AMENDED AND RESTATED CASH COLLATERAL AGREEMENT,
dated as of December 9, 1994, as amended as of January
24, 1995 and as of December 19, 1995 (this "Agreement"),
by and among Xxxxxx Stores Corporation, a New York
corporation (the "Seller"), PS Stores Acquisition Corp.,
a Delaware corporation ("PS Stores"), on behalf of itself
and each other Buyer Indemnified Party (as such term is
defined below) (collectively, the "Buyer") and Custodial
Trust Company, as collateral agent (the "Collateral
Agent") for the Buyer. (Capitalized terms used but not
defined herein shall have the respective meanings
assigned to them in the Stock Purchase Agreement referred
to below.)
W I T N E S S E T H
WHEREAS, WP Investors, Inc., a Delaware
corporation ("WP Investors"), and the Seller are parties
to a Stock Purchase Agreement, dated as of August 23,
1994, as amended as of November 3, 1994 (the "Stock
Purchase Agreement");
WHEREAS, pursuant to the Stock Purchase
Agreement, PS Stores (as assignee of WP Investors)
simultaneously with the initial execution and delivery
hereof acquired all of the issued and outstanding shares
of capital stock of Xxxxxx Retail, Inc., a Delaware
corporation and a wholly owned subsidiary of Seller
("Retail Co.");
WHEREAS, pursuant to the Stock Purchase
Agreement, the Seller agreed, among other things, to
indemnify the Buyer with respect to the Excluded
Liabilities (as defined below) and to provide collateral
to secure certain of such indemnification obligations;
WHEREAS, in order to more fully set forth their
obligations with respect to such indemnity arrangements,
among other things, Seller and Buyer simultaneously with
the initial execution and delivery of this Agreement
executed and delivered a Cross-Indemnification and
Procedure Agreement, dated as of December 9, 1994 (the
"Indemnity Agreement");
WHEREAS, it was a condition to the Buyer's
obligation to consummate the Closing under the Stock
Purchase Agreement that the Buyer be satisfied with the
collateral arrangements with respect to such indemnity
obligations;
WHEREAS, the purpose of the initial execution
and delivery of this Agreement was, and continues to be,
to provide such collateral arrangements;
WHEREAS, the Account Collateral (as defined
below) heretofore included 3,200,082 shares of common
stock, par value $.10 per share ("Toys Common Stock"), of
Toys "R" Us, Inc., a Delaware corporation; and
WHEREAS, the parties hereto desire to amend and
restate this Agreement as set forth herein to provide for
the release of all Toys Common Stock from the Collateral
Account and the substitution therefor of $67,500,000 in
cash;
NOW THEREFORE, in consideration of the
foregoing and for other good and valuable consideration,
the parties hereto hereby agree as follows:
SECTION 1. Defined Terms. As used herein, the
following terms shall have the meanings herein specified
unless the context otherwise requires:
"Account Collateral" shall have the meaning
assigned to it in Section 4.
"Business Day" shall mean a day that is not a
Saturday, a Sunday or a day on which banking institutions
in the State of New York are not required to be open.
Unless specifically stated as a Business Day, all days
referred to herein shall mean calendar days.
"Buyer Indemnified Party" shall have the
meaning set forth in the Indemnity Agreement.
"Cash Collateral Permitted Investments" shall
mean any Cash Equivalents.
"Cash Equivalents" shall mean:
(a) any security, maturing not more than
three (3) months after the date of acquisition,
issued by the United States of America, or an
instrumentality or agency thereof and
guaranteed fully as to principal, premium, if
any, and interest by the United States of
America;
(b) any certificate of deposit, time
deposit, Eurodollar time deposit, or bankers'
acceptance maturing not more than three (3)
months after the date of acquisition, issued by
any commercial banking institution that is a
member of the Federal Reserve System and that
has combined capital and surplus and undivided
profits of not less than $250,000,000, whose
debt has a rating, at the time at which any
investment therein is made or on the date of
such acquisition by the Collateral Agent, as
the case may be, of "P-1" (or higher) by
Xxxxx'x Investors Service, Inc. or any
successor rating agency, or "A-1" (or higher)
by Standard & Poor's Corporation or any
successor rating agency (a "Qualified Bank");
and
(c) commercial paper, maturing not more
than three (3) months after the date of
acquisition, issued by any Qualified Bank.
"Event of Withdrawal" shall mean any delivery
by or on behalf of PS Stores to the Collateral Agent of a
certificate signed by its chief executive officer,
president, any vice president or chief financial officer
stating that Buyer is entitled to immediate payment for
all or a specified portion of the Obligations (a
"Withdrawal Notice").
"Investments" shall have the meaning assigned
to it in Section 7.
"Obligations" shall mean all Excluded
Liabilities (including the costs of defense thereof and
reasonable attorneys' fees and expenses) arising pursuant
to Section 5.14 and/or Section 6.1(b)(y)(ii)(B) of the
Stock Purchase Agreement as further governed by the
Indemnity Agreement.
SECTION 2. Collateral Account. Custodial
Trust Company, as Collateral Agent, has established at
its office in Princeton, New Jersey, under the sole
dominion and control of the Collateral Agent and in the
name of the Collateral Agent, as Collateral Agent
hereunder, a certain collateral account: Custodial Trust
Company, as Collateral Agent for PS Stores Acquisition
Corp. (#112-10038-16). The parties hereto acknowledge
and agree that (i) the Collateral Account is not intended
to constitute a "deposit account" (as such term is
defined in SECTION 9-105(1)(e) of the Uniform Commercial Code
as in effect in the State of New York, (ii) the
Collateral Agent does not intend and has not been
instructed to establish a "deposit account" and (iii) no
interest or other earnings shall be payable by the
Collateral Agent (other than in its capacity as
Collateral Agent hereunder) in respect of any Account
Collateral held in the Collateral Account.
SECTION 3. Appointment of Agent; Deposit of
Cash. Buyer hereby appoints the Collateral Agent as
Collateral Agent hereunder and the Collateral Agent
hereby accepts such appointment and agrees and
acknowledges that it holds the security interest in the
Account Collateral for the benefit of Buyer. On December
22, 1995, Seller shall wire, or cause to be wired, into
the Collateral Account an amount in cash or immediately
available funds equal to $67,500,000 in substitution for
all shares of Toys Common Stock then held in the
Collateral Account and such shares of Toys Common Stock
shall be concurrently delivered to Seller.
SECTION 4. Pledge and Assignment. The Seller
hereby pledges and assigns to the Collateral Agent, for
the benefit of the Buyer, and hereby grants to the
Collateral Agent, for the benefit of the Buyer, a
continuing lien and security interest in, the following
collateral (the "Account Collateral"):
(i) the Collateral Account and all
certificates and instruments, if any, from time to
time credited to or representing or evidencing the
Collateral Account and all funds therein;
(ii) all Investments from time to time and all
certificates and instruments, if any, from time to
time credited to or representing or evidencing the
Investments;
(iii) all notes, certificates of deposit, checks
and other instruments from time to time hereafter
delivered to or otherwise possessed by the
Collateral Agent for or on behalf of the Seller in
substitution for or in addition to any or all of the
then existing Account Collateral;
(iv) all interest, dividends, cash, instruments
and other property from time to time received,
receivable or otherwise distributed in respect of or
in exchange for any or all of the then existing
Account Collateral; and
(v) to the extent not covered by clauses (i)
through (iv) above, all proceeds of any or all of
the foregoing Account Collateral.
SECTION 5. Security for Obligations. This
Agreement secures the payment and performance of all
Obligations.
SECTION 6. Delivery of Collateral. All
certificates or instruments, if any, representing or
evidencing the Account Collateral shall be delivered to
and held by or on behalf of the Collateral Agent pursuant
hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in
form and in substance reasonably satisfactory to the
Collateral Agent. Seller agrees that the security
interest of the Collateral Agent in all the Account
Collateral will be reflected on all books and records
necessary to perfect such interest, and the Collateral
Agent shall have the right to transfer to or to register
in the name of the Collateral Agent or any of its
nominees any or all of the Account Collateral. In
addition, the Collateral Agent shall have the right at
any time to exchange certificates or instruments
representing or evidencing Account Collateral for
certificates or instruments of smaller or larger
denominations.
SECTION 7. Investing of Amounts in the
Collateral Accounts. The Collateral Agent will from time
to time (i) invest amounts on deposit in the Collateral
Account in Cash Equivalents, and (ii) to the extent
practicable, invest interest paid on the Account
Collateral, and reinvest other proceeds of any Account
Collateral which may mature or be sold, in Cash
Equivalents, in the case of each of clause (i) and (ii),
as the Seller, or, to the extent provided in the
following sentence, the Collateral Agent, may select
(collectively, the Cash Equivalents referred to in
clauses (i) and (ii), the "Investments"). In the event
the Seller fails to instruct the Collateral Agent to
invest any such amounts in excess of $500,000 before
11:00 a.m. (New York time) on the Business Day following
any date on which Seller deposits cash or Cash
Equivalents into the Collateral Account, or on the
Business Day on which any amounts otherwise become
available for investment as a result of interest payments
or the receipt of proceeds of Account Collateral which
has matured or was sold, the Collateral Agent may, at its
sole discretion, invest such excess amounts in such Cash
Equivalents as it may select. Interest and proceeds
which are not invested or reinvested in Cash Equivalents
as provided above shall remain in the Collateral Account
as cash, except as specifically provided in Section 8.
SECTION 8. Release of Amounts. Funds on
deposit in the Collateral Account shall be disbursed to
the Seller only upon delivery to the Collateral Agent of
a certificate executed by the Buyer's chief executive
officer, president, any vice president or chief financial
officer specifying (i) the amount of funds to be
disbursed, and (ii) the account or accounts to which the
funds are to be disbursed; provided, however, that to the
extent that on the last Business Day of any calendar
quarter the excess of the amount of the Account
Collateral comprised of Cash Equivalents over the amount
of any expenses of the Collateral Agent payable hereunder
shall exceed $67,500,000, the Collateral Agent shall pay
the amount of any such excess to the Seller to the extent
it can do so without selling or disposing of any Account
Collateral prior to the maturity thereof.
SECTION 9. Representations and Warranties.
The Seller represents and warrants that (i) it is the
legal and beneficial owner of the Account Collateral free
and clear of any lien, security interest, or other charge
or Encumbrance (as defined in the Stock Purchase
Agreement), except for the security interests created by
this Agreement and that (ii) the pledge of the Account
Collateral pursuant to this Agreement creates a valid and
perfected first priority security interest in the Account
Collateral securing the payment of the Obligations.
SECTION 10. Further Assurances. At any time
and from time to time, at the expense of the Seller, the
Seller will promptly execute and deliver all further
instruments and documents, and take all further action,
that may be necessary or desirable, or that the Buyer may
reasonably request, in order to perfect and protect any
security interest granted or purported to be granted
hereby or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to
any Account Collateral.
SECTION 11. Transfers and Other Liens. The
Seller will not (i) sell or otherwise dispose of any of
the Account Collateral, or (ii) create or permit to exist
any lien, security interest, or other charge or
Encumbrance upon or with respect to any of the Account
Collateral, except for the security interests under this
Agreement.
SECTION 12. Collateral Agent Appointed
Attorney-in-Fact. The Seller hereby appoints the
Collateral Agent its attorney-in-fact, with full
authority in the place and stead of the Seller and in the
name of the Seller or otherwise, from time to time in the
Collateral Agent's reasonable discretion to take any
action and to execute any instrument which the Collateral
Agent may reasonably deem necessary or advisable to
accomplish the purposes of this Agreement, including,
without limitation, to receive, endorse and collect all
instruments made payable to the Seller representing any
interest payment, dividend, or other distribution in
respect of the Account Collateral or any part thereof and
to give full discharge for the same. The Collateral
Agent agrees promptly to notify the Seller after any such
action or execution of instruments, provided that the
failure to give such notice shall not affect the validity
of such action or execution of instruments.
SECTION 13. Collateral Agent May Perform. If
Seller fails to perform any agreement contained herein
after notice to the Seller to the extent practicable, the
Collateral Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Collateral
Agent incurred in connection therewith shall be payable
by the Seller under Section 16.
SECTION 14. Reasonable Care. The Collateral
Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Account Collateral
in its possession if the Account Collateral is accorded
treatment substantially equal to that which the
Collateral Agent accords its own property, and shall be
without liability for any loss, damage, cost, expense
(including reasonable attorneys' fees and disbursements),
liabilities or claims which does not arise from its
willful misfeasance or negligence, it being understood
that the Collateral Agent shall not have any
responsibility or liability for any loss resulting from
Cash Collateral Permitted Investments made pursuant to
Section 7. In no event shall the Collateral Agent be
liable for any action taken or omitted to be taken in
accordance with the instructions of Buyer pursuant to
this Agreement.
SECTION 15. Remedies upon an Event of
Withdrawal. If at any time or from time to time any
Event of Withdrawal shall have occurred:
(i) The Collateral Agent shall, without any
prior notice to the Seller and at any time or from
time to time, pay and deliver the Account Collateral
or any part thereof specified by Buyer in the
Withdrawal Notice to Buyer for application against
all or any part of the Obligations. The Collateral
Agent shall notify Seller of such withdrawal or
delivery immediately following any such payment or
delivery.
(ii) The Collateral Agent shall, at Buyer's
direction, from time to time, also exercise in
respect of the Account Collateral, in addition to
other rights and remedies provided for herein or
otherwise available to it, all the rights and
remedies of a secured party upon default under the
Uniform Commercial Code in effect in the State of
New York at the applicable times, all as directed by
Buyer. At Buyer's direction, the Collateral Agent
may, without notice except as specified below, sell
the Account Collateral or any part thereof in one or
more parcels at public or private sale, at any
exchange or brokers' board, at any of the Collateral
Agent's offices or elsewhere, for cash, on credit or
for future delivery, and, in the case of
transactions effected on the New York Stock
Exchange, irrespective of the impact any such
disposition may have on the market price of the
Account Collateral, and otherwise upon such other
terms as the Collateral Agent may deem commercially
reasonable. The Seller agrees that, to the extent
notice of sale shall be required by law, at least
ten days' notice to the Seller of the time and place
of any public sale or the time after which any
private sale is to be made shall constitute
reasonable notification. The Collateral Agent shall
not be obligated to make any sale of Account
Collateral regardless of notice of sale having been
given. The Collateral Agent may adjourn any public
or private sale from time to time by announcement at
the time and place fixed therefor, and such sale
may, without further notice, be made at the time and
place to which it was so adjourned. The Collateral
Agent or any of its affiliates may be the purchaser
of any or all of the Account Collateral at any
public sale. Each purchaser at any such sale shall
hold the property sold absolutely free from any
claim or right on the part of the Seller, and the
Seller hereby waives (to the extent permitted by
law) all rights of redemption, stay and/or appraisal
that it now has or may at any time in the future
have under any rule of law or statute now existing
or hereafter enacted.
(iii) Any cash held by the Collateral Agent as
Account Collateral and all cash proceeds received by
the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or
any part of the Account Collateral may, in the
discretion of the Buyer, then or at any time
thereafter be applied in whole or in part against
all or any part of the Obligations specified in the
Withdrawal Notice.
SECTION 16. Expenses. The Seller will pay to
the Collateral Agent the amount of any and all reasonable
expenses, including the reasonable fees and expenses of
its counsel, which the Collateral Agent may incur in
connection with (i) the purchase or sale of Cash
Collateral Permitted Investments, (ii) the administration
of this Agreement, (iii) the custody or preservation of,
or the sale of, collection from, or other realization
upon, any of the Account Collateral, (iv) the exercise or
enforcement of any of the rights of the Collateral Agent
hereunder or (v) the failure by the Seller to perform or
observe any of the provisions hereof. Any amounts
payable to the Collateral Agent pursuant to this Section
16 will be payable on demand and the Collateral Agent
shall make such demand on or prior to the last Business
Day of each calendar quarter for any such amounts
incurred by the Collateral Agent prior to such date and
not yet reimbursed.
SECTION 17. Amendments, Etc. No amendment or
waiver of any provision of this Agreement nor consent to
any departure by Seller herefrom shall in any event be
effective unless the same shall be in writing and signed
by the Buyer and the Collateral Agent, and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 18. Nonexclusive Remedy. The remedies
herein provided are to the fullest extent permitted by
law cumulative and are not exclusive of any remedies
provided by law. Without limiting the foregoing, nothing
in this Agreement shall be deemed to limit the liability
of the Seller under the Stock Purchase Agreement. The
Seller agrees and acknowledges that Buyer may proceed
directly against the Seller if any of the rights or
remedies contemplated hereunder is not available to Buyer
for any reason or is insufficient to fully discharge the
Buyer's obligations under the Stock Purchase Agreement.
SECTION 19. Addresses for Notices. All
notices and other communications provided for hereunder
shall be in writing and transmitted by telex or telecopy,
if to:
the Collateral Agent: Custodial Trust Company
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
the Seller: Xxxxxx Stores Corporation
c/o Skadden, Arps, Slate,
Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
the Buyer: PS Stores Acquisition Corp.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Operating
Officer
Facsimile: (000) 000-0000
with copies to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxxx Xxxxxxxx,
Esq.
Facsimile: (000) 000-0000
and
Willkie, Xxxx & Xxxxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
or such other addresses and numbers of which the parties
may advise each other in writing.
SECTION 20. Continuing Security Interest.
This Agreement shall create a continuing security
interest in the Account Collateral and shall (i) remain
in full force and effect until payment in full of the
Obligations, (ii) be binding upon the Seller, its
successors and assigns, and (iii) inure to the benefit of
the Collateral Agent and its successors, transferees and
assigns. All rights of the Collateral Agent and security
interests hereunder, and all obligations of the Seller
hereunder, shall be absolute and unconditional
irrespective of: (i) any change in the time, manner or
place of payment of, or in any other term of, all or any
of the Obligations, or any other amendment or waiver of
or any consent to any departure from the Stock Purchase
Agreement, the Indemnity Agreement or any other agreement
or instrument relating thereto; or (ii) any other
circumstance that might otherwise constitute a defense
available to, or a discharge of, the Seller. All
dividends, distributions, principal or interest payments
received by the Seller contrary to the provisions of this
Agreement above shall be received in trust for the
benefit of the Collateral Agent, shall be segregated from
other funds of the Seller and shall be forthwith paid
over to the Collateral Agent as Account Collateral in the
same form as so received (with any necessary
endorsement).
SECTION 21. Governing Law; Terms. This
Agreement shall be governed by and construed in
accordance with the laws of the State of New York, except
to the extent that perfection of the security interest
hereunder, or remedies hereunder, in respect of any
particular Account Collateral are governed by the laws of
a jurisdiction other than the State of New York. Unless
otherwise defined herein, terms defined in Article 9 of
the Uniform Commercial Code in the State of New York are
used herein as therein defined.
SECTION 22. Indemnification of Collateral
Agent. The Buyer agrees to indemnify and hold Collateral
Agent free and harmless against any claim, cause of
action, liability, expense, including reasonable
attorneys' fees, loss, damage or cost incurred or arising
as the result of or in connection with (i) the fact that
securities in the Collateral Account are registered in
the name of the Collateral Agent or (ii) compliance by
the Collateral Agent with any instruction issued by the
Buyer relating to the Collateral Account. The Collateral
Agent shall not be required to act or to refrain from
acting without first having received the direction of the
Buyer.
SECTION 23. Resignation of Collateral Agent.
The Collateral Agent may, upon thirty (30) days' notice
to Buyer, fully and completely discharge its obligations
pursuant to this agreement by delivering all of the
Account Collateral then in its possession to a successor
collateral agent designated by Buyer. Buyer agrees to
arrange for appointment of a successor collateral agent
to whom the Account Collateral shall be transferred
within said 30-day period. Upon the acceptance of any
appointment as a Collateral Agent by a successor
Collateral Agent, that successor Collateral Agent shall
thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring
Collateral Agent under this Agreement, and the retiring
Collateral Agent shall thereupon be discharged from its
duties and obligations under this Agreement.
SECTION 24. Counterparts. This Agreement may
be executed in one or more counterparts which
collectively shall constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered
by their officer thereunto duly authorized as of the date
first above written.
XXXXXX STORES CORPORATION
By:/s/ Xxxxxxxxx X. Xxxxxx
Name: Xxxxxxxxx X. Xxxxxx
Title: Secretary and Principal
Legal Officer
CUSTODIAL TRUST COMPANY,
as Collateral Agent
By:/s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President
PS STORES ACQUISITION CORP.
By: /s/ Xxx Xxxxxxx
Name: Xxx Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
