pledgor such information regarding the
Pledgee as such Pledgor may request in writing and as shall be required in
connection with any such registration, qualification or compliance.  Each Pledgor will cause the Pledgee to be
kept reasonably advised in writing as to the progress of each such
registration, qualification or compliance and as to the completion thereof,
will furnish to the Pledgee such number of prospectuses, offering circulars and
other documents incident thereto as the Pledgee from time to time may
reasonably request, and will indemnify, to the extent permitted by law, the
Pledgee, each other Secured Creditor and all others participating in the
distribution of such Pledged Stock against all claims, losses, damages or
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in writing to
such Pledgor by the Pledgee or such other Secured Creditor expressly for use
therein.


 


(b)                                 If at any time
when the Pledgee shall determine to exercise its right to sell all or any part
of the Pledged Securities pursuant to Section 7, and such Pledged
Securities or the part thereof to be sold shall not, for any reason whatsoever,
be effectively registered under the Securities Act, as then in effect, the
Pledgee may, in its sole and absolute discretion, sell such Pledged Securities
or part thereof by private sale in such manner and under such circumstances as
the Pledgee may deem necessary or advisable in order that such sale may legally
be effected without such registration. 
Without limiting the generality of the foregoing, in any such event the
Pledgee, in its sole and absolute discretion, (i) may proceed to make such
private sale notwithstanding that a registration statement for the purpose of
registering such Pledged Securities or part thereof shall have been filed under
such Securities Act, (ii) may approach and negotiate with a single
possible purchaser to effect such sale and (iii) may restrict such sale to
a purchaser who will represent and agree that such purchaser is purchasing for
its own account, for investment, and not with a view to the distribution or
sale of such Pledged Securities or part thereof.  In the event of any such sale, the Pledgee
shall incur no responsibility or liability for selling all or any part of the
Pledged Securities at a price which the Pledgee, in its sole and absolute
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were deferred until the registration as aforesaid.


 


18.                                 TERMINATION; RELEASE.  After the Termination Date (as defined
below), this Agreement shall terminate (provided that all indemnities
set forth herein including, without limitation, in Section 11 hereof shall
survive any such termination) and the Pledgee, at the request and expense of
the Pledgors, will, if requested by the Grantors, execute and deliver to the
Pledgors a proper instrument or instruments acknowledging the satisfaction and
termination 


 


18

















 


of
this Agreement as provided above, and will duly assign, transfer and deliver to
such Pledgor (without recourse and without any representation or warranty) such
of the Collateral as may be in the possession of the Pledgee and as has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the Pledgee hereunder
and, with respect to any Collateral consisting of an Uncertificated Security, a
Partnership Interest or a Membership Interest (other than an Uncertificated
Security, Partnership Interest or Membership Interest credited on the books of
a Clearing Corporation or Securities Intermediary), a termination of the
agreement relating thereto executed and delivered by the issuer of such
Uncertificated Security pursuant to Section 3.5(a)(ii) or by the
respective partnership or limited liability company pursuant to Section 3.5(a)(iv)(2).  As used in this Agreement, “Termination
Date” shall mean the date upon which the Total Revolving Commitment has
been terminated, no Note under the Credit Agreement is outstanding (and all
Loans have been paid in full), all Letters of Credit have been cancelled (or
have expired, undrawn) or collateralized to the satisfaction of the
Administrative Agent and all other Obligations have been paid in full (other
than arising from indemnities for which no request has been made).


 


19.                                 NOTICES, ETC.  All
notices and other communications hereunder shall be in writing (including
telegraphic, telex, telecopier, facsimile or cable communication) and shall be
delivered, telegraphed, telexed, telecopied, faxed, cabled, or mailed (by first
class mail, postage prepaid):


 


(i)                                     if to any
Pledgor, at its address set forth opposite its signature below;


 


(ii)                                  if to the
Pledgee, at:


Bank
of America, N.A.

901 Main Street


Dallas,
TX 75202

Attention:  Garrett Dolt

Fax:  (214) 530-3008


 


(iii)                               if to any
Secured Creditor (other than the Pledgee), either (x) to the
Administrative Agent, at the address of the Administrative Agent specified in
the Credit Agreement or (y) at such address as such Secured Creditor shall
have specified in the Credit Agreement;


 


or
at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.


 


20.                                 WAIVER; AMENDMENT.  None
of the terms and conditions of this Agreement may be changed, waived, modified
or varied in any manner whatsoever unless in writing duly signed by the Pledgee
(with the consent of the Required Lenders or, to the extent required by Section 11.11
of the Credit Agreement, all of the Lenders) and each Pledgor affected thereby,
provided that  no such change, waiver, modification or variance
shall be made to Section 9 hereof of this Section 20 without the
consent of each Secured Creditor adversely affected thereby.


 


19














 


21.                                 PLEDGEE NOT BOUND.  (a) Nothing
herein shall be construed to make the Pledgee or any other Secured Creditor
liable as a general partner or limited partner of any Pledged Partnership or a
member of any Pledged LLC, and neither the Pledgee nor any Secured Creditor by
virtue of this Agreement or otherwise (except as referred to in the following
sentence) shall have any of the duties, obligations or liabilities of a general
partner or limited partner of any Pledged Partnership or a member of any
Pledged LLC.  The parties hereto
expressly agree that, unless the Pledgee shall become the absolute owner of a
Partnership Interest or a Membership Interest pursuant hereto, this Agreement
shall not be construed as creating a partnership or joint venture or membership
agreement among the Pledgee, any other Secured Creditor and/or a Pledgor.


 


(b)                                 Except as
provided in the last sentence of paragraph (a) of this Section 21,
the Pledgee, by accepting this Agreement, does not intend to become a general
partner or limited partner of any Pledged Partnership or a member of any
Pledged LLC or otherwise be deemed to be a co-venturer with respect to any
Pledgor or any Pledged Partnership or a member of any Pledged LLC either before
or after an Event of Default shall have occurred.  The Pledgee shall have only those powers set
forth herein and shall assume none of the duties, obligations or liabilities of
a general partner or limited partner of any Pledged Partnership or of a member
of any Pledged LLC or of a Pledgor.


 


(c)                                  The Pledgee
shall not be obligated to perform or discharge any obligation of a Pledgor as a
result of the collateral assignment hereby effected.


 


(d)                                 The acceptance
by the Pledgee of this Agreement, with all the rights, powers, privileges and
authority so created, shall not at any time or in any event obligate the
Pledgee to appear in or defend any action or proceeding relating to the
Collateral to which it is not a party, or to take any action hereunder or
thereunder, or to expend any money or incur any expenses or perform or
discharge any obligation, duty or liability under the Collateral.


 


22.                                 MISCELLANEOUS.  This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect, subject to termination as set forth
in Section 18, (ii) be binding upon each Pledgor, its successors and
assigns; provided that no Pledgor shall assign any of its rights or
obligations hereunder without the prior written consent of the Pledgee (with
the prior written consent of the Required Lenders or to the extent required by Section 11.11
of the Credit Agreement, all of the Lenders), and (iii) inure, together
with the rights and remedies of the Pledgee hereunder, to the benefit of the
Pledgee, the other Secured Creditors and their respective successors,
transferees and assigns.  The headings of
the several sections and subsections in this Agreement are for purposes of
reference only and shall not limit or define the meaning hereof.  This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.  In the
event that any provision of this Agreement shall prove to be invalid or
unenforceable, such provision shall be deemed to be severable from the other
provisions of this Agreement which shall remain binding on all parties hereto.


 


23.                                 GOVERNING LAW, ETC.  (a) THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE SECURED CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN 


 


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ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT
OF LAWS.  Except for matters within the
exclusive jurisdiction of the Bankruptcy Court, any legal action or proceeding
with respect to this Agreement or any other Credit Document may be brought in
the courts of the State of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this
Agreement, each NSG Pledgor hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts.  Each NSG Pledgor
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to each NSG Pledgor
at its address set forth opposite its signature below, such service to become
effective 30 days after such mailing. 
Nothing herein shall affect the right of any of the Secured Creditors to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any Pledgor in any other jurisdiction.


 


(b)                                 Except for
matters within the exclusive jurisdiction of the Bankruptcy Court, each NSG
Pledgor hereby irrevocably waives any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement or any other Credit
Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that such action or proceeding brought in any such court has been brought in an
inconvenient forum.


 


(c)                                  EACH PLEDGOR
AND THE PLEDGEE HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.


 


24.                                 COUNTERPARTS.  This
Agreement may be executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument.  A set of
counterparts executed by all the parties hereto shall be lodged with each
Pledgor and the Pledgee.


 


25.                                 CONTRIBUTION.  At any time
a payment is made by any Pledgor (other than a Borrower) (each, a “Subsidiary
Pledgor”) in respect of the Obligations from the proceeds of any sale or
other disposition of Collateral owned by such Subsidiary Pledgor (each, a “Relevant
Payment”), the right of contribution of each Subsidiary Pledgor hereunder
against each other such Subsidiary Pledgor shall be determined as provided in
the immediately following sentence, with the right of contribution of each
Subsidiary Pledgor to be revised and restated as of each date on which a
Relevant Payment is made.  At any time
that a Relevant Payment is made by a Subsidiary Pledgor that results in the
aggregate payments made by such Subsidiary Pledgor hereunder in respect of the
Obligations to and including the date of the Relevant Payment exceeding such
Subsidiary Pledgor’s Contribution Percentage (as defined below) of the
aggregate payments made by all Subsidiary Pledgors hereunder in respect of the
Obligations from the proceeds of any sale or other disposition of Collateral
owned by the Subsidiary 


 


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Pledgors
to and including the date of the Relevant Payment (such excess, the “Aggregate
Excess Amount”), each such Subsidiary Pledgor shall have a right of
contribution against each other Subsidiary Pledgor who either has not made any
payments or has made (or whose Collateral has been used to make) payments
hereunder in respect of the Obligations to and including the date of the
Relevant Payment in an aggregate amount less than such other Subsidiary Pledgor’s
Contribution Percentage of the aggregate payments made to and including the
date of the Relevant Payment by all Subsidiary Pledgors hereunder in respect of
the Obligations from the proceeds of any sale or other disposition of
Collateral owned by the Subsidiary Pledgors (the aggregate amount of such
deficit, the “Aggregate Deficit Amount”) in an amount equal to (x) a
fraction the numerator of which is the Aggregate Excess Amount of such
Subsidiary Pledgor and the denominator of which is the Aggregate Excess Amount
of all Subsidiary Pledgors multiplied by (y) the Aggregate Deficit Amount
of such other Subsidiary Pledgor.  A
Subsidiary Pledgor’s right of contribution pursuant to the preceding sentences
shall arise at the time of each computation, subject to adjustment to the time
of any subsequent computation; provided, that no Subsidiary Pledgor may
take any action to enforce such right until the Obligations have been paid in
full and the Total Commitment has been terminated, it being expressly
recognized and agreed by all parties hereto that any Subsidiary Pledgor’s right
of contribution arising pursuant to this Agreement against any other Subsidiary
Pledgor shall be expressly junior and subordinate to such other Subsidiary
Pledgor’s obligations and liabilities in respect of the Obligations and any
other obligations owing under this Agreement. 
As used in this Section 25:  (i) each
Subsidiary Pledgor’s “Contribution Percentage” shall mean the percentage
obtained by dividing (x) the Adjusted Net Worth (as defined below) of such
Subsidiary Pledgor by (y) the aggregate Adjusted Net Worth of all
Subsidiary Pledgors; (ii) the “Adjusted Net Worth” of each
Subsidiary Pledgor shall mean the greater of (x) the Net Worth (as defined
below) of such Subsidiary Pledgor and (y) zero; and (iii) the “Net
Worth” of each Subsidiary Pledgor shall mean the amount by which the fair
salable value of such Subsidiary Pledgor’s assets on the date of any Relevant
Payment exceeds its existing debts and other liabilities (including contingent
liabilities, but without giving effect to any obligations arising under this
Agreement, any Guaranteed Obligations under, and as defined in, the Subsidiary
Guaranty) on such date.  All parties
hereto recognize and agree that, except for any right of contribution arising
pursuant to this Section 25, each Subsidiary Pledgor who makes (or whose
Collateral has been used to make) any payment in respect of the Obligations
shall have no right of contribution or subrogation against any other Subsidiary
Pledgor in respect of such payment.  Each
of the Subsidiary Pledgors recognizes and acknowledges that the rights to
contribution arising hereunder shall constitute an asset in favor of the party
entitled to such contribution.  In this
connection, each Subsidiary Pledgor has the right to waive its contribution
right against any Subsidiary Pledgor to the extent that after giving effect to
such waiver such Subsidiary Pledgor would remain solvent, in the determination
of the Required Lenders.


 


26.                                 LEGAL NAMES; TYPE OF ORGANIZATION (AND WHETHER A REGISTERED
ORGANIZATION AND/OR A TRANSMITTING UTILITY); 
JURISDICTION OF ORGANIZATION; LOCATION; ORGANIZATIONAL IDENTIFICATION
NUMBERS; CHANGES THERETO; ETC.  No Pledgor shall change its legal name, its
type of organization, its status as a Registered Organization (in the case of a
Registered Organization), its status as a Transmitting Utility or as a Person
which is not a Transmitting Utility, as the case may be, its jurisdiction of
organization or its organizational identification number (if any).  In addition, to the extent that any Pledgor
does not have an organizational identification number on the date 


 


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hereof
and later obtains one, such Pledgor shall promptly thereafter deliver a
notification of the Collateral Agent of such organizational identification
number and shall take all actions reasonably satisfactory to the Collateral
Agent to the extent necessary to maintain the security interest of the
Collateral Agent in the Collateral intended to be granted hereby fully
perfected and in full force and effect.


 


27.                                 CHANGE OF CONTROL.The Pledgee
acknowledges that (i) certain of the Collateral consists of Securities
issued by Persons subject to regulation by the FCC and/or the PUC (the “Regulated
Securities Collateral”) and (ii) to the extent (and only to the extent)
that applicable law requires that Pledgee first obtain the consent of the FCC
and/or the PUC prior to foreclosing on and/or transferring any of the Regulated
Securities Collateral, the Pledgee agrees that it will obtain such consent
prior to effecting such remedies.


 


28.                                 SEVERABILITY.  Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.


 


29.                                 HEADINGS DESCRIPTIVE.  The headings of the several Sections of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.


 


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