-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, BiE8oj1en0bDUUlgboEjevnIfQ0xxNepVF8KO3z69GO7fXu4Xetvmu9UJ42K7RJL mjSb++NwiZpoGI+riBs/Aw== 0000084567-94-000060.txt : 19941223 0000084567-94-000060.hdr.sgml : 19941223 ACCESSION NUMBER: 0000084567-94-000060 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19941222 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: WCT COMMUNICATIONS INC CENTRAL INDEX KEY: 0000892524 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 330500143 STATE OF INCORPORATION: WA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43373 FILM NUMBER: 94565841 BUSINESS ADDRESS: STREET 1: 135 E ORTEGA STREET CITY: SANTA BARBARA STATE: CA ZIP: 93101 BUSINESS PHONE: 8059632423 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ROCHESTER TELEPHONE CORP CENTRAL INDEX KEY: 0000084567 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 160613330 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: ROCHESTER TEL CENTER STREET 2: 180 S CLINTON AVE CITY: ROCHESTER STATE: NY ZIP: 14646-0995 BUSINESS PHONE: 7167771000 SC 13D/A 1 FORM 13D/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 1)* WCT Communications, Inc. ------------------------------------------------------------- (Name of Issuer) Common Stock, without par value -------------------------------------------------------------- (Title of Class of Securities) 92923M 10 2 -------------------------------------------------------------- (CUSIP Number) Helen A. Zamboni, Esq. Rochester Telephone Corporation 180 South Clinton Avenue, Rochester, New York 14646 (716) 777-7315 -------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 8, 1994 -------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d- 1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with the statement [ ]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) 2 Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 3 SCHEDULE 13D/A CUSIP NO. 92923M 10 2 1) Name of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons: Rochester Telephone Corporation 2) Check the Appropriate Box if a member of a Group (See Instructions): (a) [ ] (b) [ ] 3) SEC Use Only: 4) Source of Funds (See Instructions): 00 (see item 3) 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e): [ ] 6) Citizenship or Place of Organization: New York Number of Shares Beneficially Owned by Each Reporting Person with: 7) Sole Voting Power: 4,424,914 (The Reporting Person disclaims beneficial ownership of these shares) 8) Shared Voting Power: -0- 9) Sole Dispositive Power: -0- 10) Shared Dispositive Power: -0- 11) Aggregate Amount Beneficially Owned by Each Reporting Person: 4,424,914 (The Reporting Person disclaims beneficial ownership of these shares) 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): [ ] 13) Percent of Class Represented by Amount in Row (11): 30.4% 14) Type of Reporting Person (See Instructions): CO 4 Items 6 and 7 of the Statement of Schedule 13D (the "Initial Schedule 13D") filed pursuant to Rule 13d-1 of the Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), by Rochester Telephone Corporation, a New York corporation ("Rochester"), relating to the Common Stock, without par value (the "WCT Shares"), of WCT Communications, Inc., a Washington corporation ("WCT"), are hereby amending by adding to such items the information set forth below: Item 6. Contracts, Arrangements or Understandings with Respect to Securities of the Issuer On November 3, 1994, RCI Long Distance, Inc., a Delaware corporation and a wholly-owned subsidiary of Rochester ("RCI"), loaned Richard Frockt, the Chairman of the Board of Directors and Chief Executive Officer of WCT, $900,000 which was used by Mr. Frockt to pay a portion of the settlement of certain legal proceedings against WCT, Mr. Frockt and other officers, directors and employees of WCT. Mr. Frockt's obligation to repay the loan is evidenced by a promissory note (the "Note"), with interest thereon payable monthly and accruing at the rate of 9% per annum. The Note is due and payable on the earlier of the following to occur: (i) three business days after the effective time of the merger of Rochester Subsidiary Twenty-Eight, Inc., a Delaware corporation and a wholly-owned subsidiary of Rochester ("Sub"), with and into WCT pursuant to an Agreement and Plan of Merger dated as of November 8, 1994 among Rochester, Sub and WCT (the "Merger Agreement"); (ii) the first anniversary of the termination of that certain letter of intent between WCT and Rochester dated as of October 14, 1994 (the "Letter of Intent"), the Merger Agreement or any other definitive agreements subsequently entered into between WCT and Rochester pursuant to the Letter of Intent; and (iii) three business days following the execution of definitive agreements by WCT and a third party for the acquisition by such third party of the majority of the voting stock of WCT or all or substantially all of the assets of WCT. Mr. Frockt's obligation to pay the Note is secured by a Pledge and Security Agreement dated as of November 3, 1994 between RCI and Mr. Frockt (the "Pledge Agreement") covering 508,500 WCT Shares owned by Mr. Frockt (the "Pledged Shares"). Subject to the Frockt Shareholder's Agreement (as defined and described in the Initial Schedule 13D), the power to vote the Pledged Shares shall remain with Mr. Frockt unless an Event of Default (as defined in the Pledge Agreement), or an event which with the passage of time or giving of notice, or both, would constitute an Event of Default, shall have occurred. The Pledged Shares are among the 3,522,259 WCT Shares subject to the Frockt Shareholder's Agreement. Accordingly, the Pledged Shares are included in the 4,424,914 WCT Shares reported by Rochester in the Initial Schedule 13D as WCT Shares with respect to which it may be deemed the beneficial owner for certain purposes. 5 Except as described in Item 6 hereof and in Item 4 of the Initial Schedule 13D, neither Rochester nor, to the best knowledge of Rochester, any director or executive officer of Rochester has any contract, arrangement, understanding or relationship (legal or otherwise) with any person with respect to any securities of WCT, including, but not limited to, transfer or voting of any securities of WCT, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss or the giving of withholding of proxies. Item 7. Material to be Filed as Exhibits. 1. Promissory Note dated November 3, 1994. 2. Pledge and Security Agreement dated as of November 3, 1994 between RCI and Richard Frockt. 6 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. DATED: December 22, 1994 ROCHESTER TELEPHONE CORPORATION By: /s/ Barbara J. LaVerdi ---------------------------- Barbara J. LaVerdi Assistant Secretary EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION 99 Promissory Note dated Filed herewith November 3, 1994 99 Pledge and Security Filed herewith Agreement dated November 3, 1994 between RCI and Richard Frockt EX-99 2 EX 99 PROMISSORY NOTE 1 PROMISSORY NOTE $900,000.00 November 3, 1994 RICHARD FROCKT, an individual having his residence at 220 Hot Springs Road, Montecito, California 93108 ("Maker") for value received, hereby promises to pay to RCI LONG DISTANCE, INC., a Delaware corporation, having its offices at 180 South Clinton Avenue, Rochester, New York 14646 ("Holder"), the sum of Nine Hundred Thousand Dollars ($900,000.00), with interest thereon payable monthly and accruing at the rate of nine percent (9%) per annum. The amounts due hereunder shall be due and payable on the earlier of the following to occur: (i) three business days after the Effective Time, as that term is defined in an Agreement and Plan of Merger (the "Merger Agreement") contemplated to be entered into by and among Rochester Telephone Corporation ("Rochester"), Rochester Subsidiary Twenty-Eight, Inc. and WCT Communications, Inc. ("WCT"); (ii) the first anniversary of the termination of that certain letter of intent between WCT and Rochester, dated as of October 14, 1994 (the "Letter of Intent"), the Merger Agreement or any definitive agreements subsequently entered into between WCT and Rochester pursuant to the Letter of Intent; and (iii) three business days following the execution of definitive agreements by WCT and a third party for the acquisition by such third party of the majority of the voting stock of WCT or all or substantially all the assets of WCT. Amounts due hereunder will be paid in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. Unless Holder shall provide written instructions to the contrary, amounts due hereunder will be payable at the principal corporate office of Holder located at 180 South Clinton Avenue, Rochester, New York 14646. Maker hereby represents and warrants that Maker has the legal capacity, power and authority to execute this Note and that such Note is a binding obligation and subject to the full faith and credit of Maker. Maker further agrees that Maker's obligations under this Note are unconditional and not subject to deduction, diminution, abatement, counter-claim, defense or 2 set-off for any reason whatsoever. Maker's obligations hereunder shall not be subordinate to any other indebtedness of Maker. In the event any one or more of the provisions contained in this Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Note, but this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein or therein. This Note may not be changed orally, but only by an agreement in writing signed by the parties against whom enforcement of any waiver, change, modification or discharge is sought. Any notice, demand, request or other communication which Maker or Holder may be required or may desire to give hereunder shall be in writing and shall be deemed to have been properly given if hand-delivered or if sent via facsimile telecommunication, receipt telephonically confirmed (effective 24 business hours after receipt is confirmed), or if sent by internationally recognized express courier (such as Federal Express or United Parcel Service) (effective 48 hours after deposit thereof at any office of such courier), postage prepaid, return receipt requested, addressed as follows, or to such other addresses as the parties may designate by like notice. To Maker: Richard Frockt 220 Hot Springs Road Montecito, California 93108 To Holder: RCI Long Distance, Inc. 180 South Clinton Avenue Rochester, New York 14646 Attention: Dale M. Gregory, CEO Each right, power and remedy of Holder hereunder, now or hereafter existing at law or in equity by state or other applicable laws shall be cumulative and concurrent, and the exercise of any one or more of them shall not preclude the 3 simultaneous or later exercise by Holder of any or all such other rights, powers or remedies. No failure or delay by Holder to insist upon the strict performance of any one or more provisions of this Note or to exercise any right, power or remedy consequent upon a breach thereof or default hereunder shall constitute a waiver thereof, or preclude Holder from exercising any such right, power or remedy. By accepting payment after the due date under this Note, Holder shall not be deemed to have waived the right to require payment when due of all other payments due under this Note. No failure or delay by Holder to insist upon the strict performance of any term, condition, covenant or agreement of this Note, or to exercise any right, power or remedy consequent upon a breach thereof, shall constitute a waiver of any such term, condition, covenant or agreement or of any such breach, or preclude Holder from exercising any such right, power or remedy at any later time or times. This Note shall be governed by, construed and interpreted in accordance with the laws of the State of New York (excluding the choice of laws rules thereof). A final judgment in any such action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law. In addition to all other rights available to Holder under this Note or under any law, or under principles of equity, Holder shall have the right at any time and from time to time to sell, assign, pledge or otherwise transfer this Note to any entity or person then affiliated with Holder. Each such purchaser, assignee, pledgee and transferee shall have all the rights, remedies and benefits of Holder hereunder. Further, any such purchaser, assignee, pledgee or transferee shall have the right to surrender this Note to Maker for cancellation and have a new Note with identical terms issued in exchange therefore to such purchaser, assignee, pledgee or transferee. This Note shall be binding upon and shall inure to the benefit of Maker and Holder and their respective successors and assigns. In the event Maker should default under any of the provisions of this Note and Holder should employ attorneys or incur other expenses for the collection of any amounts due from Maker hereunder, the enforcement of performance or observance of 4 any obligation or agreement of Maker herein contained, Maker agrees that it will on demand therefor pay to Holder the reasonable fees of such attorneys and such other reasonable expenses so incurred by Holder, should Holder prevail in such collection or enforcement efforts. Any amounts paid hereunder shall first be applied to collection costs, late charges and interest. Maker agrees that he has received adequate consideration for his obligations hereunder. IN WITNESS WHEREOF, Maker has executed this Promissory Note under seal as of the date first above written. /s/ Richard Frockt ------------------------ Richard Frockt RCI LONG DISTANCE, INC. By: /s/ James G. Dole ----------------------- James G. Dole Vice President EX-99 3 EX 99 PLEDGE & SEC. AGMT 1 PLEDGE AND SECURITY AGREEMENT THIS PLEDGE AND SECURITY AGREEMENT (the "Agreement") is entered into as of November 3, 1994 by and between RCI Long Distance Inc., a Delaware corporation with its principal office at Rochester Tel Center, 180 South Clinton Avenue, Rochester, New York 14646 ("Pledgee"), and Richard Frockt ("Pledgor"), an individual residing at 220 Hot Springs Road, Montecito, California 93108 ("Pledgor"). WHEREAS, Pledgor is indebted to Pledgee in the amount of Nine Hundred Thousand Dollars ($900,000.00) in United States funds, yet unpaid and accrued interest thereon, as the same may be adjusted, all as more specifically set forth in that certain Promissory Note dated concurrently herewith ("Note"); WHEREAS, Pledgor desires to secure the payments due under the Note; NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 1. Pledge. As security for the due and punctual payment of all amounts now or hereafter payable by Pledgor under the Note, Pledgor hereby pledges, assigns and delivers to Pledgee 508,500 shares of common stock of WCT represented by certificate numbers LU 2113, LU 1784, LU 1785, LU 1786, LU 1787, and LU 1788 (the "Stock", the Stock and/or any proceeds thereof being known herein as the "Collateral"). Pledgor hereby grants to Pledgee a security interest in and lien on the Collateral. Pledgee hereby acknowledges receipt of the certificates representing the Stock, with attached stock powers duly executed in blank (with all signatures guaranteed or acknowledged). 2. Representations and Warranties of Pledgor. Pledgor hereby represents and warrants to Pledgee as follows: (a) Pledgor has good and marketable title to the Collateral, free and clear of all claims, liens, pledges or other encumbrances. Subject to restrictions under federal or state securities laws and, when executed, a Shareholder's Agreement to be entered into by Pledgor and Rochester Telephone Corporation (the "Shareholder's Agreement"), Pledgor has full power, 2 authority and legal right to pledge the Collateral to Pledgee and to grant Pledgee a lien thereon and security interest therein. The pledge of the Collateral pursuant to this Agreement does not violate any agency or court order or agreement to which Pledgor is a party or, to Pledgor's actual knowledge, any law, rule, regulation by which Pledgor or the Collateral is bound. (b) Pledgor has no defenses to the payment of or setoffs against the amount outstanding on the Note as of the date hereof to Pledgee. (c) Consents. To the actual knowledge of Pledgor, no consent of any government or governmental authority, or of any other person, is required for the execution and delivery by Pledgor of this Agreement, the pledge of the Collateral hereunder or the performance of the other obligations of Pledgor hereunder. 3. Covenants of Pledgor. (a) Preservation of Pledge. Pledgor shall execute and deliver any and all documents, or cause the execution and delivery of any and all documents (including financing statements), necessary to create, perfect, preserve, validate or otherwise protect the pledge of the Collateral to Pledgee and Pledgee's lien on and security interest in the Collateral and the first priority thereof; maintain, or cause to be maintained at all times the pledge of the Collateral to Pledgee and Pledgee's priority thereof; and defend the Collateral and Pledgee's interests therein against all claims and demands of all persons at any time claiming the same or any interest therein adverse to Pledgee and pay all costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) in connection with such defense. (b) Transfer of Collateral. Pledgor shall not sell, transfer, assign or otherwise dispose of any of the Collateral or any interest therein, and Pledgor shall not create, incur, assume or suffer to exist any encumbrances with respect to any of the Collateral or any interest therein. (c) Notice to WCT. Upon the request of Pledgee, Pledgor shall give written notice of this Agreement and of the pledges, security interests, proxies and powers of attorney created hereby to WCT and shall cause WCT to note such interest in its stock transfer records. 3 (d) Other Actions. Pledgor shall not take or permit to be taken any action in connection with the Collateral which would impair the value of the interests or rights of Pledgee therein or which would impair the interests or rights of Pledgee therein or with respect thereto. 4. Irrevocable Proxy. Subject to the provisions of the Shareholder's Agreement, Pledgor hereby grants to Pledgee an irrevocable proxy to (a) vote or cause to be voted any and all of the Stock, (b) give or cause to be given consents, waivers and ratification in respect thereof and (c) exercise all other rights of ownership with respect thereto. This proxy shall be valid as long as the Stock or any part thereof shall be pledged to Pledgee pursuant to this Agreement. Pledgee hereby agrees that until an Event of Default (as defined in Section 6 hereof), or an event which with the passage of time or giving of notice, or both, would constitute an Event of Default, shall have occurred, Pledgee shall not exercise this proxy and Pledgor shall be entitled to (i) vote or cause to be voted any and all of the Stock, (ii) give or cause to be given consents, waivers and ratification in respect thereof and (iii) exercise all other rights of ownership with respect thereto; provided, however, that no vote shall be cast or consent, waiver, ratification or other action given or taken which would be inconsistent with any of the provisions of this Agreement or the Shareholder's Agreement. All such rights of Pledgor to vote (or cause to be voted), to give (or cause to be given) consents, waivers and ratification and to exercise other rights shall cease upon the occurrences of an Event of Default. 5. Additional Property. All dividends (including without limitation, stock and liquidating dividends) payable in stock or other securities, distributions of property, returns of capital or other noncash distributions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock of WCT or received in exchange for the Stock or any part thereof or as a result of any merger, consolidation, acquisition or other sale or exchange of assets to which WCT or Pledgor may be a party or otherwise, and any and all money and other property received upon sale or transfer of or in exchange for or redemption of the Stock or any part thereof, shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgee to be held subject to the terms of this agreement. 4 6. Events of Default. For purposes of this Agreement, the term "Event of Default" shall mean the occurrence of any one or more of the following events: (a) Failure to Pay Promissory Note. The failure of Pledgor to pay, in full, as provided therein, the Note, or any other of the obligations with respect thereto; or (b) Representation and Warranties. Any representation, warranty or other statement made by or on behalf of Pledgor in this Agreement shall prove to have been false or incorrect in any material respect as of the date made or deemed made to the detriment of Pledgee; or (c) Observance of Provisions. Pledgor shall fail to observe or perform any term, covenant or agreement contained in this Agreement to the detriment of Pledgee; or (d) Bankruptcy, Insolvency and Related Events. Pledgor (i) admits in writing his inability to, or be generally unable to, pay his debts when due, (ii) applies for or consents to the appointment of a receiver, custodian, trustee or liquidator of himself or a substantial portion of his property, (iii) makes a general assignment for the benefit of his creditors, (iv) commences a voluntary case under any applicable bankruptcy or insolvency law, (v) have filed against him any case or proceeding seeking liquidation, reorganization, dissolution or winding up upon the appointment of a trustee, receiver, liquidator or the like; provided, however, that in the event Pledgor shall pay in full all amounts due on the Note within ten (10) days after the occurrence of any event specified in subparagraphs (a), (b), (c) or (d) above, such Event of Default shall be cured, provided further, however, that the right of Pledgee to exercise its rights with respect to the Collateral during such ten (10) day period shall not be impaired if Pledgee determines, in its sole discretion, that exercise of its rights is necessary to insure payment in full of the Note; or (e) Breach of Shareholder's Agreement. The breach by Pledgor of his obligations under the Shareholder's Agreement. 7. Rights of Pledgee Upon Occurrence of Event of Default. (a) Upon the occurrence of any Event of Default hereunder and so long as such Event of Default shall be 5 continuing, (i) all of the Note shall be immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by Pledgor, anything contained herein to the contrary notwithstanding; (ii) Pledgee may exercise any one or more of the rights and remedies exercisable by Pledgee under other provisions of this Agreement or exercisable by a secured party under the Uniform Commercial Code or under any other applicable law; and (iii) without limiting the generality of the foregoing, to take any other action which Pledgee deems necessary or desirable to protect or realize upon its pledge, lien on or security interest in the Collateral or any part thereof, and Pledgor hereby irrevocably appoints Pledgee as Pledgor's attorney-in-fact to take any such action (including, without limitation, the execution and delivery of any and all documents or instruments related to the Collateral or any part thereof in Pledgor's name) and said appointment shall create in Pledgee a power coupled with an interest; including, without limitation, any one or more of the following actions: (A) to cause any or all of the Collateral to be transferred into the name of Pledgee or into the name of its nominee or nominees; (B) to apply any cash held by Pledgee hereunder to the payment of the Note; and (C) if there shall be no such cash or if the cash so applied shall be insufficient to pay in full the Note, to sell, resell, assign and deliver all or any part of the Collateral, at public or private sale, for cash, upon credit or for future delivery, and at such price or prices and upon such other terms and conditions as are commercially reasonable. Pledgee shall give Pledgor not less than five (5) days' prior written notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made, and Pledgor agrees that, where reasonable notification of the time or requirement of such sale or other disposition thereof is required by law, such requirement shall be met if Pledgor is given such five-day notice. Pledgee may purchase any or all of the Collateral to be sold at any such public sale or sales upon such terms and conditions as are commercially reasonable. Pledgor recognizes and acknowledges that, notwithstanding that a higher price might be obtained for the Collateral at a public sale than at a private sale or sales, the making of a public sale of the Collateral is subject to registration requirements and other legal restrictions compliance with which might require such actions on the part of the Pledgor and Pledgee, might entail such expenses, and might subject Pledgee, any underwriter through whom the Collateral might be 6 sold and any controlling person of any thereof to such liabilities, as would make a public sale of the Collateral, in the judgment of Pledgee, impractical. Accordingly, Pledgor agrees that private sales made by Pledgee may be at prices and on other terms and conditions less favorable to the seller than if the Collateral were sold at public sale, that Pledgee shall have no obligation to take any steps in order to permit the Collateral to be sold at a public sale complying with the requirements of applicable securities and similar laws and that any sale at a private sale made under the foregoing circumstances shall be considered and deemed to be a sale in a commercially reasonable manner. Upon any sale or sales pursuant to this Agreement, the Collateral so sold shall be held by the purchaser absolutely free from any claims or rights of whatsoever kind or nature, including any equity of redemption or any similar rights, all such equity of redemption and similar rights being hereby expressly waived and released by Pledgor. Pledgee is hereby authorized to comply with any limitation or restriction in connection with any such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of any governmental authority, and any such sale made in compliance with the foregoing procedure shall be considered and deemed to be a sale in a commercially reasonable manner. No notice to or demand on Pledgor in any case shall entitle Pledgor to any other notice or demand in similar or other circumstances. Upon the exercise of any power, right, privilege or remedy pursuant to this Agreement, which requires any consent, approval, recording, qualification or authorization of any governmental authority or instrumentality, Pledgor will execute and deliver, or will cause the execution and delivery of, and papers that Pledgee may require to be obtained for such governmental consent, approval, recording, qualification or authorization. (b) Anything in Section 7(a) above to the contrary notwithstanding, Pledgee shall use its best efforts to sell the Stock in the public market in broker's transactions (in compliance with Rule 144 promulgated by the Securities and Exchange Commission, if applicable) and in such manner and amounts as not to disrupt the public market for the Stock of WCT and in order to realize the best price per share for the Stock available in the public market under the circumstances. 7 8. Application of Proceeds. All proceeds from the collection or sale or other disposition of all or any part of the Collateral pursuant to this Agreement, together with all other money and property held or received by Pledgee as, on or in respect of the Collateral, shall be applied in the following order of priority: First, to the payment of all costs and expenses of collecting, holding, managing, selling or otherwise disposing of the Collateral or any part thereof or any proceeds thereof, and to the payment of all sums which Pledgee may be required or may elect to pay, if any, for charges upon the Collateral or any part thereof, and all other payments which Pledgee may be required or authorized to make under any provision of this Agreement (including in each such case legal costs and attorneys' fees and expenses and all expenses, liabilities and advances made or incurred in connection therewith); Second, to the payment of all amounts due under the Note; and Third, to be held by Pledgee until satisfaction or expiration of Pledgor's obligations under the Note or this Agreement, and upon such payment or satisfaction, to the payment of any surplus then remaining to the Pledgor, unless otherwise provided by law or directed by a court of competent jurisdiction. 9. Return of Collateral. So long as no Event of Default shall have occurred and be continuing, Pledgee shall return the Collateral to Pledgor upon payment or satisfaction in full of the Note and all other sums payable under this Agreement, together with all money and property held or received by Pledgee as, on or in respect of the Collateral. So long as no Event of Default shall have occurred and be continuing, Pledgee shall return to Pledgor, on payment in full of all amounts due on the Note, shares of the Stock representing the Collateral. Pledgee shall not be deemed to make or to have made any representation or warranty with respect to any Collateral returned to Pledgor, pursuant to this Section 9, except that such Collateral is free and clear, on the date of delivery, of any and all encumbrances arising from Pledgee's own acts. 8 10. Sole Duty of Pledgee. Other than the exercise of reasonable care to assure the safe custody of the Collateral while held by the Pledgee hereunder, Pledgee shall have no responsibility for or obligation or duty with respect to all or any part of the Collateral or any matter or proceeding arising out of or relating thereto, including, without limitation, no obligation or duty to collect any sums due in respect thereof or to protect or preserve rights pertaining thereto and Pledgor hereby waives any claims he may have again Pledgee with respect thereto. 11. Miscellaneous Provisions. (a) Additional Actions and Documents. Pledgor hereby agrees to take or cause to be taken such further actions, to execute, deliver and file or cause to be executed delivered and filed such further documents and instruments and to obtain such consents, as may be necessary or as may be reasonably requested in order to fully effectuate the purposes, terms and conditions of, and the remedies set forth in, this Agreement, whether before, at or after the occurrence of an Event of Default hereunder. (b) Expenses. Pledgor agrees to reimburse and save Pledgee harmless against liability for the payment of all out-of- pocket expenses arising in connection with the administration or enforcement of, or the preservation or exercise of any rights (including the right to dispose of the Collateral) under, this Agreement, including, without limitation, the reasonable fees and expenses of counsel to Pledgee arising in such connection. (c) Notices. All notice, demands, request or other communications which may be or are required to be given, served or sent by a party to the other party pursuant to this Agreement shall be in writing and shall be given, served or sent in the manner and to the addresses specified herein or otherwise theretofore delivered to the other party hereto in writing, in the case of Pledgee, to the attention of its Corporate Counsel. (d) Benefit. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. 9 (e) Modification; Discharge; and Waiver. No amendment, modification or discharge of this Agreement or waiver hereunder shall be valid or binding unless set forth in writing and duly executed by the party against whom enforcement of the amendment, modification, discharge or waiver is sought. (f) Governing Law. This Agreement, the rights and obligations of the parties hereto and any claims or disputes relating thereto shall be governed by and construed in accordance with the laws of the State of New York. (g) Severability of Provisions. Each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable laws and regulations, but if any provision of this Agreement is held to be prohibited or unenforceable in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof. (h) Counterparts. This Agreement may be executed in any number of counterparts, all of which together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. 10 IN WITNESS WHEREOF, each of the parties hereto has caused this Pledge and Security Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. PLEDGOR: /s/ Richard Frockt -------------------------- RICHARD FROCKT PLEDGEE: RCI LONG DISTANCE, INC. By: /s/ James G. Dole ----------------------- James G. Dole Its: Vice President -----END PRIVACY-ENHANCED MESSAGE-----