Exhibit 10.3
STOCK PLEDGE AGREEMENT
This
Stock Pledge Agreement (this “ Agreement
”), dated as of March 31, 2008, among LV ADMINISTRATIVE
SERVICES INC., as administrative and collateral agent for the
Creditor Parties (as defined below) (the “ Pledgee
”), RAPID LINK, INCORPORATED, a Delaware corporation
(the “ Company
”), and each of the other undersigned parties (the
Company and each such other undersigned party, a “
Pledgor
” and collectively, the “ Pledgors
”).
BACKGROUND
The
Company has entered into a Security Agreement dated as of the
date hereof (as amended, modified, restated or supplemented
from time to time, the “ Security
Agreement ”), pursuant to which the Pledgee and
the other Creditor Parties (as defined in the Security
Agreement) party thereto provide or will provide certain
financial accommodations to the Company and certain
subsidiaries of the Company.
In
order to induce the Pledgee and the other Creditor Parties to
provide or continue to provide the financial accommodations
described in the Security Agreement, each Pledgor has agreed
to pledge and grant a security interest in the collateral
described herein to the Pledgee on the terms and conditions
set forth herein.
NOW,
THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt of which is hereby
acknowledged, the parties hereto agree as
follows:
1.
Defined
Terms . All capitalized terms used herein
which are not defined shall have the meanings given to them in
the Security Agreement.
2.
Pledge and Grant
of Security Interest . To secure the full
and punctual payment and performance of (the following clauses
(a) and (b), collectively, the “ Obligations
”) (a) all obligations owing to Pledgee and the other
Creditor Parties under the Security Agreement and the
Ancillary Agreements referred to in the Security Agreement
(the Security Agreement and the Ancillary Agreements, as each
may be amended, restated, modified and/or supplemented from
time to time, collectively, the “ Documents
”) and (b) all other obligations and liabilities of each
Pledgor to the Pledgee and the other Creditor Parties whether
now existing or hereafter arising, direct or indirect,
liquidated or unliquidated, absolute or contingent, due or not
due and whether under, pursuant to or evidenced by a note,
agreement, guaranty, instrument or otherwise (in each case,
irrespective of the validity, regularity or enforceability of
such Obligations, or of any instrument evidencing any of the
Obligations or of any collateral therefor or of the existence
or extent of such collateral, and irrespective of the
allowability, allowance or disallowance of any or all of such
in any case commenced by or against any Pledgor under Title
11, United States Code, including, without limitation,
obligations of each Pledgor for post-petition interest, fees,
costs and charges that would have accrued or been added to the
Obligations but for the commencement of such case), each
Pledgor hereby pledges, assigns, hypothecates, transfers and
grants a security interest to the Pledgee, for the ratable
benefit of the Creditor Parties, in all of the following (the
“ Collateral
”):
(a) the
shares of stock or other equity interests set forth on
Schedule
A annexed hereto and expressly made a part hereof
(together with any additional shares of stock or other equity
interests acquired by any Pledgor, the “ Pledged
Stock ”), the certificates representing the
Pledged Stock and all dividends, cash, instruments and other
property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or
all of the Pledged Stock;
(b) all
additional shares of stock or other equity interests of any
issuer (each, an “ Issuer
”) of the Pledged Stock from time to time acquired by
any Pledgor in any manner, including, without limitation,
stock dividends or a distribution in connection with any
increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock
split, spin-off or split-off (which shares shall be deemed to
be part of the Collateral), and the certificates representing
such additional shares, and all dividends, cash, instruments
and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of such shares; and
(c) all
options and rights, whether as an addition to, in substitution
of or in exchange for any shares of any Pledged Stock and all
dividends, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all such
options and rights.
3.
Delivery of
Collateral . All certificates representing
or evidencing the Pledged Stock shall be delivered to and held
by or on behalf of Pledgee pursuant hereto and shall be
accompanied by duly executed instruments of transfer or
assignments in blank, all in form and substance satisfactory
to the Pledgee. Each Pledgor hereby authorizes the
Issuer upon demand by the Pledgee to deliver any certificates,
instruments or other distributions issued in connection with
the Collateral directly to the Pledgee, in each case to be
held by the Pledgee, subject to the terms
hereof. Upon the occurrence and during the
continuance of an Event of Default (as defined below), the
Pledgee shall have the right, during such time in its
discretion and without notice to the Pledgor, to transfer to
or to register in the name of the Pledgee or any of its
nominees any or all of the Pledged Stock. In
addition, the Pledgee shall have the right at such time to
exchange certificates or instruments representing or
evidencing Pledged Stock for certificates or instruments of
smaller or larger denominations.
4.
Representations
and Warranties of each Pledgor . Each
Pledgor jointly and severally represents and warrants to the
Pledgee (which representations and warranties shall be deemed
to continue to be made until all of the Obligations have been
paid in full in cash and each Document and each agreement and
instrument entered into in connection therewith has been
irrevocably terminated) that:
(a) the
execution, delivery and performance by each Pledgor of this
Agreement and the pledge of the Collateral hereunder do not
and will not result in any violation of any agreement,
indenture, instrument, license, judgment, decree, order, law,
statute, ordinance or other governmental rule or regulation
applicable to any Pledgor;
(b) this
Agreement constitutes the legal, valid, and binding obligation
of each Pledgor enforceable against each Pledgor in accordance
with its terms;
(c) (i)
all Pledged Stock owned by each Pledgor is set forth on
Schedule
A hereto and (ii) each Pledgor is the direct and
beneficial owner of each share of the Pledged
Stock;
(d) all
of the shares of the Pledged Stock have been duly authorized,
validly issued and are fully paid and
non-assessable;
(e) no
consent or approval of any person, corporation, governmental
body, regulatory authority or other entity, is or will be
necessary for (i) the execution, delivery and performance of
this Agreement, (ii) the exercise by the Pledgee of any rights
with respect to the Collateral or (iii) the pledge and
assignment of, and the grant of a security interest in, the
Collateral hereunder;
(f) there
are no pending or, to the best of Pledgor’s knowledge,
threatened actions or proceedings before any court, judicial
body, administrative agency or arbitrator which may materially
adversely affect the Collateral;
(g)
each Pledgor has the requisite power and authority to
enter into this Agreement and to pledge and assign the
Collateral to the Pledgee, for the ratable benefit of the
Creditor Parties, in accordance with the terms of this
Agreement;
(h)
each Pledgor owns each item of the Collateral and,
except for the pledge and security interest granted to the
Pledgee hereunder, the Collateral shall be, immediately
following the closing of the transactions contemplated by the
Documents, free and clear of any other security interest,
mortgage, pledge, claim, lien, charge, hypothecation,
assignment, offset or encumbrance whatsoever (collectively,
“ Liens
”);
(i) there
are no restrictions on transfer of the Pledged Stock contained
in the certificate of incorporation or by-laws (or equivalent
organizational documents) of the Issuer or otherwise which
have not otherwise been enforceably and legally waived by the
necessary parties;
(j) none
of the Pledged Stock has been issued or transferred in
violation of the securities registration, securities
disclosure or similar laws of any jurisdiction to which such
issuance or transfer may be subject;
(k) the
pledge and assignment of the Collateral and the grant of a
security interest under this Agreement vest in the Pledgee,
for the ratable benefit of the Creditor Parties, all rights of
each Pledgor in the Collateral as contemplated by this
Agreement; and
(l) the
Pledged Stock constitutes one hundred percent (100%) of the
issued and outstanding shares of capital stock of each
Issuer.
5.
Covenants
. Each Pledgor jointly and severally covenants
that, until the Obligations shall be indefeasibly satisfied in
full in cash and each Document and each agreement and
instrument entered into in connection therewith is irrevocably
terminated:
(a) No
Pledgor will sell, assign, transfer, convey, or otherwise
dispose of its rights in or to the Collateral or any interest
therein; nor will any Pledgor create, incur or permit to exist
any Lien whatsoever with respect to any of the Collateral or
the proceeds thereof other than that created
hereby.
(b) Each
Pledgor will, at its expense, defend the Pledgee’s
right, title and security interest in and to the Collateral
against the claims of any other party.
(c) Each
Pledgor shall at any time, and from time to time, upon the
written request of the Pledgee, execute and deliver such
further documents and do such further acts and things as the
Pledgee may reasonably request in order to effectuate the
purposes of this Agreement including, but without limitation,
delivering to the Pledgee, upon the occurrence of an Event of
Default, irrevocable proxies in respect of the Collateral in
form satisfactory to the Pledgee. Until receipt
thereof, upon an Event of Default that has occurred and is
continuing beyond any applicable grace period, this Agreement
shall constitute the Pledgor’s proxy to the Pledgee or
its nominee to vote all shares of Collateral then registered
in each Pledgor’s name.
(d) No
Pledgor will consent to or approve the issuance of (i) any
additional shares of any class of capital stock or other
equity interests of the Issuer; or (ii) any securities
convertible either voluntarily by the holder thereof or
automatically upon the occurrence or nonoccurrence of any
event or condition into, or any securities exchangeable for,
any such shares, unless, in either case, such shares are
pledged as Collateral pursuant to this Agreement.
(e) Each
Pledgor agrees to execute and deliver to each Issuer that is a
limited liability company or a limited partnership a control
acknowledgment (“ Control
Acknowledgement ”) substantially in the form of
Exhibit B
hereto. Each Pledgor shall cause each such Issuer
to acknowledge in writing its receipt and acceptance thereof.
Such Control Acknowledgement shall instruct such Issuer to
follow instructions from the Pledgee without any
Pledgor’s consultation or consent.
6.
Voting Rights
and Dividends . In addition to the
Pledgee’s rights and remedies set forth in Section 8
hereof, in case an Event of Default shall have occurred and be
continuing, beyond any applicable cure period, the Pledgee
shall (i) be entitled to vote the Collateral, (ii) be entitled
to give consents, waivers and ratifications in respect of the
Collateral (each Pledgor hereby irrevocably constituting and
appointing the Pledgee, with full power of substitution, the
proxy and attorney-in-fact of each Pledgor for such purposes)
and (iii) be entitled to collect and receive for its own use
cash dividends paid on the Collateral. Unless and
until there shall have occurred and be continuing an Event of
Default, each Pledgor shall be permitted to exercise or
refrain from exercising any voting rights or other powers;
provided that, in each case, no vote shall be cast or any
consent, waiver or ratification given or any action taken or
omitted to be taken if, in the reasonable judgment of the
Pledgee, such action would have a material adverse effect on
the value of the Collateral or any part thereof; and,
provided
, further ,
that each Pledgor shall give at least five (5) days’
written notice of the manner in which such Pledgor intends to
exercise, or the reasons for refraining from exercising, any
voting rights or other powers other than with respect to any
election of directors and voting with respect to any
incidental matters. Following the occurrence of an
Event of Default, all rights of each Pledgor to vote and to
give consents, waivers and ratifications shall cease and all
dividends and all other distributions in respect of any of the
Collateral, shall be delivered to the Pledgee to hold as
Collateral and shall, if received by any Pledgor, be received
in trust for the benefit of the Pledgee, be segregated from
the other property or funds of any other Pledgor, and be
forthwith delivered to the Pledgee as Collateral in the same
form as so received (with any necessary
endorsement).
7.
Event of
Default . An “ Event of
Default ” under this Agreement shall occur upon
the happening of any of the following events:
(a) An
“ Event of
Default ” under any Document or any agreement or
note related to any Document shall have occurred and be
continuing beyond any applicable cure period;
(b) Any
Pledgor shall default in the performance of any of its
obligations under any Document, including, without limitation,
this Agreement, and such default shall not be cured during the
cure period applicable thereto;
(c) Any
representation or warranty of any Pledgor made herein, in any
Document or in any agreement, statement or certificate
give
