Membership Interests Pledge Agreement

Loan No. ML0743


MEMBERSHIP INTEREST PLEDGE AGREEMENT


This MEMBERSHIP INTEREST PLEDGE AGREEMENT (this "Agreement"), dated as of November 30, 2004, is entered into by SHENANDOAH TELECOMMUNICATIONS COMPANY ("Pledgor") in favor of COBANK, ACB ("Secured Party").


R E C I T A L S:


WHEREAS, Secured Party and Pledgor have entered into that certain Second Amended and Restated Master Loan Agreement, dated of even date herewith (as the same may be amended, supplemented, extended or restated from time to time, the "MLA"), that certain Term Supplement, dated as of June 22, 2001, as amended by that certain First Amendment to term Loan Supplement, dated as of September 1, 2001, and by that certain Second Amendment to Term Supplement, dated as of even date herewith (as the same may be further amended, supplemented, extended or restated from time to time, the "Term Supplement") providing for a term loan in the original principal amount of $45,965,690, and that certain Third Supplement to the Master Loan Agreement, dated as of even date herewith (as the same may be amended, supplemented, extended or restated from time to time, the "Third Supplement"; the MLA, as supplemented by the Term Supplement and the Third Supplement, the "Loan Agreement") providing for a reducing revolving line of credit of up to $15,000,000 (the "Revolving Loan"); and


WHEREAS, Pledgor is the legal and beneficial owner of the Membership Interests (as defined in Section 2 hereof) of each Person as specified on Schedule 1 attached hereto and incorporated herein by reference (collectively, the "Pledged Entities"); and


WHEREAS, as an inducement to Secured Party to execute the MLA and Third Supplement and to make the Revolving Loan, Pledgor desires to grant Secured Party a first-priority security title and lien in and to the Collateral (as hereinafter defined).


NOW, THEREFORE, in consideration of the foregoing, and intending to be legally bound hereby, Pledgor and Secured Party agree as follows:


SECTION 1. Definitions. Capitalized terms used in this Pledge Agreement, unless otherwise defined herein, shall have the meanings assigned to them in the Loan Agreement.


SECTION 2. Secured Obligations; Pledge; Collateral. To secure (i) the payment and performance in full of all (i) the payment and performance of all obligations of Pledgor under the MLA (as such obligations relate to the Term Supplement and the Third Supplement), the Term Supplement and the Third Supplement, any related Notes and other Loan Documents executed in connection therewith, (ii) the payment of all other indebtedness and the performance of all other obligations of Pledgor to Secured Party under any future Supplement to the MLA that by its terms provides that the loan or other extension of credit described therein shall be secured


Membership Interests Pledge Agreement/Shenandoah Telecommunications Company Loan No. ML0743


by a lien and security interest in the Collateral pursuant to this Pledge Agreement, and (iii) the payment of any and all additional advances made or costs or expenses incurred by Secured Party to protect or preserve the Collateral or the security title, lien and security interest created hereby or for any other purpose provided herein (whether or not Pledgor remains the owner of the Collateral at the time such advances are made or costs or expenses are incurred) (collectively, the "Secured Obligations"), Pledgor hereby pledges, hypothecates, assigns, transfers, sets over and delivers unto Secured Party, and grants to Secured Party a lien upon and a security interest in (a) all right, title and interest of Pledgor, whether legal or equitable, now or hereafter existing or acquired, and howsoever evidenced or arising, in each Pledged Entity (collectively, the "Membership Interests"), (b) any cash, additional Membership Interests or other property at any time and from time to time receivable or otherwise distributable in respect of, in exchange for, or in liquidation of, any and all of the Membership Interests, together with the proceeds thereof (collectively, the "Distributions") and (c) all certificates, accounts, chattel paper, instruments, general intangibles, cash, books, records, notices and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for the Membership Interests or the Distributions, together with all rights of Pledgor to receive and retain any of the foregoing and all proceeds of the foregoing (all such Membership Interests, Distributions and other proceeds thereof, collectively, the "Collateral"). Notwithstanding the foregoing, if at any time Pledgor demonstrates to Secured Party on a pro forma basis, taking into consideration the acquisition of any Pledged Entity hereafter acquired by Pledgor, that Pledgor will achieve and maintain for the then remaining life of the Loans (i) a Total Leverage Ratio (as determined in accordance with Section 7 of the MLA) less than or equal to 2.5:1.0 and (ii) an Equity to Total Assets Ratio (as determined in accordance with Section 7 of the MLA) greater than or equal to 35.0%, and the remaining life of the all Loans then outstanding is less than 7 years, Secured Party shall release the lien and security interest granted herein in such shares, capital stock, securities, cash, property and other proceeds thereof of such Pledged Entity. Upon a determination by Secured Party to grant such a request, for purposes of this Pledge Agreement such entity shall no longer be considered a Pledged Entity, all such membership and other ownership interests, cash, property and other proceeds shall no longer be considered part of the Collateral, and Secured Party shall deliver to Pledgor UCC termination statements and any other documents reasonably requested by Pledgor to evidence such release.


Upon delivery to Secured Party, all property comprising part of the Collateral, except as provided below, shall be accompanied by proper instruments of assignment duly executed by Pledgor and by such other instruments or documents as Secured Party may reasonably request. Upon any certification of the Membership Interests or the issuance to Pledgor of any additional certificates representing Membership Interests in the Pledged Entities thereafter, Pledgor shall hold such certificates as Secured Party's agent and in trust for Secured Party as additional Collateral and shall pledge and deliver to Secured Party such certificates, along with proper instruments of assignment or membership interest transfer powers in blank duly executed by Pledgor and by such other instruments or documents as Secured Party or its counsel may reasonably request. Each delivery of such certificates or other issuance of uncertificated Membership Interests to Pledgor shall be accompanied by a schedule showing the numbers of the certificates (or other interests) therefor, theretofore and then being delivered or pledged to Secured Party hereunder, which schedules shall be attached hereto as Schedule 1 and made a part hereof. Each schedule so delivered shall supersede any prior schedules so delivered. In case any


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distribution of any additional Membership Interests shall be made on or in respect of the Membership Interests or any property shall be distributed upon or with respect to the Membership Interests pursuant to the recapitalization or reclassification of the Membership Interests or pursuant to the reorganization thereof, the property so distributed shall be delivered to Secured Party to be held by it as additional Collateral. All sums of money and property so paid or distributed in respect of the Membership Interests which are received by Pledgor may be received by Pledgor and used in the ordinary course of its business; provided, however, upon the occurrence and during the continuance of an Event of Default, such sums shall, until paid or delivered to Secured Party, be held by Pledgor in trust for the benefit of Secured Party as additional Collateral.


TO HAVE AND TO HOLD the Collateral, together with all rights, titles, interests, powers, privileges and preferences pertaining or incidental thereto, unto Secured Party, its successors and assigns, forever, subject, however, to the terms, covenants and conditions hereinafter set forth.


SECTION 3. Representations and Warranties. Pledgor hereby represents and warrants that, except for security interests granted herein, Pledgor is the legal, equitable and beneficial owner of the Membership Interests, and holds the same free and clear of all liens, charges, encumbrances and security interests of every kind and nature and free and clear of all warrants, options, rights to purchase, rights of first refusal and other interests of any Person; that Pledgor has legal authority to pledge the Collateral in the manner hereby done or contemplated; that the execution and delivery of this Pledge Agreement, and the performance of its terms, will not result in any violation of any provision of Pledgor's or any Pledged Entity's articles of organization or operating agreement, or violate or constitute a default under the terms of any trust agreement or other agreement, indenture or other instrument, license, judgment, decree, order, law, statute, ordinance or other governmental rule or regulation applicable to Pledgor or any Pledged Entity or any of Pledgor's or any Pledged Entity's property; that no approval, consent or authorization of any Governmental Authority which has not heretofore been obtained is necessary for the execution or delivery by Pledgor of this Pledge Agreement or for the performance by Pledgor of any of the terms or conditions hereof or thereof; and that this pledge is effective to vest in Secured Party the rights of Pledgor in the Collateral as set forth herein.


SECTION 4. Membership Interests of the Pledged Entities. Pledgor represents that it is the registered and beneficial owner of Membership Interests in the Pledged Entities set forth on Schedule 1 hereto, as such schedule may be amended by Pledgor from time to time pursuant to this Sections 2 and 4. The outstanding Membership Interests owned by Pledgor of each Pledged Entity has been duly authorized and are validly issued, fully paid and non-assessable. Pledgor shall amend Schedule 1 from time to time as necessary for the information thereon to be true and correct and, with each such delivery, shall be deemed to remake all of the representations and warranties contained in this Pledge Agreement. Schedule 1 shall be amended by Pledgor's delivery of an amended Schedule 1 to Secured Party in accordance with Section 2 of this Pledge Agreement.


SECTION 5. Additional Membership Interests; Transfer. Without the prior written consent of Secured Party, Pledgor will not (i) consent to or approve of the issuance of


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any additional Membership Interests or certificates representing Membership Interests by any Pledged Entity, or to any options, subscription rights, warrants or other instruments in respect thereof, (ii) consent to, approve of or permit any merger, consolida ...