Document:

Exhibit 10.1

 

EXECUTION VERSION

 

 

SECURITY AGREEMENT

 

By

 

FAIRPOINT COMMUNICATIONS, INC.,

 

and

 

ITS SUBSIDIARIES PARTY HERETO,
 as Grantors,

 

and

 

U.S. BANK NATIONAL ASSOCIATION
 as Collateral Agent

 

 

Dated as of February 14, 2013

 

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    
	
ARTICLE I DEFINITIONS
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 1.01
    	
 
    	
Uniform   Commercial Code Defined Terms
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 1.02
    	
 
    	
Indenture   Defined Terms
    	
 
    	
2
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 1.03
    	
 
    	
Definition   of Certain Terms Used Herein
    	
 
    	
2
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE II AUTHORITY OF COLLATERAL AGENT
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 2.01
    	
 
    	
Remedies   Not Exclusive
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 2.02
    	
 
    	
Waiver   and Estoppel
    	
 
    	
6
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 2.03
    	
 
    	
Limitation   on Collateral Agent’s Duties
    	
 
    	
6
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE III SECURITY INTERESTS
    	
 
    	
7
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 3.01
    	
 
    	
Collateral
    	
 
    	
7
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 3.02
    	
 
    	
Grant   of Security Interest in Collateral
    	
 
    	
9
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 3.03
    	
 
    	
Lien   Filing
    	
 
    	
9
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 3.04
    	
 
    	
No   Assumption of Liability
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IV REPRESENTATIONS AND WARRANTIES
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 4.01
    	
 
    	
Title   and Authority
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 4.02
    	
 
    	
Validity   of Security Interest and Filings
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 4.03
    	
 
    	
Jurisdiction   of Organization
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 4.04
    	
 
    	
Instruments   and Tangible Chattel Paper
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 4.05
    	
 
    	
Deposit   Accounts and Investment Property
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 4.06
    	
 
    	
Intellectual   Property
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 4.07
    	
 
    	
Commercial   Tort Claims
    	
 
    	
12
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE V COVENANTS
    	
 
    	
12
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 5.01
    	
 
    	
Protection   of Security
    	
 
    	
12
    

 

 

	
Section 5.02
    	
 
    	
Further   Assurances
    	
 
    	
12
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 5.03
    	
 
    	
Taxes;   Encumbrances
    	
 
    	
12
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 5.04
    	
 
    	
Continuing   Obligations of the Grantors
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 5.05
    	
 
    	
Limitation   on Modification of Accounts
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 5.06
    	
 
    	
Insurance
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 5.07
    	
 
    	
Certain   Covenants and Provisions Regarding Patent, Trademark and Copyright Collateral
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 5.08
    	
 
    	
Other   Actions
    	
 
    	
15
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 5.09
    	
 
    	
Legal   Names; Type of Organization (and whether a Registered Organization and/or a   Transmitting Utility); Jurisdiction of Organization; Organizational   Identification Numbers; Changes Thereto; Etc.
    	
 
    	
17
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VI REMEDIES
    	
 
    	
17
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 6.01
    	
 
    	
Remedies   upon Default
    	
 
    	
17
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 6.02
    	
 
    	
Application   of Proceeds
    	
 
    	
19
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 6.03
    	
 
    	
Grant   of License to Use Intellectual Property
    	
 
    	
19
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 6.04
    	
 
    	
Subordination
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 6.05
    	
 
    	
Deficiency
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 6.06
    	
 
    	
Limitation   on the Exercise of Remedies
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VII MISCELLANEOUS
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.01
    	
 
    	
Notices
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.02
    	
 
    	
Survival   of Agreement
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.03
    	
 
    	
Binding   Effect
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.04
    	
 
    	
Intercreditor   Agreement
    	
 
    	
21
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.05
    	
 
    	
GOVERNING   LAW
    	
 
    	
21
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.06
    	
 
    	
Waivers;   Amendment
    	
 
    	
22
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.07
    	
 
    	
Severability
    	
 
    	
22
    
						

 

ii

 

	
Section 7.08
    	
 
    	
Counterparts
    	
 
    	
23
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.09
    	
 
    	
Headings
    	
 
    	
23
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.10
    	
 
    	
Termination
    	
 
    	
23
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.11
    	
 
    	
Additional   Grantors
    	
 
    	
23
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.12
    	
 
    	
Indemnification
    	
 
    	
23
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.13
    	
 
    	
Collateral   Agent Appointed Attorney-in-Fact
    	
 
    	
24
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.14
    	
 
    	
Conflict
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.15
    	
 
    	
USA   Patriot Act Compliance
    	
 
    	
25
    

 

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ANNEXES

 

	
Annex I
    	
 
    	
Form of Copyright Security Agreement
    
	
 
    	
 
    	
 
    
	
Annex II
    	
 
    	
Form of Patent Security Agreement
    
	
 
    	
 
    	
 
    
	
Annex III
    	
 
    	
Form of Trademark Security Agreement
    
	
 
    	
 
    	
 
    
	
Annex IV
    	
 
    	
Form of Joinder Agreement
    
	
 
    	
 
    	
 
    
	
SCHEDULES
    
	
 
    	
 
    	
 
    
	
Schedule 4.02
    	
 
    	
Filing Jurisdictions
    
	
 
    	
 
    	
 
    
	
Schedule 4.03
    	
 
    	
Jurisdiction of Organization
    
	
 
    	
 
    	
 
    
	
Schedule 4.05(a)
    	
 
    	
Deposit Accounts
    
	
 
    	
 
    	
 
    
	
Schedule 4.05(b)
    	
 
    	
Securities and Commodities Accounts
    
	
 
    	
 
    	
 
    
	
Schedule 4.06(a)
    	
 
    	
Copyrights constituting Material Intellectual Property
    
	
 
    	
 
    	
 
    
	
Schedule 4.06(b)
    	
 
    	
Licenses constituting Material Intellectual Property
    
	
 
    	
 
    	
 
    
	
Schedule 4.06(c)
    	
 
    	
Patents constituting Material Intellectual Property
    
	
 
    	
 
    	
 
    
	
Schedule 4.06(d)
    	
 
    	
Trademarks constituting Material Intellectual Property
    
	
 
    	
 
    	
 
    
	
Schedule 4.07
    	
 
    	
Commercial Tort Claims
    
					

 

iv

 

SECURITY AGREEMENT

 

This  SECURITY AGREEMENT (as amended, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), dated as of February 14, 2013 among FAIRPOINT COMMUNICATIONS, INC., a Delaware corporation ( “FairPoint”), each Subsidiary of FairPoint listed on the signature pages hereto (collectively, together with each Subsidiary that becomes a party hereto pursuant to Section 7.11 of this Agreement, and, together with FairPoint, the “Grantors”) and U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent (in such capacity, and together with any successors and assigns in such capacity, the “Collateral Agent”) for the benefit of the Notes Secured Parties.

 

R E C I T A L S

 

WHEREAS, FairPoint, the other Grantors, the Collateral Agent and U.S. Bank National Association, in its capacity as trustee (together, with any successors and assigns, in such capacity, the “Trustee”), on behalf of the holders of the Notes and Additional Notes (each as defined in the Indenture referred to below) and the other Notes Secured Parties, have, in connection with the execution and delivery of this Agreement, entered into that certain indenture dated as of February 14, 2013 (as amended, amended and restated, restated, supplemented or modified from time to time, the “Indenture”), pursuant to which FairPoint has issued or will issue $300,000,000 million principal amount of 8.75% senior secured notes due 2019 (the “Notes”).

 

WHEREAS, each Grantor other than FairPoint has unconditionally and irrevocably guaranteed, as primary obligor and not merely as surety, to the Trustee, for the benefit of the Notes Secured Parties the prompt and complete payment and performance when due of FairPoint’s obligations under the Notes and all other obligations of FairPoint under the Indenture (collectively, the “Obligations”), and desires to execute this Agreement to evidence the foregoing.

 

WHEREAS, U.S. Bank National Association has been appointed to serve as Collateral Agent under the Indenture and, in such capacity, to enter into this Agreement.

 

NOW THEREFORE, in consideration of the foregoing and other benefits accruing to each Grantor, the receipt and sufficiency of which are hereby acknowledged, each Grantor hereby agrees as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01          Uniform Commercial Code Defined Terms.  Unless otherwise defined herein, terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC (and, if defined in more than one Article of the UCC, shall have the meaning given in Article 9 thereof), including the following which are capitalized herein:

 

“Accounts”; “Bank”; “Certificate of Title”; “Chattel Paper”; “Commercial Tort Claim”; “Commodity Account”; “Commodity Contract”; “Commodity Customer”;

 

 

“Commodity Intermediary”; “Deposit Accounts”; “Documents”; “Electronic Chattel Paper”; “Entitlement Holder”; “Entitlement Order”; “Equipment”; “Financial Asset”; “Fixtures”; “Goods”; “Instruments”; “Inventory”; “Investment Property”; “Letter-of-Credit Rights”; “Letters of Credit”; “Money”; “Proceeds”; “Securities”; “Securities Account”; “Securities Intermediary”; “Security Entitlement”; “Supporting Obligations”; and “Tangible Chattel Paper”.

 

Section 1.02          Indenture Defined Terms.  Capitalized terms used but not otherwise defined herein that are defined in the Indenture shall have the meanings given to them in the Indenture.

 

Section 1.03          Definition of Certain Terms Used Herein.  As used herein, the following terms shall have the following meanings:

 

“Account Debtor” shall mean any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account.

 

“Books and Records” shall mean all instruments, files, records, ledger sheets and documents evidencing, covering or relating to any of the Collateral.

 

“Collateral” shall have the meaning assigned to such term in Section 3.01.

 

“Collateral Agent” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

 

“Control” shall mean (i) in the case of each Deposit Account, “control,” as such term is defined in Section 9-104 of the UCC, (ii) in the case of any Security Entitlement, “control,” as such term is defined in Section 8-106(d) of the UCC, and (iii) in the case of any Commodity Contract, “control,” as such term is defined in Section 9-106(b) of the UCC.

 

“Copyright License” shall mean each agreement granting any right to any third party under any copyright owned by any Grantor or which such Grantor otherwise has the right to license, or granting any right to such Grantor under any copyright now or hereafter owned by any third party, and all rights of such Grantor under any such agreement.

 

“Copyrights” shall mean, collectively, with respect to each Grantor, all copyrights (whether statutory or common law, whether registered or unregistered and whether published or unpublished) and all copyright registrations and applications made by such Grantor in the United States,  including, without limitation, the copyrights, registrations and applications listed on Schedule 4.06(a) to this Agreement, together with any and all (i) rights and privileges arising under applicable law with respect to such Grantor’s use of such copyrights, (ii) renewals and extensions thereof, (iii) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof and (iv) rights to sue for past, present or future infringements thereof.

 

“Copyright Security Agreement” shall mean an agreement substantially in the form of Annex I hereto.

 

2

 

“Credit Facility Administrative Agent” shall mean Morgan Stanley Senior Funding, Inc., as administrative agent under the Credit Agreement.

 

“Credit Facility Security Agreement” shall mean the Security Agreement, dated as of February 14, 2013, as amended, amended and restated, supplemented or otherwise modified from time to time, among the Grantors and the Credit Facility Administrative Agent.

 

“Discharge of Credit Agreement Obligations” shall have the meaning assigned to such term in the Intercreditor Agreement.

 

“Excluded Property” shall have the meaning assigned to such term in Section 3.01.

 

“FairPoint” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

 

“General Intangibles” shall mean, collectively, all “general intangibles,” as such term is defined in the UCC, and in any event shall include, without limitation, all choses in action and causes of action and all other intangible personal property of any Grantor of every kind and nature now owned or hereafter acquired by any Grantor, including all rights and interests in partnerships, limited partnerships, limited liability companies and other unincorporated entities, corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, and other agreements), goodwill, registrations, franchises and tax refund claims, but, for the purposes of this Agreement, General Intangibles shall exclude all Intellectual Property.

 

“Grantors” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

 

“Indenture” shall have the meaning assigned to such term in the Recitals of this Agreement.

 

“Intellectual Property” shall mean all intellectual property of every kind and nature owned in the United States by a Grantor, including Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how or other confidential or proprietary data or information, software and databases and all rights to sue and collect damages for past, present or future infringement for any of the foregoing.

 

“Law” shall mean any law, constitution, statute, treaty, regulation, by-law, rule, ordinance, order, injunction, award, decree or determination of any Governmental Authority.

 

“License” shall mean any United States Patent License, Trademark License or Copyright License or other United States license or sublicense in respect of Intellectual Property to which any Grantor is a party including, without limitation, those listed on Schedule 4.06(b) to this Agreement.

 

3

 

“Material Intellectual Property” shall mean all Intellectual Property that is material to the business of the Loan Parties and their Subsidiaries (taken as a whole).

 

“Notes Documents” shall mean the Notes, the Additional Notes, the Indenture and the Collateral Documents.

 

“Obligations” shall have the meaning assigned to such term in the Recitals of this Agreement.

 

“Patent License” shall mean any agreement granting to any third party any right to make, use or sell any invention covered by a patent, owned by any Grantor or which any Grantor otherwise has the right to license, or granting to any Grantor any right to make, use or sell any invention on which a patent, owned by any third party, is in existence, and all rights of any Grantor under any such agreement.

 

“Patents” shall mean all of the following in the United States owned by a Grantor:  (a) all letters patent and all applications for letters patent, including registrations, recordations and pending applications in the United States Patent and Trademark Office, including, without limitation, those listed on Schedule 4.06(c) to this Agreement, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein.

 

“Patent Security Agreement” shall mean an agreement substantially in the form of Annex II hereto.

 

“Pledge Agreement” means the Pledge Agreement, dated as of the date hereof, made by FairPoint and certain of its Subsidiaries party thereto in favor of the Collateral Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Pledge Agreement Collateral” shall mean “Collateral” under and as defined in the Pledge Agreement.

 

“Possessory Collateral” shall have the meaning given such term in the Intercreditor Agreement.

 

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

 

“Security Interests” shall mean the Liens and security interests granted in Section 3.02 of this Agreement to secure the Obligations.

 

“Trademark License” shall mean any agreement, now or hereafter in effect, granting to any third party any right to use any trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any trademark now or hereafter owned by any third party, and all rights of any Grantor under any such agreement.

 

4

 

“Trademarks” shall mean all of the following in the United States owned by a Grantor:  (a) all trademarks, service marks, trade names, “doing business as” names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, all registrations and recordations thereof, and all applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office or any State of the United States, and all extensions or renewals thereof, including, without limitation, those listed on Schedule 4.06(d) to this Agreement and, (b) all goodwill connected with the use thereof and symbolized thereby.

 

“Trademark Security Agreement” shall mean an agreement substantially in the form of Annex III hereto.

 

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

 

“Trustee” shall have the meaning assigned to such term in the Recitals to this Agreement.

 

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however, that if by reason of mandatory provisions of law, any or all of the perfection or priority of the Collateral Agent’s and the Notes Secured Parties’ security interests in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect on the date hereof in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.

 

ARTICLE II
 AUTHORITY OF COLLATERAL AGENT

 

Section 2.01          Remedies Not Exclusive.

 

No remedy conferred upon or reserved to the Collateral Agent herein or in the other Notes Documents is intended to be exclusive of any other remedy or remedies, but every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or in any other Notes Document or now or hereafter existing at law or in equity or by statute.

 

No delay or omission by the Collateral Agent to exercise any right, remedy or power hereunder or under any other Notes Document shall impair any such right, remedy or power or shall be construed to be a waiver thereof, and every right, power and remedy given by this Agreement or any Notes Document to the Collateral Agent may be exercised from time to time and as often as may be deemed expedient by the Collateral Agent.

 

If the Collateral Agent shall have proceeded to enforce any right, remedy or power under this Agreement or under any other Notes Document and the proceeding for the enforcement thereof shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Collateral Agent, then the Grantors, the Collateral Agent and the other Notes Secured Parties shall, subject to any determination in such proceeding, severally and

 

5

 

respectively be restored to their former positions and rights hereunder or thereunder with respect to the Collateral and in all other respects, and thereafter all rights, remedies and powers of the Collateral Agent shall continue as though no such proceeding had been taken.

 

Section 2.02          Waiver and Estoppel.

 

(a)        Subject to the terms of the Notes Documents, each Grantor agrees, to the extent it may lawfully do so, that it will not at any time in any manner whatsoever claim, or take the benefit or advantage of, any appraisement, valuation, stay, extension, moratorium, turnover or redemption law, or any law permitting it to direct the order in which the Collateral shall be sold, now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance or enforcement of this Agreement or any Notes Document and hereby waives all benefit or advantage of all such laws and covenants that it will not hinder, delay or impede the execution of any power granted to the Collateral Agent in this Agreement or any Notes Document but will suffer and permit the execution of every such power as though no such law were in force.

 

(b)        Each Grantor, to the extent it may lawfully do so, on behalf of itself and all who may claim through or under it, including without limitation any and all subsequent creditors, vendees, assignees and licensors, waives and releases all rights to demand or to have any marshaling of the Collateral upon any sale, whether made under any power of sale granted herein or in any other Notes Document or pursuant to judicial proceedings or upon any foreclosure or any enforcement of this Agreement or any other Notes Document and consents and agrees that all the Collateral may at any such sale be offered and sold as an entirety.

 

(c)        Each Grantor waives, to the extent permitted by applicable law, presentment, demand, protest and any notice of any kind (except notices explicitly required hereunder or under any Notes Document) in connection with this Agreement and the other Notes Documents and any action taken by the Collateral Agent with respect to the Collateral.

 

Section 2.03          Limitation on Collateral Agent’s Duties.

 

(a)        Beyond its duties as to the custody thereof expressly provided herein, under applicable law or in any other Notes Document and to account to the Notes Secured Parties and the Grantors for moneys and other property received by it hereunder or under any Notes Document and any other express duties specified in the Notes Documents, the Collateral Agent shall have no duty to the Grantors or to the Notes Secured Parties as to any Collateral in its possession or control or in the possession or control of any of its agents or nominees, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.

 

(b)        No implied agreements, covenants or obligations with respect to the Grantors, the Notes Secured Parties or any other party shall be read into this Agreement against the Collateral Agent.  The Collateral Agent in its capacity as such is not a fiduciary of, and shall not owe or be deemed to owe any fiduciary duty to, the Grantors or the Notes Secured Parties, whether before or after the occurrence of an Event of Default.  Without limiting the foregoing, the Collateral Agent shall not have any duty, express or implied, to:

 

6

 

(i)    manage, control, use, maintain, sell, dispose of, purchase, bid for or otherwise deal with the Collateral or any portion thereof, or to otherwise take or refrain from taking any action under, or in connection with, this Agreement or the other Collateral Documents, except to the extent required by law;

 

(ii)   obtain or maintain insurance on the Collateral or any other insurance;

 

(iii)  pay or discharge any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, or assessed or levied against, any part of the Collateral;

 

(iv)  advance any moneys related to the Collateral or for the benefit of the Notes Secured Parties for any purpose;

 

(v)   take any action or omit to take any action not expressly provided for in this Agreement or the Collateral Documents;

 

(vi)  take any action or omit to take any action to perfect or insure priority for the security interest granted by the Collateral Documents, including filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times; or

 

(vii) make any determination as to the satisfaction of  any covenant hereunder, and may deem such covenant satisfied, by reference to (A) any Grantor taking actions hereunder that are analogous to the actions such Grantor is taking under the Credit Facility Security Agreement, (B) procedures being used that are analogous to the procedures being used under the Credit Facility Security Agreement or (C) agreements, instruments or documents being executed hereunder that are analogous to the agreements, instruments or documents that any Grantor is executed and delivering pursuant to the Credit Facility Security Agreement.

 

ARTICLE III

 

SECURITY INTERESTS

 

Section 3.01          Collateral.  For the purposes of this Agreement, the term “Collateral” shall mean each Grantor’s right, title and interest in, to and under all of the following property, wherever located, and whether now existing or hereafter arising or acquired from time to time:

 

(a)        Accounts;

 

(b)        Books and Records;

 

(c)        Money and Deposit Accounts;

 

7

 

(d)        Chattel Paper;

 

(e)        Commercial Tort Claims described on Schedule 4.07 to this Agreement;

 

(f)        Documents;

 

(g)        Equipment;

 

(h)        Fixtures;

 

(i)         General Intangibles;

 

(j)         Goods;

 

(k)        Instruments;

 

(l)         Inventory;

 

(m)      Investment Property;

 

(n)        Letter-of-Credit Rights;

 

(o)        Letters of Credit;

 

(p)        Supporting Obligations;

 

(q)        Material Intellectual Property, including the Intellectual Property set forth on Schedules 4.06(a),  (b), (c), and (d); and

 

(r)         all Proceeds and products of any and all of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to such Grantor from time to time with respect to any of the foregoing;

 

provided that, notwithstanding the foregoing, “Collateral” shall not include the following items (collectively, “Excluded Property”): (i) Pledge Agreement Collateral or any Equity Interests in an Excluded Entity (as defined in the Pledge Agreement), (ii) FCC licenses and PUC authorizations to the extent (and only to the extent) that any Grantor is prohibited from granting liens and security interests therein pursuant to applicable Law, but the Collateral shall include, to the maximum extent permitted by Law, all rights incident or appurtenant to all FCC licenses and PUC authorizations and the right to receive all proceeds derived from or in connection with the sale, assignment or transfer of such FCC licenses and PUC authorizations, (iii) any contracts, leases, licenses or other agreements as to which the grant of a security interest would (A) constitute a violation of a restriction in favor of a third party on such grant, (B) constitute or result in the abandonment, invalidation, unlawfulness or unenforceability of any right, title or interest of any Grantor therein or (C) give any other party to such contract, lease, license or other agreement a right to terminate its obligations thereunder; provided, however, that any such

 

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contract, lease, license or other agreement shall only be excluded, in each case under clauses (A) and (C) above, to the extent such violation or right to terminate would not be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable Law or principles of equity; and provided, further, that any such contract, lease, license or other agreement shall not be excluded, and such security interest shall attach immediately at such time as the condition causing such violation or right to terminate shall no longer exist, and, to the extent severable, shall attach immediately to any portion of any such contract, lease, license or other agreement that does not result in any of the consequences specified in (A) or (C) above, (iv) any application to register any Trademark in the United States Patent and Trademark Office based upon Grantor’s “intent to use” such Trademark (but only if the grant of security interest to such application would result in the invalidation of such application or any resulting registration), in each case, unless and until a “Statement of Use” or “Amendment to Allege Use” is submitted to and accepted by the United States Patent and Trademark Office with respect thereto, at which point Collateral shall include, and the security interests granted hereunder shall attach to, such application, (v) motor vehicles and other assets subject to a Certificate of Title, (vi) all leasehold interests relating to real property, (vii) any other asset, or portion thereof, the granting of a security interest in which would be void or illegal under any applicable law, (viii) any property subject to a purchase money Lien, (ix) any assets located outside the United States or assets that require action under the law of any jurisdiction other than the United States to create or perfect a security interest in such assets, including Intellectual Property registered in any jurisdictions other than the United States, and (x) (A) Deposit Accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Guarantor’s employees, (B) deposit accounts used primarily as disbursement accounts, (C) that certain account with Bank of America, N.A., containing the Initial Litigation Trust Funds (as defined in the Plan of Reorganization) and (D) the Bankruptcy Claims Reserve account at BB&T ending in 6161, the Bankruptcy Claims Distribution Account ending in 7979 at Texas Capital Bank and the VT Broadband Restricted account at BB&T Bank ending in 9919 and the Security Deposit bank account at  BB&T Bank ending in 6102;  provided, however, that the Excluded Property shall not include any Proceeds, substitutions or replacements of Excluded Property (unless such Proceeds, substitutions or replacements would constitute Excluded Property).

 

Section 3.02          Grant of Security Interest in Collateral.  As security for the payment and performance in full of the Obligations, each Grantor hereby mortgages, pledges and hypothecates to the Collateral Agent, for the ratable benefit of the Notes Secured Parties, and hereby grants to the Collateral Agent, for the ratable benefit of the Notes Secured Parties, a security interest in, all of such Grantor’s right, title and interest in, to and under the Collateral of such Grantor, wherever located, whether now existing or hereafter arising or acquired from time to time.

 

Section 3.03          Lien Filing.  The Collateral Agent is hereby authorized (but has no obligation) to file one or more financing statements (including fixture filings), continuation statements, filings with the United States Patent and Trademark Office, United States Copyright Office or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interests granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Collateral Agent as secured party.  Any such financing statement may indicate the collateral as “all assets of the debtor, whether

 

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now owned or existing or hereafter acquired or arising”, “all personal property of the debtor, whether now owned or existing or hereafter acquired or arising”, or words of similar effect and/or meaning.

 

Section 3.04          No Assumption of Liability.  The Security Interests are granted as security only and shall not subject the Collateral Agent or any other Notes Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Collateral.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Each Grantor represents and warrants to the Collateral Agent and the other Notes Secured Parties that:

 

Section 4.01          Title and Authority.  Each Grantor has good and valid rights in the Collateral and title to the Collateral with respect to which it has purported to grant the Security Interests hereunder and has full power and authority to grant to the Collateral Agent, for the benefit of the Notes Secured Parties, the Security Interests in such Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval which has been obtained.

 

Section 4.02          Validity of Security Interest and Filings.

 

(a)        The Security Interests constitute legal and valid security interests in all the Collateral securing the payment and performance of the Obligations.  As of the date hereof, all information set forth on the Schedules annexed hereto is correct and complete in all material respects.  As of the date hereof, the Collateral described on Schedules 4.05(a), 4.05(b) and 4.07 annexed hereto constitutes all of the property of such type of Collateral owned or held by the Grantors.  Fully completed UCC financing statements (including fixture filings as applicable) stating that the same cover “all assets of the debtor,” “all personal property and assets of the debtor” or words of similar import, or containing a description of the Collateral have been delivered for filing in each governmental, municipal or other office specified in Schedule 4.02.  Except as set forth in clause (b) below with respect to Collateral consisting of United States registered and applied-for Copyrights, United States registered and applied-for Trademarks and United States registered and applied-for Patents, upon (i) the filing of such UCC financing statements with the appropriate filing offices of each jurisdiction specified in Schedule 4.02 and (ii) the taking of possession or control by the Collateral Agent of the Collateral to the extent required by this Agreement, the Collateral Agent, for the benefit of the Notes Secured Parties, will have a perfected first priority security interest in respect of all Collateral, to the extent such security interest can be perfected under the UCC by such filings, possession or control (to the extent such control is required by this Agreement), other than Permitted Liens, and subject to the Intercreditor Agreement.

 

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(b)        With respect to all Collateral consisting of United States registered and applied-for Patents, United States registered and applied-for Trademarks and United States registered and applied-for Copyrights that are registered or applied for in the name of any Grantor as of the date hereof, fully executed Patent Security Agreements, Trademark Security Agreements and/or Copyright Security Agreements, as applicable, containing a description of all Collateral consisting of such United States registered and applied-for Patents, United States registered Trademarks (and Trademarks for which United States registration applications are pending other than any United States registration applications comprising Excluded Property) and United States registered and applied-for Copyrights have been delivered for recordation with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, pursuant to 35 U.S.C. § 261 or 17 U.S.C. § 205 and the regulations thereunder, as applicable.  Upon the recordation of such Patent Security Agreements, Trademark Security Agreements and/or Copyright Security Agreements with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, and the filing of proper UCC financing statements with the appropriate filing offices of each jurisdiction specified in Schedule 4.02, the Collateral Agent, for the benefit of the Notes Secured Parties, will have perfected first priority security interests in respect of all Collateral consisting of Patents, Trademarks and Copyrights registered or applied-for (other than any United States registration applications for Trademarks comprising Excluded Property) in the name of any Grantors as of the date hereof.

 

Section 4.03          Jurisdiction of Organization.  As of the date hereof, Schedule 4.03 hereto identifies each Grantor’s corporate (or, if not a corporation, legal) name, its jurisdiction of incorporation or organization, and the type of entity and the state organization identification number of such Grantor (if the state of its incorporation or organization provides such organization number).

 

Section 4.04          Instruments and Tangible Chattel Paper.  As of the date hereof, each Instrument and each item of Tangible Chattel Paper owned by a Grantor and required to be delivered to the Collateral Agent pursuant to Section 5.08(f) has been properly endorsed, assigned and delivered to the Collateral Agent, and, if necessary, accompanied by instruments of transfer or assignment duly executed in blank.

 

Section 4.05          Deposit Accounts and Investment Property.  Each Grantor hereby represents and warrants that as of the date hereof (a) it maintains no Deposit Accounts other than the accounts listed in Schedule 4.05(a) to this Agreement, (b) it maintains no Securities Accounts or Commodity Accounts other than those listed in Schedule 4.05(b) to this Agreement and (c) it does not hold, own or have any interest in any certificated securities or uncertificated securities other than those constituting Pledge Agreement Collateral, Equity Interests in Excluded Entities or those maintained in Securities Accounts or Commodity Accounts listed in Schedule 4.05(b) to this Agreement.

 

Section 4.06          Intellectual Property.

 

(a)        Schedule 4.06(a) attached hereto contains a complete and accurate list, as of the date hereof, of all registered Copyrights (and Copyrights for which registration applications are pending) owned by each Grantor that constitute Material Intellectual Property.

 

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(b)        Schedule 4.06(b) attached hereto contains a complete and accurate list, as of the date hereof, of all Licenses to which any Grantor is a party that constitute Material Intellectual Property.

 

(c)        Schedule 4.06(c) attached hereto contains a complete and accurate list, as of the date hereof, of all registered Patents (and Patents for which applications are pending) owned by each Grantor that constitute Material Intellectual Property.

 

(d)        Schedule 4.06(d) attached hereto contains a complete and accurate list, as of the date hereof, of all registered Trademarks (and Trademarks for which registration applications are pending) owned by each Grantor that constitute Material Intellectual Property.

 

Section 4.07          Commercial Tort Claims.  As of the date hereof each Grantor hereby represents and warrants that it holds no Commercial Tort Claims reasonably expected to have a value over $250,000, other than those listed on Schedule 4.07 to this Agreement.

 

ARTICLE V

 

COVENANTS

 

Section 5.01          Protection of Security.  Each Grantor shall, at its own cost and expense, take any and all actions reasonably necessary to defend the Security Interests of the Collateral Agent in the Collateral and the priority thereof against any Lien other than Permitted Liens.

 

Section 5.02          Further Assurances.  Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as are reasonably necessary to better assure, preserve, protect and perfect the Security Interests and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interests and the filing of any financing statements or other documents in connection herewith or therewith.

 

Section 5.03          Taxes; Encumbrances.  During the continuance of an Event of Default, the Collateral Agent may (but shall have no obligation to) discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Collateral except to the extent the same constitute Permitted Liens, and may (but shall have no obligation to) pay for the maintenance and preservation of the Collateral to the extent any Grantor fails to do so as required by this Agreement and each Grantor jointly and severally agrees to reimburse the Collateral Agent on demand for any payment made or any expense incurred by the Collateral Agent pursuant to the foregoing authorization, together with interest thereon at the rate then in effect in respect of the Notes, and such amounts shall constitute Obligations secured by the Collateral and shall be paid in accordance with Section 6.10 of the Indenture; provided, however, that nothing in this Section 5.03 shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Collateral Agent or any Notes Secured Party to cure or perform, any covenants or other promises of any

 

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Grantor with respect to taxes, assessments, charges, fees, liens, security interests or other encumbrances and maintenance as set forth herein or in the other Notes Documents.

 

Section 5.04          Continuing Obligations of the Grantors.  Each Grantor shall remain liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Collateral, all in accordance with the terms and conditions thereof to the same extent as if this Agreement had not been executed.

 

Section 5.05          Limitation on Modification of Accounts.  None of the Grantors will, without the prior written consent of the Credit Facility Administrative Agent granted pursuant to the Credit Facility Security Agreement (or, after Discharge of Credit Agreement Obligations, the prior written consent of Holders of at least a majority in principal amount of the Notes then outstanding), grant any extension of the time of payment of any of the Accounts, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any Person liable for the payment thereof or allow any credit or discount whatsoever thereon, other than extensions, credits, discounts, compromises or settlements granted or made in the ordinary course of business and consistent with such prudent and standard practices used in industries in which such Grantor is engaged.

 

Section 5.06          Insurance.  The Grantors, at their own expense, shall maintain or cause to be maintained insurance covering physical loss or damage to the Collateral in accordance with Section 11.04 of the Indenture.  Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor’s true and lawful agent (and attorney-in-fact) for the purpose, during the continuance of an Event of Default, of making, settling and adjusting claims in respect of Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto.

 

Section 5.07          Certain Covenants and Provisions Regarding Patent, Trademark and Copyright Collateral.  (a) Each Grantor agrees that it will not, nor will it permit any of its licensees to, do any act, or knowingly omit to do any act, whereby any Patent that constitutes Material Intellectual Property (and solely during the period where such Patent constitutes Material Intellectual Property) may become invalidated or dedicated to the public.  Each Grantor (either itself or through its licensees or its sublicensees) will, for each Trademark that constitutes Material Intellectual Property (and solely during the period where such Trademark constitutes Material Intellectual Property), (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for nonuse, (ii) maintain the quality of products and services offered under such Trademark and (iii) not knowingly use or knowingly permit the use of such Trademark in violation of any third party rights in a manner that, in each case, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

(c)        Each Grantor shall notify the Collateral Agent as soon as reasonably practicable if it knows that any Patent, Trademark or Copyright that constitutes Material Intellectual Property becomes or is reasonably likely to become abandoned, forfeited or dedicated to the public, or of any adverse determination or development including the institution of, or any such determination or development in, any proceeding in the United States Patent and

 

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Trademark Office or the United States Copyright Office (other than, with respect to any pending application to register any Patent, Trademark or Copyright, routine office actions or other determinations or developments in the ordinary course of prosecution before the United States Patent and Trademark Office or the United States Copyright Office) regarding such Grantor’s ownership of any Patent, Trademark or Copyright that constitutes Material Intellectual Property, or its right to register the same, or to keep and maintain the same.

 

(d)        Each Grantor hereby agrees that with respect to all Material Intellectual Property owned by such Grantor on the date hereof, it will, if such Grantor is also requested by the Credit Facility Administrative Agent to take the analogous actions pursuant to the Credit Facility Security Agreement (or, after the Discharge of Credit Agreement Obligations, such Grantor will take such actions without further request or demand by the Collateral Agent or any other Person), execute and deliver any and all agreements, instruments or documents analogous to the agreements, instruments or documents that such Grantor is executing and delivering pursuant to the Credit Facility Security Agreement to evidence (or, after the Discharge of Credit Agreement Obligations, agreements, instruments or documents necessary to evidence) the Collateral Agent’s security interest in such Intellectual Property, which agreements, instruments or documents may be filed with the United States Patent and Trademark Office, the United States Copyright Office or any office or agency in any political subdivision of the United States.

 

(e)        In the event that any Grantor, either itself or through any agent, employee, licensee or designee, files an application for or, following the Closing Date, becomes the registered owner of, any Patent, Trademark or Copyright (or for the registration of any Trademark or Copyright) with the United States Patent and Trademark Office, the United States Copyright Office or any office or agency in any political subdivision of the United States that constitutes Material Intellectual Property, such Grantor shall promptly (and in any event within sixty (60) days of such filing or acquisition, or, unless the Discharge of Credit Agreement Obligations has occurred, such longer time as such Grantor has been granted by the Credit Facility Administrative Agent to perform the analogous actions under the Credit Facility Security Agreement) notify the Collateral Agent of such occurrence, and shall execute and deliver any and all agreements, instruments, documents and papers (including, without limitation, Patent Security Agreements, Trademark Security Agreements and/or Copyright Security Agreements, as applicable) analogous to the agreements, instruments, documents and papers as such Grantor is delivering pursuant to the Credit Facility Security Agreement to evidence (or, if the Discharge of Credit Agreement Obligations has occurred, agreements, instruments or documents necessary to evidence) the Collateral Agent’s security interest in such Patent, Trademark or Copyright or application therefor, and in the event of such Grantor’s failure to notify of such occurrence, or execute or deliver such materials to the Collateral Agent pursuant to the terms of this Section, each Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute and file such writings solely for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable until this Agreement is terminated.

 

(f)        Each Grantor will take all reasonably necessary steps that are consistent with its reasonable business judgment in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any office or agency in any

 

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political subdivision of the United States to maintain and pursue each application relating to the Patents, Trademarks and/or Copyrights that constitutes Material Intellectual Property (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trademarks or Copyrights that that constitutes Material Intellectual Property, including timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent with its reasonable business judgment, to initiate opposition, interference and cancellation proceedings against third parties.

 

(g)        In the event that any Grantor knows that any Collateral consisting of a Patent, Trademark or Copyright has been or is about to be infringed, misappropriated or diluted by a third party, such Grantor promptly shall notify the Collateral Agent and shall, if consistent with its reasonable business judgment, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions as are appropriate under the circumstances to protect such Collateral.

 

(h)        To each Grantor’s knowledge, on and as of the date hereof, such Grantor is not infringing upon any patent, trademark or copyright of any other Person other than such infringement that, individually or in the aggregate, would not (or would not reasonably be expected to) result in a Material Adverse Effect and no proceedings have been instituted or are pending against such Grantor or, to such Grantor’s knowledge, threatened, and no claim against such Grantor has been received by such Grantor, alleging any such violation.

 

Section 5.08      Other Actions.  In order to further ensure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Collateral Agent’s security interests in the Collateral, each Grantor agrees, subject to the Intercreditor Agreement and in each case at such Grantor’s own expense, to take the following actions with respect to the following Collateral:

 

(a)        As between the Collateral Agent and the Grantors, the Grantors shall bear the investment risk with respect to the Investment Property, and the risk of loss of, damage to or the destruction of the Investment Property, whether in the possession of, or maintained as a security entitlement or deposit by, or subject to the control of, the Collateral Agent, a Securities Intermediary, a Commodity Intermediary, any Grantor or any other Person; provided, however, that nothing contained in this Section 5.10(a) shall release or relieve any Securities Intermediary or Commodity Intermediary of its duties and obligations to the Grantors or any other Person under any control agreement or under applicable law.

 

(b)        Electronic Chattel Paper and Transferable Records.  If any amount individually in excess of $500,000 or in the aggregate in excess of $2,000,000, payable under or in connection with any of the Collateral shall be evidenced by any Electronic Chattel Paper or any “transferable record,” as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, the Grantor acquiring such Electronic Chattel Paper or transferable record shall promptly notify the Collateral Agent thereof and shall take such action as is necessary to vest in the Collateral Agent control under UCC Section 9-105 of such Electronic Chattel Paper or control under Section 201 of the Federal Electronic

 

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Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record.  The Collateral Agent agrees with such Grantor that the Collateral Agent will arrange, at the written request of such Grantor and pursuant to procedures analogous to the procedures being used pursuant to the Credit Facility Security Agreement (or, if the Discharge of Credit Agreement Obligations has occurred, procedures determined by such Grantor to be necessary) and so long as such procedures will not result in the Collateral Agent’s loss of control, for the Grantor to make alterations to the Electronic Chattel Paper or transferable record permitted under UCC Section 9-105 or, as the case may be, Section 201 of the Federal Electronic Signatures in Global and National Commerce Act of Section 16 of the Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such Electronic Chattel Paper or transferable record.

 

(c)                        Letter-of-Credit Rights.  If any Grantor is at any time a beneficiary under a Letter of Credit now or hereafter issued in favor of such Grantor in an amount individually in excess of $500,000 or in the aggregate in excess of $2,000,000, such Grantor shall promptly notify the Collateral Agent in writing and, if such Grantor is taking analogous actions under the Credit Facility Security Agreement (or, if the Discharge of Credit Agreement Obligations has occurred, such Grantor will take such actions without further request or demand by the Collateral Agent or any other Person), such Grantor shall use commercially reasonable efforts to pursuant to an agreement in form and substance satisfactory to the Collateral Agent, either (i) arrange for the issuer and any confirmer of such Letter of Credit to consent to an assignment to the Collateral Agent of the proceeds of any drawing under the Letter of Credit or (ii) arrange for the Collateral Agent to become the transferee beneficiary of such Letter of Credit.

 

(d)                       Commercial Tort Claims.  If any Grantor shall at any time hold or acquire a Commercial Tort Claim having a value individually in excess of $500,000 or in the aggregate in excess of $2,000,000 such Grantor shall promptly notify the Collateral Agent thereof in writing and, if such Grantor is taking analogous actions under the Credit Facility Security Agreement (or, if the Discharge of Credit Agreement Obligations has occurred, such Grantor will take such actions without further request or demand by the Collateral Agent or any other Person), grant to the Collateral Agent in writing signed by such Grantor a security interest therein and in the Proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Collateral Agent.

 

(e)                        Landlord’s Access Agreements/Bailee Letters.  With respect to each warehouse or other storage facility located in the United States of America owned by any Person other than a Grantor, if Inventory, Equipment or other personal property of any Grantor with a fair market value in excess of $500,000 is regularly maintained at such location, FairPoint shall notify the Collateral Agent thereof in writing and, if such Grantor is taking analogous actions under the Credit Facility Security Agreement (or, if the Discharge of Credit Agreement Obligations has occurred, such Grantor will take such actions without further request or demand by the Collateral Agent or any other Person), will use commercially reasonable efforts to deliver a landlord waiver and access agreement or bailee letter, as applicable, in form and substance reasonably satisfactory to the Collateral Agent.

 

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(f)                         Instruments and Tangible Chattel Paper.  If any amount individually in excess of $500,000 or in the aggregate in excess of $2,000,000 payable under or in connection with any of the Collateral shall be evidenced by any Instrument or Tangible Chattel Paper, the Grantor acquiring such Instrument or Tangible Chattel Paper shall forthwith endorse, assign and deliver the same to the Collateral Agent, accompanied by instruments of transfer or assignment duly executed in blank.

 

Section 5.09                             Legal Names; Type of Organization (and whether a Registered Organization and/or a Transmitting Utility); Jurisdiction of Organization; Organizational Identification Numbers; Changes Thereto; Etc.  No Grantor 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), except that any such changes shall be permitted (so long as not in violation of the applicable requirements of the Notes Documents) if (i) it shall have given to the Collateral Agent not less than ten (10) days’ prior written notice of each change to its legal name, its type of organization, whether or not it is a Registered Organization, its jurisdiction of organization, its organizational identification number (if any), and whether or not it is a Transmitting Utility, and (ii) in connection with the respective change or changes, it shall have taken all actions as are reasonably necessary to maintain the security interests of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect.

 

ARTICLE VI

 

REMEDIES

 

Section 6.01                             Remedies upon Default.  Subject to Section 6.06, after the occurrence and during the continuance of an Event of Default, the Collateral Agent (acting in accordance with Article Six of the Indenture) shall have the right to take any of or all the following actions at the same or different times:  (a) with respect to any Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Collateral by the applicable Grantors to the Collateral Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent (acting in accordance with Article Six of the Indenture) shall determine (other than in violation of applicable law or any then existing Licenses to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Collateral and without liability for trespass to enter any premises where the Collateral may be located for the purpose of taking possession of or removing the Collateral and, generally, to exercise any and all rights afforded to a secured creditor under the UCC or other applicable law.  Without limiting the generality of the foregoing, each Grantor agrees that the Collateral Agent (acting in accordance with Article Six of the Indenture) shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral, at public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate.  The Collateral Agent shall be authorized at any such sale of Equity Interests (if it, acting in accordance with Article Six of the

 

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Indenture, determines to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing such Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold.  Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

 

The Collateral Agent (acting in accordance with Article Six of Indenture) shall give a Grantor ten (10) Business Days’ prior written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-612 of the UCC) of the Collateral Agent’s intention to make any sale or other disposition of such Grantor’s Collateral.  Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange.  Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent (acting in accordance with Article Six of the Indenture) may fix and state in the notice of such sale.  At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent (acting in accordance with Article Six of the Indenture) may determine.  The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given.  The Collateral Agent may (acting in accordance with Article Six of the Indenture), without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned.  In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent (acting in accordance with Article Six of the Indenture) until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice.  At any public (or, to the extent permitted by law, private) sale made pursuant to this Section, the Collateral Agent on behalf of the Notes Secured Parties (or certain of them (acting in accordance with Article Six of the Indenture)) may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any Obligation then due and payable to such Notes Secured Parties from any Grantor as a credit against the purchase price, and such Notes Secured Parties may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor.  For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent (acting in accordance with Article Six of the Indenture) shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of

 

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Default shall have been remedied and the Obligations paid in full.  As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent (acting in accordance with Article Six of the Indenture) may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver.  Any sale pursuant to the provisions of this Section shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610 of the UCC.

 

This Agreement may be enforced only by the action of the Collateral Agent acting in accordance with Article Six of the Indenture and no other Notes Secured Party shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby.

 

Section 6.02                             Application of Proceeds.

 

(a)                       All moneys collected by the Collateral Agent upon any sale or other disposition of the Collateral, together with all other moneys received by the Collateral Agent hereunder, shall be applied in accordance with Section 6.10 of the Indenture.

 

(b)                       All payments required to be made to the Notes Secured Parties hereunder shall be made to the Collateral Agent for the account of the respective Notes Secured Parties.

 

(c)                        It is understood that each Grantor 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.

 

Section 6.03                             Grant of License to Use Intellectual Property.

 

For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Article at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Collateral Agent a nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors) to use, license or sublicense any of the Collateral, except to the extent that such license may not be granted (i) as a result of a pre-existing exclusive Licenses or (ii) pursuant to any License granting such Grantor rights in such Intellectual Property, consisting of Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof; provided that the quality of any services or products in connection with which any Trademarks included in the Collateral are used will not be materially inferior to the quality of such services or products sold by such Grantor under such Trademarks immediately prior to such Event of Default.  The use of such license by the Collateral Agent shall be exercised, at the option of the Collateral Agent (acting in accordance with Article Six of the Indenture), only after the occurrence and during the continuation of an Event of Default; provided that any license, sublicense or other transaction entered into by the Collateral Agent in accordance herewith shall be binding upon the Grantors

 

19

 

notwithstanding any subsequent cure of an Event of Default.  Such license shall be irrevocable until this Agreement is terminated.

 

Section 6.04                             Subordination.  Each Grantor hereby agrees that, upon the occurrence and during the continuance of an Event of Default, unless otherwise agreed by the Collateral Agent (acting in accordance with Article Six of the Indenture), all Indebtedness owing by it to any Subsidiary of FairPoint shall be fully subordinated to the payment in full in cash of such Grantor’s Obligations.

 

Section 6.05                             Deficiency.  Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the fees and disbursements of any attorneys employed by the Collateral Agent or any Notes Secured Party to collect such deficiency.

 

Section 6.06                             Limitation on the Exercise of Remedies.  The Collateral Agent acknowledges that (i) certain of the Collateral may be subject to regulation by the FCC, an applicable PUC or other regulatory authority (the “Regulated Collateral”) and (ii) to the extent (and only to the extent) that applicable law requires that the Collateral Agent first obtain the consent of the FCC, any applicable PUC or any other regulatory authority prior to exercising any of the remedies set forth herein, regarding any of the Regulated Collateral, the Collateral Agent agrees that it will obtain such consent prior to effecting such remedies.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.01                             Notices.  All notices and other communications hereunder shall be given in accordance with Section 13.01 of the Indenture.

 

Section 7.02                             Survival of Agreement.  All covenants, agreements, representations and warranties made by any Grantor herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Notes Document shall be considered to have been relied upon by the Collateral Agent and the other Notes Secured Parties and shall continue in full force and effect until this Agreement shall terminate.

 

Section 7.03                             Binding Effect; Successors and Assigns.  This Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent (it being understood that delivery of an executed counterpart by electronic imaging shall be effective as delivery of a manually executed counterpart), and thereafter shall be binding upon such Grantor and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of such Grantor and the Collateral Agent for the benefit of the Notes Secured Parties and their respective successors and assigns, except that no Grantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly permitted by each of the other Notes Documents.  Whenever in this

 

20

 

Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

 

Section 7.04                             Intercreditor Agreement.  Notwithstanding any provision to the contrary contained herein, all terms and provisions of this Agreement (other than Section 3.02) are subject to the terms of the Intercreditor Agreement.  In the event of any conflict between the terms of this Agreement (other than Section 3.02) and the Intercreditor Agreement, the terms of the Intercreditor Agreement shall govern.  Notwithstanding anything herein to the contrary, the requirements of this Agreement to endorse, assign or deliver Possessory Collateral to the Collateral Agent (or any representation or warranty having the effect of requiring the same) shall be deemed satisfied (or any such representation or warranty shall be deemed true) by endorsement, assignment or delivery of such Possessory Collateral to the Credit Facility Administrative Agent (as gratuitous bailee for the benefit of the Collateral Agent pursuant to Section 2.09 of the Intercreditor Agreement) pursuant to the terms of the Credit Facility Security Agreement.

 

Section 7.05                             GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT, PURSUANT TO MANDATORY PROVISIONS OF LAW, THE PERFECTION, THE EFFECT OF PERFECTION OR NONPERFECTION OR THE PRIORITY OF ANY SECURITY INTEREST GRANTED HEREUNDER MAY BE DETERMINED IN ACCORDANCE WITH THE LAWS OF A DIFFERENT JURISDICTION.  EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE COLLATERAL AGENT, ANY NOTES SECURED PARTY, OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER NOTES DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER NOTES DOCUMENT SHALL AFFECT ANY RIGHT THAT THE COLLATERAL AGENT OR ANY NOTES SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER NOTES

 

21

 

DOCUMENT AGAINST ANY GRANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES,  TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER NOTES DOCUMENT IN ANY COURT REFERRED TO IN THE IMMEDIATELY PRECEDING PARAGRAPH. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

EACH GRANTOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 13.01 OF THE INDENTURE. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

WAIVER OF JURY TRIAL; FINAL AGREEMENT.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER NOTES DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER NOTES DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 7.06                             Waivers; 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 Collateral Agent (in accordance with Article Nine of the Indenture) and each Grantor affected thereby.

 

Section 7.07                             Severability.  In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction).  The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

22

 

Section 7.08                             Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single contract.  Delivery of an executed signature page to this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart hereof.

 

Section 7.09                             Headings.  Article and Section headings used herein are for the purpose of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

 

Section 7.10                             Termination.

 

(a)                       Upon the Termination Date (as defined below), this Agreement shall automatically terminate (provided that all indemnities set forth herein and in the other Notes Documents shall survive any such termination) and the Collateral Agent, at the written request and expense of the Grantors, will, if requested by the Grantors, execute and deliver to the Grantors a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement as provided above, and will duly assign, transfer and deliver to such Grantor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Collateral Agent 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 Collateral Agent hereunder.  As used in this Agreement, “Termination Date” shall mean the date upon which Liens on the Collateral are released in whole pursuant to Section 11.05 of the Indenture.

 

(b)                       In the event that any part of the Collateral is released from the Lien granted hereunder pursuant to Section 11.05 of the Indenture, such Collateral will be automatically and fully released from this Agreement and the Collateral Agent, at the expense of the respective Grantor, will duly assign, transfer and deliver to such Grantor (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so sold, disposed of or released and as may be in possession of the Collateral Agent and has not theretofore been released pursuant to this Agreement.

 

(c)                        The Collateral Agent shall have no liability whatsoever to any Notes Secured Party as the result of any release of Collateral by it in accordance with (or which the Collateral Agent in the absence of gross negligence and willful misconduct believes to be in accordance with) this Section 7.10.

 

Section 7.11                             Additional Grantors.  It is understood and agreed that any Subsidiary of FairPoint that is required to become a party hereto pursuant to the Indenture shall become a Grantor hereunder by executing and delivering a joinder agreement, in the form attached hereto as Annex IV, and delivering the same to the Collateral Agent.

 

Section 7.12                             Indemnification.  Each Grantor jointly and severally agrees (i) to indemnify and hold harmless the Collateral Agent and the other Notes Secured Parties  (collectively, the “Indemnitees”) from and against any and all claims, losses, damages, liabilities and related expenses of whatsoever kind or nature including the fees, charges and disbursements

 

23

 

of one counsel together with one local counsel, if necessary, in each relevant jurisdiction and, if necessary, one regulatory counsel (and one additional counsel if an actual or potential conflict of interest exists among the Indemnitees) and (ii) to reimburse the Collateral Agent for all reasonable out-of-pocket costs and expenses, including reasonable attorneys’ fees (including the fees, charges and disbursements of one counsel together with one local counsel, if necessary, in each relevant jurisdiction and if necessary, one regulatory counsel (and one additional counsel if an actual or potential conflict of interest exists among the Indemnitees)), arising in connection with any amendment, waiver or modification to this Agreement and the administration thereof and the Collateral Agent for all out-of-pocket costs and expenses (including attorney’s fees) arising out of or resulting from the exercise by the Collateral Agent of any right or remedy granted to it hereunder or under any other Notes Document; provided, with respect to clause (i) above, that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by any Grantor against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Notes Document, if such Grantor has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.  If and to the extent that the obligations of any Grantor under this Section 7.12 are unenforceable for any reason, such Grantor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law.  If and to the extent that the obligations of any Grantor under this Section 7.12 are unenforceable for any reason, such Grantor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law.

 

Section 7.13                             Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the Collateral Agent the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment will become effective upon the occurrence and during the continuance of an Event of Default and is irrevocable until this Agreement is terminated and coupled with an interest.  Without limiting the generality of the foregoing, the Collateral Agent shall have the right, after the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Collateral Agent’s name or in the name of such Grantor, (a) to receive, endorse, assign or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof, and in accordance with Article Six of the Indenture; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due under and by virtue of any Collateral; (d) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (e) to send verifications of Accounts to any Account Debtor; (f) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (g) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (h) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral Agent; and (i) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of

 

24

 

the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes; provided, that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby.  The Collateral Agent shall be accountable only for amounts actually received as a result of the exercise of the powers granted to it herein, and neither it nor its officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for its own gross negligence or willful misconduct.

 

Section 7.14                             Conflict.  Notwithstanding anything to the contrary set forth herein, this Agreement, the Liens created hereby and the rights and remedies of the Collateral Agent hereunder are subject to the terms and provisions of the Indenture.  In the event of any inconsistency between the provisions of this Agreement (other than Section 3.02) and the Indenture, the provisions of the Indenture shall supersede and control the provisions of this Agreement.

 

Section 7.15                             USA Patriot Act Compliance.  To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify and record information that identifies each Person who opens an account.  For a non-individual Person such as a business entity, a charity, a trust or other legal entity, the Collateral Agent will ask for documentation to verify its formation and existence as a legal entity.  The Collateral Agent may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation.  The Grantors agree to provide all such information and documentation as to themselves as requested by the Collateral Agent to ensure compliance with federal law.

 

[Signatures on Following Page]

 

25

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

 

Address:

 

	
c/o FAIRPOINT   COMMUNICATIONS, INC.

521 East Morehead   Street

Charlotte, NC   28202

Attention: General   Counsel

 

Facsimile No.:   (704) 344-1594

 

Email:   slinn@fairpoint.com
    	
 
    	
BERKSHIRE   CELLULAR, INC.

BERKSHIRE NEW YORK   ACCESS, INC.

C & E   COMMUNICATIONS, LTD.

C-R   COMMUNICATIONS, INC.

C-R LONG   DISTANCE, INC.

COMERCO, INC.

EL PASO LONG   DISTANCE COMPANY

ELLTEL LONG   DISTANCE CORP.

FAIRPOINT BROADBAND, INC.

FAIRPOINT CARRIER   SERVICES, INC.

FAIRPOINT   COMMUNICATIONS, INC.

FAIRPOINT   LOGISTICS, INC.

GERMANTOWN LONG   DISTANCE COMPANY

MJD SERVICES CORP.

MJD   VENTURES, INC.

PEOPLES MUTUAL   LONG DISTANCE COMPANY

QUALITY ONE   TECHNOLOGIES, INC.

RAVENSWOOD COMMUNICATIONS, INC.

S T   ENTERPRISES, LTD.

TACONIC TECHNOLOGY   CORP.

UNITE   COMMUNICATIONS SYSTEMS, INC.

UTILITIES, INC.,
    
	
 
    	
 
    	
each as a Grantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Ajay   Sabherwal
    
	
 
    	
 
    	
 
    	
Name: Ajay   Sabherwal

Title: Executive   Vice President and Chief

Financial   Officer
    
	
ORWELL   COMMUNICATIONS, INC.
    as a   Grantor
    	
 
    	
 
    	
 
    
	
By:
    	
/s/   John R.   Whitener
    	
 
    	
 
    
	
 
    	
Name: John R.   Whitener

Title: Vice   President and Treasurer
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/   Shirley J.   Linn
    	
 
    	
 
    
	
 
    	
Name: Shirley J.   Linn

Title: Executive Vice President, Secretary   and General Counsel
    	
 
    	
 
    

 

[Signature Page to Notes Security Agreement]

 

 

Accepted and Agreed to:

 

 

	
U.S. BANK NATIONAL ASSOCIATION,
    
	
as Collateral Agent
    
	
 
    
	
By:
    	
/s/ Maryanne Dufresne
    	
 
    
	
Name:
    	
Maryanne Dufresne
    	
 
    
	
Title:
    	
Vice   President
    	
 
    

 

[Signature Page to Notes Security Agreement]

 

 

Annex I to the
 Security Agreement

 

[Form of]

 

Copyright Security Agreement

 

Copyright Security Agreement, dated as of     , 2013, by [                    ], a [  ] with offices located at [  ] (the “Grantor”) in favor of U.S. BANK NATIONAL ASSOCIATION, a [  ] with offices located at [  ] in its capacity as collateral agent pursuant to the Indenture (in such capacity, the “Collateral Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Grantor is party to a Security Agreement of even date herewith (the “Security Agreement”) in favor of the Collateral Agent pursuant to which the Grantor is required to execute and deliver this Copyright Security Agreement;

 

NOW, THEREFORE, in consideration of the premises and to induce the Collateral Agent, for the benefit of the Notes Secured Parties, to enter into the Indenture, the Grantor hereby agrees with the Collateral Agent as follows:

 

SECTION 1.                            Defined Terms.  Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

 

“Copyright Collateral” shall mean, collectively, (a) all of the copyrights (whether statutory or common law, whether registered or unregistered and whether published or unpublished) and all copyright registrations and applications listed in Schedule I to this Agreement (collectively, “Copyrights”), together with any and all (i) rights and privileges arising under applicable law with respect to such Grantor’s use of such Copyrights, (ii) renewals and extensions thereof, and (iii) rights to sue and collect damages for past, present or future infringements thereof; and (b) all Proceeds and products of any and all of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to such Grantor from time to time with respect to any of the foregoing.

 

SECTION 2.                            Grant of Security Interest in Copyright Collateral.  As security for the payment and performance in full of the Obligations, the Grantor hereby mortgages, pledges and hypothecates to the Collateral Agent, for the ratable benefit of the Notes Secured Parties and hereby grants to the Collateral Agent, for the ratable benefit of the Notes Secured Parties, a security interest in, all of its right, title and interest in, to and under the Copyright Collateral of the Grantor, wherever located, whether now existing or hereafter arising or acquired from time to time.

 

 

SECTION 3.                            Security Agreement.  The security interests granted pursuant to this Copyright Security Agreement are granted in conjunction with the security interests granted to the Collateral Agent pursuant to the Security Agreement and Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral Agent with respect to the security interests in the Copyrights made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.  In the event that any provision of this Copyright Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Collateral Agent shall otherwise reasonably determine.

 

SECTION 4.                            Termination.  Upon the payment in full of the Obligations and termination of the Security Agreement, the Collateral Agent shall execute, acknowledge, and deliver to the Grantor a written instrument in recordable form releasing the collateral pledges, grants, liens and security interests in the Copyright Collateral under this Copyright Security Agreement.

 

SECTION 5.                            Counterparts.  This Copyright Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Copyright Security Agreement by signing and delivering one or more counterparts.  Delivery of an executed signature page to this Copyright Security Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart thereof.

 

SECTION 6.                            Governing Law.  This Copyright Security Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

 

[signature page follows]

 

 

IN WITNESS WHEREOF, the Grantor has caused this Copyright Security Agreement to be executed and delivered by its duly authorized offer as of the date first set forth above.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
[GRANTORS]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

Accepted and Agreed to:

 

 

	
U.S. BANK NATIONAL ASSOCIATION,
    
	
as Collateral Agent
    
	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

SCHEDULE I
 TO
 COPYRIGHT SECURITY AGREEMENT
  COPYRIGHT REGISTRATIONS AND COPYRIGHT APPLICATIONS

 

Copyright Registrations:

 

	
OWNER
    	
 
    	
REGISTRATION NUMBER
    	
 
    	
TITLE
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

Copyright Applications:

 

	
OWNER
    	
 
    	
TITLE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

 

Annex II to the

Security Agreement

 

[Form of]

 

Patent Security Agreement

 

Patent Security Agreement, dated as of     , 2013, by [                    ], a [  ] with offices located at [  ] (the “Grantor”) in favor of U.S. BANK NATIONAL ASSOCIATION, a [  ] with offices located at [  ] in its capacity as collateral agent pursuant to the Indenture (in such capacity, the “Collateral Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Grantor is party to a Security Agreement of even date herewith (the “Security Agreement”) in favor of the Collateral Agent pursuant to which the Grantor is required to execute and deliver this Patent Security Agreement;

 

NOW, THEREFORE,  in consideration of the premises and to induce the Collateral Agent, for the benefit of the Notes Secured Parties, to enter into the Indenture, the Grantor hereby agrees with the Collateral Agent as follows:

 

SECTION 1.                            Defined Terms.  Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

 

“Patent Collateral” shall mean (a) (i) all of the letters patent and all applications for letters patent, including registrations, recordations and pending applications in the United States Patent and Trademark Office listed on Schedule I to this Agreement (collectively, “Patents”), (ii) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, and (iii) rights to sue and collect damages for past, present or future infringements thereof; and (b) all Proceeds and products of any and all of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to such Grantor from time to time with respect to any of the foregoing.

 

SECTION 2.                            Grant of Security Interest in Patent Collateral.   As security for the payment and performance in full of the Obligations, the Grantor hereby mortgages, pledges and hypothecates to the Collateral Agent, for the ratable benefit of the Notes Secured Parties, and hereby grants to the Collateral Agent, for the ratable benefit of the Notes Secured Parties, a security interest in all of its right, title and interest in, to and under the Patent Collateral of the Grantor, wherever located, whether now existing or hereafter arising or acquired from time to time.

 

SECTION 3.                            Security Agreement.  The security interests granted pursuant to this Patent Security Agreement are granted in conjunction with the security interests granted to the

 

 

Collateral Agent pursuant to the Security Agreement and Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral Agent with respect to the security interests in the Patents made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.  In the event that any provision of this Patent Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Collateral Agent shall otherwise reasonably determine.

 

SECTION 4.                            Termination.  Upon the payment in full of the Obligations and termination of the Security Agreement, the Collateral Agent shall execute, acknowledge, and deliver to the Grantor a written instrument in recordable form releasing the collateral pledges, grants, liens and security interests in the Patent Collateral under this Patent Security Agreement.

 

SECTION 5.                            Counterparts.  This Patent Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Patent Security Agreement by signing and delivering one or more counterparts.  Delivery of an executed signature page to this Patent Security Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart thereof.

 

SECTION 6.                            Governing Law.  This Patent Security Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

 

[signature page follows]

 

 

IN WITNESS WHEREOF, the Grantor has caused this Patent Security Agreement to be executed and delivered by its duly authorized offer as of the date first set forth above.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
[GRANTORS]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

Accepted and Agreed to:

 

 

	
U.S. BANK NATIONAL ASSOCIATION,
    
	
as Collateral Agent
    
	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

SCHEDULE I
 to
 PATENT SECURITY AGREEMENT
  PATENT REGISTRATIONS AND PATENT APPLICATIONS

 

Patent Registrations:

 

	
OWNER
    	
 
    	
REGISTRATION NUMBER
    	
 
    	
NAME
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

Patent Applications:

 

	
OWNER
    	
 
    	
APPLICATION NUMBER
    	
 
    	
NAME
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

Annex III to the

Security Agreement

 

[Form of]

 

Trademark Security Agreement

 

Trademark Security Agreement, dated as of     , 2013, by [                    ], a [  ] with offices located at [  ] (the “Grantor”) in favor U.S. BANK NATIONAL ASSOCIATION, a [  ] with offices located at [  ] in its capacity as collateral agent pursuant to the Indenture (in such capacity, the “Collateral Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Grantor is party to a Security Agreement of even date herewith (the “Security Agreement”) in favor of the Collateral Agent pursuant to which the Grantor is required to execute and deliver this Trademark Security Agreement;

 

NOW, THEREFORE, in consideration of the premises and to induce the Collateral Agent, for the benefit of the Notes Secured Parties, to enter into the Indenture, the Grantor hereby agrees with the Collateral Agent as follows:

 

SECTION 1.         Defined Terms.  Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

 

“Trademark Collateral” shall mean (a) (i) all of the trademarks, service marks, trade names, “doing business as” names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, all registrations and recordations thereof, and all applications filed in connection therewith, in each case, listed on Schedule I to this Agreement, and all extensions or renewals thereof (collectively, “Trademarks”), (ii) all goodwill connected with the use thereof and symbolized thereby, and (iii) all rights to sue and collect damages for past, present or future infringements thereof; and (b) all Proceeds and products of any and all of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to such Grantor from time to time with respect to any of the foregoing.

 

SECTION 2.         Grant of Security Interest in Trademark Collateral.  As security for the payment and performance in full of the Obligations, the Grantor hereby mortgages, pledges and hypothecates to the Collateral Agent, for the ratable benefit of the Notes Secured Parties, and hereby grants to the Collateral Agent, for the ratable benefit of the Notes Secured Parties, a security interest in all of its right, title and interest in, to and under the Trademark Collateral of the Grantor, wherever located, whether now existing or hereafter arising or acquired from time to time.

 

 

SECTION 3.         Security Agreement.  The security interests granted pursuant to this Trademark Security Agreement are granted in conjunction with the security interests granted to the Collateral Agent pursuant to the Security Agreement and Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral Agent with respect to the security interests in the Trademarks made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.  In the event that any provision of this Trademark Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Collateral Agent shall otherwise reasonably determine.

 

SECTION 4.         Termination.  Upon the payment in full of the Obligations and termination of the Security Agreement, the Collateral Agent shall execute, acknowledge, and deliver to the Grantor a written instrument in recordable form releasing the collateral pledges, grants, liens and security interests in the Trademarks under this Trademark Security Agreement.

 

SECTION 5.         Counterparts.  This Trademark Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Trademark Security Agreement by signing and delivering one or more counterparts.  Delivery of an executed signature page to this Trademark Security Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart thereof.

 

SECTION 6.         Governing Law.  This Trademark Security Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

 

[signature page follows]

 

 

IN WITNESS WHEREOF, the Grantor has caused this Trademark Security Agreement to be executed and delivered by its duly authorized offer as of the date first set forth above.

 

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    	
 
    
	
 
    	
[GRANTORS]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
Accepted and Agreed to:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
U.S. BANK NATIONAL ASSOCIATION,
    	
 
    
	
as Collateral Agent
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
					

 

 

SCHEDULE I
 to
 TRADEMARK SECURITY AGREEMENT
  TRADEMARK REGISTRATIONS AND TRADEMARK APPLICATIONS

 

Trademark Registrations:

 

	
OWNER 
    	
 
    	
REGISTRATION NUMBER
    	
 
    	
TRADEMARK
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Trademark Applications:

 

	
OWNER
    	
 
    	
APPLICATION NUMBER
    	
 
    	
TRADEMARK
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

 

ANNEX IV

 

Form of Joinder Agreement

 

JOINDER NO.        dated as of [                              ] (this “Joinder”), to the Security Agreement (the “Security Agreement”) dated as of February 14, 2013 (as amended, modified, restated and/or supplemented from time to time, the “Security Agreement”), among FAIRPOINT COMMUNICATIONS, INC., a Delaware corporation (“FairPoint”), the other Subsidiaries of FairPoint party thereto (together with FairPoint, each a “Grantor” and collectively, the “Grantors”) and U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent (in such capacity, together with any successors and assigns in such capacity, the “Collateral Agent”) for the benefit of the Notes Secured Parties.

 

A.            Reference is made to (a) the Indenture dated as of February 14, 2013 (as amended, modified, restated and/or supplemented from time to time, the “Indenture”), among FairPoint, the Subsidiary Guarantors party thereto, the Collateral Agent and U.S. Bank National Association, as Trustee and (b) the Security Agreement.

 

B.            Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement.

 

C.            [NAME OF GRANTOR] has [formed][acquired]            , a              [type of entity] (the “New Grantor”).

 

D.            Pursuant to the terms and provisions of the Indenture, the New Grantor is required to become a party to the Security Agreement and to pledge and grant a Lien in all of its Collateral to the Collateral Agent, for the benefit of the Notes Secured Parties.  The New Grantor is executing this Joinder in accordance with the requirements of the Indenture and Section 7.11 of the Security Agreement to become a party to the Security Agreement.

 

Accordingly, the New Grantor hereby agrees as follows:

 

SECTION 1.         The New Grantor is hereby added as a party to the Security Agreement and hereby agrees to be bound as a “Grantor” by all of the terms, covenants and provisions set forth in the Security Agreement to the same extent that it would have been bound if it had been a signatory to the Security Agreement on the date of the Security Agreement.

 

Without limiting the generality of the first paragraph of this Section 1, as security for the payment and performance in full of the Obligations, each Grantor hereby assigns, mortgages, pledges and hypothecates to the Collateral Agent, for the ratable benefit of the Notes Secured Parties, and hereby grants to the Collateral Agent, for the ratable benefit of the Notes Secured Parties, a security interest in, all of such Grantor’s right, title and interest in, to and under the Collateral of such Grantor, wherever located, whether now existing or hereafter arising or acquired from time to time.

 

SECTION 2.         Annexed hereto are supplements to each of the Schedules to the Security Agreement with respect to the New Grantor.  Such supplements shall be deemed to be

 

 

part of the Security Agreement.  The New Grantor hereby represents and warrants that, as of the date hereof, all information set forth in the supplements annexed hereto is true and correct.

 

SECTION 3.         The New Grantor hereby represents and warrants to the Collateral Agent and the other Notes Secured Parties that this Joinder has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors’ rights generally and by general principles of equity.

 

SECTION 4.         This Joinder may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.

 

SECTION 5.         Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect in accordance with the terms thereof.

 

SECTION 6.         THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE NOTES SECURED PARTIES AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, except to the extent that, pursuant to mandatory provisions of law, the perfection, the effect of perfection or nonperfection or the priority of any security interest granted under the Security Agreement may be determined in accordance with the laws of a different jurisdiction.

 

SECTION 7.         All communications and notices to be provided to the New Grantor hereunder or under the Security Agreement shall be given to the New Grantor at the address set forth under its signature below.

 

 

IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly executed this Joinder as of the day and year first above written.

 

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
[NEW GRANTOR]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address of New Grantor:
    
	
 
    	
 
    
	
 
    	
[                                      ]
    
	
 
    	
 
    
	
 
    	
 
    
	
Accepted and Agreed to:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
U.S. BANK NATIONAL ASSOCIATION
    	
 
    
	
as Collateral Agent
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Title:Exhibit 10.2

 

EXECUTION VERSION

 

PLEDGE AGREEMENT

 

PLEDGE AGREEMENT, dated as of February 14, 2013 (as amended, restated, modified and/or supplemented from time to time, this “Agreement”), made by FairPoint Communications, Inc., a Delaware corporation (“FairPoint”), each of the other undersigned pledgors (each (including FairPoint), a “Pledgor” and together with any other entity that becomes a party hereto pursuant to Section 25 hereof, collectively, the “Pledgors”), in favor of U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent (in such capacity, together with any successors and assigns in such capacity, the “Collateral Agent”) for the benefit of the Notes Secured Parties.

 

 W I T N E S S E T H:

 

WHEREAS, FairPoint, the other Pledgors, the Collateral Agent and U.S. Bank National Association, in its capacity as trustee (together with any successors and assigns in such capacity, the “Trustee”), on behalf of the holders of the Notes and Additional Notes (each as defined in the Indenture referred to below) and the other Notes Secured Parties, have, in connection with the execution and delivery of this Agreement, entered into that certain indenture dated as of February 14, 2013 (as amended, amended and restated, restated, supplemented or modified from time to time, the “Indenture”), pursuant to which FairPoint has issued or will issue $300,000,000 principal amount of 8.75% senior secured notes due 2019 (the “Notes”).

 

WHEREAS, each Pledgor other than FairPoint has unconditionally and irrevocably guaranteed, as primary obligor and not merely as surety, to the Trustee for the benefit of the Notes Secured Parties the prompt and complete payment and performance when due of FairPoint’s obligations under the Notes and all other obligations of FairPoint under the Indenture (collectively, the “Obligations”), and desires to execute this Agreement to evidence the foregoing.

 

WHEREAS, U.S. Bank National Association has been appointed to serve as Collateral Agent under the Indenture and, in such capacity, to enter into this Agreement.

 

NOW, THEREFORE, in consideration of the benefits accruing to each Pledgor, the receipt and sufficiency of which are hereby acknowledged, each Pledgor hereby agrees as follows:

 

1.                                       SECURITY FOR OBLIGATIONS.  This Agreement is made by each Pledgor for the benefit of the Notes Secured Parties to secure the Obligations.

 

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

 

“Administrative Agent” shall mean Morgan Stanley Senior Funding, Inc., in its capacity as administrative agent under the Credit Agreement.

 

 

“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.

 

“Credit Facility Pledge Agreement” shall mean the Pledge Agreement, dated as of February 14, 2013, as amended, amended and restated, supplemented or otherwise modified from time to time, made by the Pledgors in favor of the Administrative Agent.

 

“Excluded Entity” shall mean (x) each of the corporations, partnerships and, limited liability companies listed on Schedule 2 hereto where a consent of the applicable PUC to such pledge is required or the capital stock or other Equity Interests of such corporations, partnerships or limited liability companies 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 and (y) any corporations, partnerships or limited liability companies formed or acquired by a Pledgor after the date hereof and listed on a supplement to Schedule 2 provided to the Collateral Agent, where a consent of the applicable PUC to such pledge is required or the capital stock or other Equity Interests of such corporations, partnerships or limited liability companies 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; provided, that in the event a consent of the applicable PUC to such pledge is obtained or the prohibition under applicable law, rule or regulation with respect to a pledge of the capital stock or other Equity Interests of a corporation, partnership or limited liability company listed on Schedule 2 (as supplemented from time to time) ceases to exist, the capital stock or other Equity Interests of such corporation, partnership or limited liability company, as applicable, shall automatically become Collateral hereunder and the applicable Pledgor shall take all actions with respect thereto as required hereunder.

 

“Excluded Interests” shall have the meaning provided in Section 3.1.

 

“Foreign Corporation” shall mean a corporation that is (i) a CFC, (ii) a Subsidiary corporation that is held directly or indirectly by a CFC or (iii) a Subsidiary for which substantially all of its assets consist of Equity Interests in CFCs.

 

“Foreign Issuer” shall mean each of a Foreign Corporation, Foreign LLC and Foreign Partnership.

 

“Foreign LLC” shall mean a limited liability company that is (i) a CFC, (ii) a Subsidiary limited liability company that is held directly or indirectly by a CFC or (iii) a Subsidiary for which substantially all of its assets consist of Equity Interests in CFCs.

 

“Foreign Partnership” shall mean a partnership that is (i) a CFC, (ii) a Subsidiary partnership that is held directly or indirectly by a CFC or (iii) a Subsidiary for which substantially all of its assets consist of Equity Interests in CFCs.

 

2

 

“Membership Interest” shall mean the limited liability company interests and/or membership interests at any time owned by any Pledgor in any limited liability company.

 

“Partnership Interest” shall mean the partnership interests (whether general and/or limited partnership interests) at any time owned by any Pledgor in any partnership.

 

“Pledged LLC” shall mean any limited liability company (other than an Excluded Entity) in which any Pledgor owns a limited liability company interest and/or membership interest.

 

“Pledged Membership Interests” shall mean all Membership Interests at any time pledged hereunder.

 

“Pledged Partnership” shall mean any partnership (other than an Excluded Entity) in which any Pledgor owns a partnership interest.

 

“Pledged Partnership Interests” shall mean all Partnership Interests at any time pledged hereunder.

 

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

 

“Pledged Stock” shall mean all Stock at any time pledged hereunder.

 

“Possessory Collateral” shall have the meaning given such term in the Intercreditor Agreement.

 

“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, Partnership Interests and Membership Interests.

 

“Securities Intermediary” shall have the meaning given such term in Section 8-102(a)(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 all of the issued and outstanding shares of stock at any time owned by any Pledgor in any corporation.

 

“Termination Date” has the meaning specified in Section 18(a) hereof.

 

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

 

3

 

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however, that if by mandatory provisions of law, any or all of the perfection or priority of the Collateral Agent’s and the Notes Secured Parties’ security interests in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect on the date hereof in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.

 

“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           Collateral.  For the purposes of this Agreement, the term “Collateral” shall mean each Pledgor’s right, title and interest in and to the following, whether now existing or hereafter from time to time acquired:

 

(i)            all shares of stock and all limited liability company interests in the issuers set forth on Schedule 3.1(i) hereto and all certificates evidencing such stock and/or interests (the “Scheduled Interests”);

 

(ii)           to the extent not described in Section 3.1(i), 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); and

 

(iii)          all Proceeds of any and all of the foregoing;

 

provided that, notwithstanding the foregoing, “Collateral” shall not include any (x) shares of stock, partnership interests, limited liability company interests and/or membership interests in an Excluded Entity or (y) more than 65% of the total voting power of all classes of stock, all partnership interests, all limited liability company interests and/or membership interests, as applicable, of any Foreign Issuer (the foregoing items so excluded under clauses (x) and (y), the “Excluded Interests”); provided, further, that notwithstanding the preceding proviso, the Scheduled Interests shall constitute Collateral.

 

3.2           Pledge.  As security for the payment and performance in full of the Obligations, each Pledgor does hereby grant, pledge, hypothecate, mortgage, charge and assign to the Collateral Agent, for the benefit of the Notes Secured Parties, and does hereby create a continuing security interest in favor of the Collateral Agent for the benefit of the Notes Secured Parties in all of its right, title and interest in and to the Collateral, whether now existing or hereafter from time to time acquired.

 

3.3           Procedures.  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

 

4

 

Section 3.2 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 constituting Collateral (other than a Certificated Security representing a Security in any person who is not a Subsidiary and 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 Collateral Agent, endorsed to the Collateral Agent or endorsed in blank;

 

(ii)           with respect to an Uncertificated Security constituting Collateral (other than an Uncertificated Security representing a Security in any person who is not a Subsidiary 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 Collateral Agent, an agreement for the benefit of the Collateral Agent and the other Notes Secured Parties substantially in the form of Exhibit A hereto (appropriately completed to the satisfaction of the Collateral Agent and with such modifications, if any, as shall be satisfactory to the Collateral Agent) pursuant to which such issuer agrees to comply with any and all instructions originated by the Collateral Agent without further consent by the registered owner;

 

(iii)          with respect to any Collateral consisting of a Partnership Interest or a Membership Interest (other than a Partnership Interest or a Membership Interest representing a Security in any person who is not a Subsidiary and 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 3.3(i) hereof; and (2) if such Partnership Interest or Membership Interest constitutes an Uncertificated Security, the procedure set forth in Section 3.3(ii) hereof; and

 

(iv)          cause appropriate financing statements (on appropriate forms) under the UCC, covering all Collateral hereunder (with the form of such financing statements to be satisfactory to the Collateral Agent), to be filed in the relevant filing offices so that at all times the Collateral Agent’s security interest in all Collateral which can be perfected by the filing of such financing statements is so perfected. Any such financing statement may indicate the collateral as “all assets of the debtor, whether now owned or existing or hereafter acquired or arising”, “all personal property of the debtor, whether now owned or existing or hereafter acquired or arising”, or words of similar effect and/or meaning.

 

3.4           Subsequently Acquired Collateral.  If any Pledgor shall acquire (by purchase, 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 3.3 hereof, and will deliver to the Collateral Agent all information and other items required to be provided under Section 4.18 of the Indenture with respect thereto within the time periods specified therein.  No Pledgor shall be required at any time to pledge hereunder any Excluded Interests.

 

5

 

3.5           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 Schedule 3.1(i) 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 Schedule 3.5(b) hereto; (c) such Stock constitutes that percentage of the issued and outstanding capital stock of the issuing corporation as set forth in Schedule 3.5(b) hereto; (d) such Pledgor is the holder of record and sole beneficial owner of the Stock 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 on Schedule 3.5(f) hereto; (g) on the date hereof, such Pledgor owns or possesses no other Securities except as described on Schedules 3.1(i), 3.5(b) and 3.5(f) hereto; and (h) the Pledgor has complied with the respective procedure set forth in Section 3.3 hereof with respect to each item of Collateral described in Schedules 3.5(b) and 3.5(f) hereto.

 

3.6           Possessory Collateral; Applicable Collateral Agent.  Notwithstanding anything herein to the contrary, the requirements of this Agreement to endorse, assign or deliver Possessory Collateral to the Collateral Agent (or any representation or warranty having the effect of requiring the same) shall be deemed satisfied (or any such representation or warranty shall be deemed true) by endorsement, assignment or delivery of such Possessory Collateral to the Administrative Agent (as gratuitous bailee for the benefit of the Collateral Agent pursuant to Section 2.09 of the Intercreditor Agreement) pursuant to the terms of the Credit Facility Pledge Agreement.  In the case of any Uncertificated Security that is Shared Collateral (as defined in the Intercreditor Agreement) on which the Collateral Agent’s Lien hereunder is perfected by obtaining “control” (as defined in Section 8-106 of the UCC) via an agreement by the issuer thereof to comply with instructions originated by the Collateral Agent without further consent by the registered owner, so long as the Administrative Agent’s Lien on such Uncertificated Security remains perfected by obtaining “control” (as defined in Section 8-106 of the UCC) via a similar agreement by such issuer, such issuer shall be deemed in compliance with instructions originated by the Collateral Agent if it complies with instructions originated by the Applicable Collateral Agent (as defined in the Intercreditor Agreement).

 

4.                                       APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC.  The Collateral Agent 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 Collateral Agent) in the name of the relevant Pledgor, endorsed or assigned in blank or in favor of the Collateral Agent or any nominee or nominees of the Collateral Agent or a sub-agent appointed by the Collateral Agent.

 

5.                                       VOTING, ETC., WHILE NO EVENT OF DEFAULT.  Unless and until there shall have occurred and be continuing an Event of Default, and the Collateral Agent has given such Pledgor five (5) Business Days prior written notice of its intent to exercise such rights (subject to Section 28), 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 have the effect of materially

 

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impairing the value of the Collateral or any part thereof or the security interest of the Collateral Agent therein.  All such rights of a Pledgor to vote and to give consents, waivers and ratifications shall cease upon the occurrence and during the continuance of an Event of Default, and the giving of five (5) Business Days prior written notice to such Pledgor by the Collateral Agent of its intent to exercise such rights (subject to Section 28), whereupon Section 7 hereof shall become applicable.

 

6.                                       DIVIDENDS AND OTHER DISTRIBUTIONS.  Unless and until an Event of Default shall have occurred and be continuing and the Collateral Agent has given such Pledgor three (3) Business Days prior written notice of its intent to exercise such rights, 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 represent in whole or in part an extraordinary, liquidating or other distribution in return of capital not permitted by the Indenture shall be paid, to the extent representing an extraordinary, liquidating or other distribution in return of capital not permitted by the Indenture, to the Collateral Agent 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 Collateral Agent shall also be entitled to receive directly, and to retain as part of the Collateral:

 

(i)            all other or additional stock, limited liability company interests, 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, limited liability company interests, 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, limited liability company interests, 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 (other than the net proceeds from any asset sale or other disposition applied to repay the Obligations and/or reinvested in accordance with the relevant provisions of the Indenture).

 

Nothing contained in this Section 6 shall limit or restrict in any way the Collateral Agent’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 Collateral Agent, shall be segregated from other property or funds of such Pledgor and shall be forthwith paid over to the Collateral Agent as Collateral in the same form as so received (with any necessary endorsement).

 

7.                                       REMEDIES IN CASE OF AN EVENT OF DEFAULT.  Subject, in each case, to Section 28, if an Event of Default shall have occurred and be continuing, the Collateral Agent

 

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(acting pursuant to Article Six of the Indenture) shall be entitled to exercise all of the rights, powers and remedies (whether vested in it by this Agreement 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 creditor upon default under the UCC, and the Collateral Agent (acting pursuant to Article Six of the Indenture) shall be entitled, without limitation, to exercise any or all of the following rights:

 

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

 

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

 

(c)                                  upon three (3) Business Days prior written notice to the applicable Pledgor, to vote all or any part of the Collateral (whether or not transferred into the name of the Collateral Agent) 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 Collateral Agent the proxy and attorney-in-fact of such Pledgor, with full power of substitution to do so);

 

(d)                                 to set off any and all Collateral against any and all Obligations;

 

(e)                                  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 to the extent permitted by law), 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 Collateral Agent 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 Collateral Agent 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 full 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 Collateral Agent on behalf of all Notes Secured Parties (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 Collateral Agent nor any Notes Secured Party 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.

 

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8.                                       REMEDIES, ETC., CUMULATIVE.  Each right, power and remedy of the Collateral Agent provided for in this Agreement or any other Notes 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 Collateral Agent of any one or more of the rights, powers or remedies provided for in this Agreement or any other Notes Document or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by the Collateral Agent of all such other rights, powers or remedies, and no failure or delay on the part of the Collateral Agent to exercise any such right, power or remedy shall operate as a waiver thereof.  Unless otherwise required by the Indenture or any Notes Document, 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 Collateral Agent to any other further action in any circumstances without demand or notice.

 

This Agreement may be enforced only by the action of the Collateral Agent acting in accordance with Article Six of the Indenture and no other Notes Secured Party shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby.

 

9.                                       APPLICATION OF PROCEEDS.  (a) All moneys collected by the Collateral Agent upon any sale or other disposition of the Collateral, together with all other moneys received by the Collateral Agent hereunder, shall be applied in accordance with Section 6.10 of the Indenture.  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 Pledgor 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 Collateral Agent hereunder (whether by virtue of the power of sale herein granted, pursuant to judicial process or otherwise), the receipt of the purchase price therefor by the Collateral Agent 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 Collateral Agent 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 Collateral Agent and the other Notes Secured Parties  (collectively, the “Indemnitees”) from and against any and all claims, losses, damages, liabilities and related expenses of whatsoever kind or nature including the fees, charges and disbursements of one counsel together with one local counsel, if necessary, in each relevant jurisdiction and, if necessary, one regulatory counsel (and one additional counsel if an actual or potential conflict of interest exists among the Indemnitees) and (ii) to reimburse the Collateral Agent for all reasonable out-of-pocket costs and expenses, including reasonable attorneys’ fees (including the fees, charges and disbursements of one counsel together with one local counsel, if necessary, in each relevant jurisdiction and if necessary, one regulatory counsel (and one additional counsel if an actual or

 

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potential conflict of interest exists among the Indemnitees)), arising in connection with any amendment, waiver or modification to this Agreement and the administration thereof and the Collateral Agent for all out-of-pocket costs and expenses (including attorney’s fees) arising out of or resulting from the exercise by the Collateral Agent of any right or remedy granted to it hereunder or under any other Notes Document; provided, with respect to clause (i) above, that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee.  If and to the extent that the obligations of any Pledgor under this Section 11 are unenforceable 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 Collateral Agent in executing and, at such Pledgor’s own expense, file and refile under the UCC such financing statements, continuation statements and other documents in such offices as the Collateral Agent may reasonably deem necessary or appropriate and wherever required or permitted by law in order to perfect and preserve the Collateral Agent’s security interest in the Collateral hereunder and hereby authorizes the Collateral Agent 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 Collateral Agent such additional conveyances, assignments, agreements and instruments as the Collateral Agent may reasonably require or deem advisable to carry into effect the purposes of this Agreement or to further assure and confirm unto the Collateral Agent its rights, powers and remedies hereunder or thereunder.

 

(b) Each Pledgor hereby appoints the Collateral Agent, 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, to take any action and to execute any instrument which the Collateral Agent may reasonably deem necessary or advisable (acting pursuant to Article Six of the Indenture) to accomplish the purposes of this Agreement.

 

13.                                 THE COLLATERAL AGENT.  The Collateral Agent 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 Collateral Agent 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 Collateral Agent shall act hereunder on the terms and conditions set forth herein and in Article Seven of the Indenture.  If any Pledgor fails to perform or comply with any of its agreements contained in this Agreement and the Collateral Agent, as provided for by the terms of this Agreement, the Indenture or any Notes Document, shall itself perform or comply, or otherwise cause performance or compliance, with such agreement, the expenses of the Collateral Agent incurred in connection with such performance or

 

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compliance, together with interest thereon at the rate then in effect in respect of the Notes, shall be payable by such Pledgor to the Collateral Agent on demand and shall constitute Obligations secured by the Collateral.

 

14.                               INTERCREDITOR AGREEMENT.  Notwithstanding any provision to the contrary contained herein, all terms and provisions of this Agreement are subject to the terms of the Intercreditor Agreement.  In the event of any conflict between the terms of this Agreement and the Intercreditor Agreement, the terms of the Intercreditor Agreement shall govern.

 

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

 

(i)            this Agreement constitutes a legal, valid and binding obligation of such Pledgor 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);

 

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

 

(iii)          upon the delivery of the Certificated Securities constituting Collateral (other than those not required to be delivered pursuant to Section 3.3(i) hereof) to and continued possession by the Collateral Agent in the State of New York, the Collateral Agent, for the benefit of the Notes Secured Parties, will have a legal, valid and perfected first priority Lien (subject to the Intercreditor Agreement) upon and security interest in the Certificated Securities constituting Collateral (other than those not required to be delivered pursuant to Section 3.3(i) hereof) as security for the payment and performance of the Obligations, subject to no other Lien other than any Permitted Lien;

 

(iv)          the Partnership Interests and the Membership Interests in any person who is a Subsidiary pledged by it pursuant to this Agreement have been validly acquired and are fully paid for and are duly and validly pledged hereunder;

 

(v)           the pledge and assignment of the Partnership Interests and the Membership Interests pursuant to this Agreement, together with the relevant filings, consents or recordings (which filings, consents and recordings have been made, obtained or delivered to the Collateral Agent for filing), create a valid security interest and, upon filing of the applicable UCC financing statement, will constitute a perfected and continuing first priority (subject to the Intercreditor Agreement) security interest in such Partnership Interests and Membership Interests and the proceeds thereof, subject to no other Lien other than any Permitted Lien;

 

(vi)          other than financing statements pursuant to Permitted Liens, there are no currently effective financing statements under the UCC covering any property which is now or hereafter may be included in the Collateral;

 

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

 

(viii)        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 Pledged LLC or seek a partition of any property of any Pledged Partnership or Pledged LLC, except as permitted by the Indenture;

 

(ix)          as of the date hereof, all of the Pledged Partnership Interests and Pledged Membership Interests owned by it (other than the Membership Interests of Northern New England Telephone Operations, LLC and FairPoint Business Services LLC) are uncertificated and each Pledgor covenants and agrees that it will not approve any action by any Pledged Partnership or Pledged LLC to convert such uncertificated interests into certificated interests, unless it complies with Section 3.3 with respect to such Certificated Interests; and

 

(x)           “control” (as defined in Section 8-106 of the UCC) has been obtained by the Collateral Agent over all of such Pledgor’s Collateral consisting of Pledged Securities (excluding, for the avoidance of doubt, Security Entitlements and Collateral constituting Pledged Securities not required to be delivered to the Collateral Agent pursuant to Section 3.3(i) hereof) 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 Collateral Agent with “control” of such Collateral has not yet arisen under this Agreement.

 

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)            [RESERVED];

 

(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 Collateral Agent or its assignee or any acceptance thereof or any release of any security by the Collateral Agent or its assignee;

 

(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; or

 

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(v)           any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to such Pledgor or any Subsidiary of such Pledgor, or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding, whether or not such Pledgor shall have notice or knowledge of any of the foregoing.

 

17.                               REGISTRATION, ETC.

 

(a)           If the Collateral Agent shall determine to exercise its right to sell all or any of the Collateral that are Pledged Securities pursuant to Section 7, each Pledgor agrees that, upon request of the Collateral Agent, each Pledgor will, at its own expense do or cause to be done all such other acts and things as may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law; provided that no Pledgor shall be required pursuant to this Section 17(a) to register such Collateral under the provisions of the Securities Act of 1933, as from time to time amended, or qualify such Collateral under the state securities or “Blue Sky” laws.

 

(b)           If at any time when the Collateral Agent shall (acting in accordance with Article Six of the Indenture) 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 Collateral Agent (acting in accordance with Article Six of the Indenture) 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 Collateral Agent 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 Collateral Agent, in its sole and absolute discretion (acting in accordance with Article Six of the Indenture), (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 Collateral Agent shall incur no responsibility or liability for selling all or any part of the Pledged Securities at a price which the Collateral Agent, 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.

 

(a)                                 Upon the Termination Date (as defined below), this Agreement shall automatically terminate (provided that all indemnities set forth herein and the other Notes Documents including, without limitation, in Section 11 hereof shall survive any such termination) and the Collateral Agent, at the expense of the Pledgors, will, if requested by the Pledgors, execute and deliver to the Pledgors a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement as provided above, and will duly assign, transfer and deliver to

 

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the Pledgors (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Collateral Agent 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 Collateral Agent 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 3.3(ii) or by the respective partnership or limited liability company pursuant to Section 3.3(iii)(2).  As used in this Agreement, “Termination Date” shall mean the date upon which the Liens on the Collateral are released in whole pursuant to Section 11.05 of the Indenture.

 

(b)                                 In the event that any part of the Collateral is released from the Lien granted hereunder pursuant to Section 11.05 of the Indenture, the Collateral Agent, at the request and expense of the respective Pledgor, will release such Collateral from this Agreement, duly assign, transfer and deliver to such Pledgor (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so sold, disposed of or released and as may be in possession of the Collateral Agent and has not theretofore been released pursuant to this Agreement.

 

(c)                                  The Collateral Agent shall have no liability whatsoever as the result of any release of Collateral by it in accordance with (or which the Collateral Agent in the absence of gross negligence, bad faith and willful misconduct believes to be in accordance with) this Section 18.

 

19.                               NOTICES.  All notices and other communications hereunder shall be given in accordance with Section 13.01 of the Indenture.

 

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 Collateral Agent (pursuant to Article Nine of the Indenture) and each Pledgor affected thereby, other than pursuant to Section 25.

 

21.                               COLLATERAL AGENT NOT BOUND.  (a) Nothing herein shall be construed to make the Collateral Agent or any other Notes Secured Party liable as a general partner or limited partner of any Pledged Partnership or as a member of any Pledged LLC, and neither the Collateral Agent nor any Notes Secured Party 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 of a member of any Pledged LLC.  The parties hereto expressly agree that, unless the Collateral Agent 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 Collateral Agent, any other Notes Secured Party and/or a Pledgor.

 

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(a)                                 Except as provided in the last sentence of paragraph (a) of this Section 21, the Collateral Agent, 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 Collateral Agent 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.

 

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

 

(c)                                  The acceptance by the Collateral Agent of this Agreement, with all the rights, powers, privileges and authority so created and with the rights, powers, privileges and authority under the Indenture, shall not at any time or in any event obligate the Collateral Agent 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.                               BINDING EFFECT; SUCCESSORS AND ASSIGNS.  This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect, subject to release and/or 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 Collateral Agent, and (iii) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent, the other Notes Secured Parties and their respective successors, transferees and assigns.

 

23.                               GOVERNING LAW, ETC.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT, PURSUANT TO MANDATORY PROVISIONS OF LAW, THE PERFECTION, THE EFFECT OF PERFECTION OR NONPERFECTION OR THE PRIORITY OF ANY SECURITY INTEREST GRANTED HEREUNDER MAY BE DETERMINED IN ACCORDANCE WITH THE LAWS OF A DIFFERENT JURISDICTION.  EACH PLEDGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE COLLATERAL AGENT, ANY NOTES SECURED PARTY, OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT, THE INDENTURE OR ANY OTHER NOTES DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND

 

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UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR ANY OTHER NOTES DOCUMENT SHALL AFFECT ANY RIGHT THAT THE COLLATERAL AGENT OR ANY NOTES SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY NOTES DOCUMENT AGAINST ANY PLEDGOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

EACH PLEDGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES,  TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER NOTES DOCUMENT IN ANY COURT REFERRED TO IN THE IMMEDIATELY PRECEDING PARAGRAPH. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

EACH PLEDGOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 13.01 OF THE INDENTURE. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

24.                               WAIVER OF JURY TRIAL; FINAL AGREEMENT.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER NOTES DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE NOTES DOCUMENTS BY, AMONG

 

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OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

25.                               ADDITIONAL PLEDGORS.  It is understood and agreed that any Subsidiary of FairPoint that is required to become a party to this Agreement pursuant to the Indenture shall become a Pledgor hereunder by executing a joinder agreement, in the form attached hereto as Exhibit B.

 

26.                               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.  Delivery of an executed signature page to this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart thereof.

 

27.                               LEGAL NAMES; TYPE OF ORGANIZATION (AND WHETHER A REGISTERED ORGANIZATION AND/OR A TRANSMITTING UTILITY);  JURISDICTION OF ORGANIZATION; 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), except that any such changes shall be permitted if (i) it shall have given to the Collateral Agent not less than ten (10) days’ prior written notice of each change to its legal name, its type of organization, whether or not it is a Registered Organization, its jurisdiction of organization, its organizational identification number (if any), and whether or not it is a Transmitting Utility, and (ii) in connection with the respective change or changes, it shall have taken all actions as are reasonably necessary to maintain the security interests of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect.

 

28.                               LIMITATION ON THE EXERCISE OF REMEDIES.  The Collateral Agent acknowledges that (i) certain of the Collateral consists of Securities issued by Persons subject to regulation by the FCC and/or an applicable PUC (the “Regulated Securities Collateral”) and (ii) to the extent (and only to the extent) that applicable law requires that the Collateral Agent first obtain the consent of the FCC and/or any applicable PUC prior to exercising any of the remedies set forth herein, including, without limitation, Sections 5 and 7 hereof, regarding any of the Regulated Securities Collateral, the Collateral Agent agrees that it will obtain such consent prior to effecting such remedies.

 

29.                               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.

 

17

 

30.                               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.

 

31.                               CONFLICT.  Notwithstanding anything to the contrary set forth herein, this Agreement, the security interests created hereby and the rights and remedies of the Collateral Agent hereunder are subject to the terms and provisions of the Indenture.  In the event of any inconsistency between the provisions of this Agreement and the Indenture, the provisions of the Indenture shall supersede and control the provisions of this Agreement.

 

18

 

IN WITNESS WHEREOF, each Pledgor and the Collateral Agent have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.

 

	
c/o FAIRPOINT   COMMUNICATIONS, INC.
   521 East Morehead Street
   Charlotte, NC 28202
   Attention: General Counsel
    	
BERKSHIRE   CELLULAR, INC.
   COMERCO, INC.
   C-R COMMUNICATIONS, INC.
   FAIRPOINT COMMUNICATIONS, INC.
   MJD SERVICES CORP.
   MJD VENTURES, INC.
   RAVENSWOOD COMMUNICATIONS, INC.
   S T ENTERPRISES, LTD.
   UNITE COMMUNICATIONS SYSTEMS, INC.
   UTILITIES, INC.
    
	
 
    	
each as a Pledgor
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ajay Sabherwal   
    
	
 
    	
 
    	
Name:
    	
Ajay Sabherwal  
    
	
 
    	
 
    	
Title: 
    	
Executive Vice   President and Chief Financial Officer
    
	
Accepted and Agreed to:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
U.S. BANK NATIONAL ASSOCIATION,
    	
 
    
	
as Collateral Agent
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Maryanne Dufresne
    	
 
    
	
Name:
    	
Maryanne Dufresne
    	
 
    
	
Title:
    	
Vice President
    	
 
    

 

[Signature Page to Notes Pledge Agreement]

 

 

EXHIBIT A

 

Form of Agreement Regarding Uncertificated Securities

 

AGREEMENT (as amended, modified, restated and/or supplemented from time to time, this “Agreement”), dated as of [                 , 20    ], among the undersigned pledgor (the “Pledgor”), U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity but solely as Collateral Agent (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and [ ], as the issuer of the Uncertificated Securities, Membership Interests and/or Partnership Interests (each as defined below) (the “Issuer”).

 

W I T N E S S E T H:

 

WHEREAS, the Pledgor, certain of its affiliates and the Collateral Agent have entered into a Pledge Agreement, dated as of February 14, 2013 (as amended, modified, restated and/or supplemented from time to time, the “Pledge Agreement”; capitalized terms used but not defined herein shall have the meaning ascribed to them in the Pledge Agreement), under which, among other things, in order to secure the payment of the Obligations, the Pledgor has pledged or will pledge to the Collateral Agent for the benefit of the Notes Secured Parties, and grant a security interest in favor of the Collateral Agent for the benefit of the Notes Secured Parties in, all of the right, title and interest of the Pledgor in and to any and all Uncertificated Securities, from time to time by the Issuer, whether now existing or hereafter from time to time acquired by the Pledgor (with all of such Uncertificated Securities being herein collectively called the “Issuer Pledged Interests”); and

 

WHEREAS, the Pledgor desires the Issuer to enter into this Agreement in order to perfect the security interest of the Collateral Agent under the Pledge Agreement in the Issuer Pledged Interests, to vest in the Collateral Agent control of the Issuer Pledge Interests and to provide for the rights of the parties under this Agreement;

 

NOW THEREFORE, in consideration of the premises and the mutual promises and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.             The Pledgor hereby irrevocably authorizes and directs the Issuer, and the Issuer hereby agrees, to comply with any and all instructions and orders originated by the Collateral Agent (and its successors and assigns) regarding any and all of the Issuer Pledged Interests without the further consent by the registered owner (including the Pledgor), and, following its receipt of a notice from the Collateral Agent stating that the Collateral Agent is exercising exclusive control of the Issuer Pledged Interests, not to comply with any instructions or orders regarding any or all of the Issuer Pledged Interests originated by any person or entity other than the Collateral Agent (and its successors and assigns) or a court of competent jurisdiction.

 

2.             The Issuer hereby certifies that (i) no notice of any security interest, lien or other encumbrance or claim affecting the Issuer Pledged Interests (other than the security interest

 

 

of the Collateral Agent or Permitted Liens under the Indenture) has been received by it, and (ii) the security interest of the Collateral Agent in the Issuer Pledged Interests has been registered in the books and records of the Issuer.

 

3.             The Issuer hereby represents and warrants that (i) the pledge by the Pledgor of, and the granting by the Pledgor of a security interest in, the Issuer Pledged Interests to the Collateral Agent, for the benefit of the Notes Secured Parties, does not violate the charter, by-laws, partnership agreement, membership agreement or any other formation or organizational agreement governing the Issuer or the Issuer Pledged Interests, and (ii) the Issuer Pledged Interests consisting of capital stock of a corporation are fully paid and nonassessable.

 

4.             All notices, statements of accounts, reports, prospectuses, financial statements and other communications to be sent to the Pledgor by the Issuer in respect of the Issuer will also be sent to the Collateral Agent at the following address:

 

[  ]

[  ]

Attention:  [  ]

Telephone No.:  [  ]

Facsimile No.:  [  ]

 

5.             Following its receipt of a notice from the Collateral Agent stating that the Collateral Agent is exercising exclusive control of the Issuer Pledged Interests and until the Collateral Agent shall have delivered written notice to the Issuer that all of the Obligations have been paid in full and this Agreement is terminated, the Issuer will send any and all redemptions, distributions, interest or other payments in respect of the Issuer Pledged Interests from the Issuer for the account of the Collateral Agent only by wire transfers to such account as the Collateral Agent shall instruct.

 

6.             Except as expressly provided otherwise in Sections 4 and 5, all notices, instructions, orders and communications hereunder shall be sent or delivered by mail, facsimile or overnight courier service, and all such notices and communications shall, when mailed, sent by facsimile or sent by overnight courier, be effective when deposited in the mails or delivered to overnight courier, prepaid and properly addressed for delivery on such or the next Business Day, or sent by telex or telecopier, except that notices and communications to the Collateral Agent or the Issuer shall not be effective until received.  All notices and other communications shall be in writing and addressed as follows:

 

(a)           if to the Pledgor, at:

 

Attention:

Telephone No.:

Fax No.:

 

(b)           if to the Collateral Agent, at the address given in Section 4 hereof;

 

(c)           if to the Issuer, at:

 

 

Attention:

Telephone No.:

Fax No.:

 

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.

 

7.             This Agreement shall be binding upon the successors and assigns of the Pledgor and the Issuer and shall inure to the benefit of and be enforceable by the Collateral Agent and its successors and assigns.  This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument.  Delivery of an executed signature page to this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart thereof.  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.  None of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever except in writing signed by the Collateral Agent, the Issuer and the Pledgor.

 

8.             THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

[remainder of page intentionally left blank]

 

 

EXECUTION VERSION

 

IN WITNESS WHEREOF, the Pledgor, the Collateral Agent and the Issuer have caused this Agreement to be executed by their duly elected officers duly authorized as of the date first above written.

 

	
 
    	
[                         ],
    
	
 
    	
as Pledgor
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
U.S. BANK NATIONAL ASSOCIATION,
    
	
 
    	
not in its individual capacity but solely
    
	
 
    	
as Collateral Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[                            ],
    
	
 
    	
as the Issuer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

EXECUTION VERSION

 

EXHIBIT B

 

Form of Joinder to Pledge Agreement

 

JOINDER NO.        dated as of [                              ] (this “Joinder”), to the Pledge Agreement (the “Pledge Agreement”) dated as of February 14, 2013 (as amended, modified, restated and/or supplemented from time to time, the “Pledge Agreement”), made by FAIRPOINT COMMUNICATIONS, INC., a Delaware corporation (“FairPoint”) and the other Subsidiaries of FairPoint party thereto (together with FairPoint, each a “Pledgor” and collectively, the “Pledgors”) in favor of U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent (in such capacity, together with any successors and assigns in such capacity, the “Collateral Agent”) for the benefit of the Notes Secured Parties.

 

A.            Reference is made to (a) the Indenture dated as of February 14, 2013 (as amended, modified, restated and/or supplemented from time to time, the “Indenture”), among FairPoint, the Subsidiary Guarantors party thereto, the Collateral Agent and U.S. National Bank, as Trustee and (b) the Pledge Agreement.

 

B.            Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Pledge Agreement.

 

C.            [NAME OF PLEDGOR] has [formed][acquired]       , a       [type of entity] (the “New Pledgor”).

 

D.            Pursuant to the terms and provisions of Section 4.18 of the Indenture, the New Pledgor is required to become a party to the Pledge Agreement and to pledge and grant a Lien in all of its Collateral to the Collateral Agent, for the benefit of the Notes Secured Parties.  The New Pledgor is executing this Joinder in accordance with the requirements of the Indenture and Section 25 of the Pledge Agreement to become a party to the Pledge Agreement.

 

Accordingly, the New Pledgor hereby agrees as follows:

 

SECTION 1.         The New Pledgor is hereby added as a party to the Pledge Agreement and hereby agrees to be bound as a “Pledgor” by all of the terms, covenants and provisions set forth in the Pledge Agreement to the same extent that it would have been bound if it had been a signatory to the Pledge Agreement on the date of the Pledge Agreement.

 

Without limiting the generality of first paragraph of this SECTION 1, as security for the payment and performance in full of the Obligations, the New Pledgor does hereby grant, pledge, hypothecate, mortgage, charge and assign to the Collateral Agent, for the benefit of the Notes Secured Parties, in all of its right, title and interest in and to the Collateral, whether now existing or hereafter from time to time acquired.

 

The New Pledgor hereby makes each of the representations and warranties applicable to a “Pledgor” contained in the Pledge Agreement.

 

 

SECTION 2.         Annexed hereto are supplements to each of Schedules 3.1(i), 3.5(b) and 3.5(f) to the Pledge Agreement with respect to the New Pledgor.  Such supplements shall be deemed to be part of the Pledge Agreement.  The New Pledgor hereby represents and warrants that, as of the date hereof, all information set forth in the supplements annexed hereto is true and correct.

 

SECTION 3.         The New Pledgor hereby represents and warrants to the Collateral Agent and the other Notes Secured Parties that this Joinder has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors’ rights generally and by general principles of equity.

 

SECTION 4.         This Joinder may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.

 

SECTION 5.         Except as expressly supplemented hereby, the Pledge Agreement shall remain in full force and effect in accordance with the terms thereof.

 

SECTION 6.         THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, except to the extent that, pursuant to mandatory provisions of law, the perfection, the effect of perfection or nonperfection or the priority of any security interest granted under the Pledge Agreement may be determined in accordance with the laws of a different jurisdiction.

 

SECTION 7.         All communications and notices to be provided to the New Pledgor hereunder or under the Pledge Agreement shall be given to the New Pledgor at the address set forth under its signature below.

 

 

IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly executed this Joinder as of the day and year first above written.

 

	
 
    	
[NEW PLEDGOR]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
Address of New Pledgor:
    
	
 
    	
 
    
	
 
    	
[                                      ]
    
	
 
    	
 
    
	
 
    	
 
    
	
Accepted and Agreed to:
    	
 
    
	
 
    	
 
    
	
U.S. BANK NATIONAL ASSOCIATION,
    	
 
    
	
as Collateral Agent
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:

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