Exhibit 4(g)(4)
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (the "Pledge Agreement") is made and
entered into as of November 27, 2001 by Xerox Funding LLC II, a Delaware limited
liability company (the "Pledgor"), having its principal office at 000 Xxxx Xxxxx
Xxxx, Xxxxxxxx, XX 00000, in favor of Xxxxx Fargo Bank Minnesota National
Association, a national association with trust power ("Xxxxx Fargo"), in its
capacity as trustee (the "Trustee") for the holders from time to time, (the
"Holders") of the Xerox Funding Debentures (as defined herein), issued by the
Pledgor under the Xerox Funding Indenture referred to below. Capitalized terms
used and not defined in this Pledge Agreement have the meanings set forth or
referred to in the Xerox Funding Indenture.
W I T N E S S E T H
WHEREAS, the Pledgor and Xerox Capital Trust II, a Delaware
statutory business trust ("Xerox Capital"), are parties to a Subscription
Agreement dated November 27, 2001 (the "Xerox Funding Debenture Subscription
Agreement"), pursuant to which the Pledgor will issue and sell to Xerox Capital
$1,067,010,400 aggregate principal amount of 7 1/2% Convertible Junior
Subordinated Debentures due 2021 (the "Xerox Funding Debentures");
WHEREAS, the Pledgor and the Trustee have entered into that
certain indenture dated as of the date hereof (as amended, restated,
supplemented or otherwise modified from time to time, the "Xerox Funding
Indenture"), pursuant to which the Pledgor is issuing the Xerox Funding
Debentures on the date hereof;
WHEREAS, the Pledgor is the beneficial owner of security
entitlements (the "Pledged Security Entitlements") with respect to (i) the
United States Treasury securities identified by CUSIP number in Schedule I
hereto, and credited to the Pledgor's securities account with Xxxxx Fargo Bank
Minnesota, National Association (Xxxxx Fargo Bank Minnesota, National
Association, in its capacity as a "securities intermediary" and a "depositary
bank" (each as defined under the Uniform Commercial Code), being referred to
herein as the "Account Holder"), ABA No.000000000, Account No.00000000 at its
office at Sixth and Marquette, MAC N9303-120, Xxxxxxxxxxx, Xxxxxxxxx 00000,
Attention: Corporate Trust Services, in the name of "Xerox Funding LLC II,
subject to the security interest of Xxxxx Fargo Bank Minnesota, National
Association", as Trustee for the benefit of the holder of the 7 1/2% Convertible
Junior Subordinated Debentures due 2021 of Xerox Funding LLC Collateral Pledge
Account" (the "Pledged Account") and (ii) all other financial assets credited
from time to time to the Pledged Account (collectively with the assets described
in clause (i)above, the "Pledged Financial Assets");
WHEREAS, to secure the obligation of the Pledgor under the Xerox
Funding Indenture and the Xerox Funding Debentures to pay in full each of the
first twelve scheduled interest payments on the Xerox Funding Debentures when
due and to secure repayment of any portion of the principal, premium (if any)
and interest on the Xerox Funding Debentures that becomes due and payable prior
to such time as the first twelve scheduled interest payments thereon shall have
been paid in full
(collectively, the "Obligations"), the Pledgor has agreed (i) to pledge to the
Trustee for its benefit and the ratable benefit of the Holder of the Xerox
Funding Debentures, a security interest in the Collateral (as defined herein)
securing the payment and performance by the Pledgor of all of the Obligations
and (ii) to execute and deliver this Pledge Agreement;
WHEREAS, it is a condition precedent to the initial purchase of
the Xerox Funding Debentures by the initial Holder thereof that the Pledgor
shall have executed and delivered this Pledge Agreement and delivered the
Pledged Financial Assets; and
WHEREAS, unless otherwise defined herein or in the Xerox Funding
Indenture, terms used in Article 8 or 9 of the Uniform Commercial Code as in
effect in the State of New York ("UCC") and/or in the Federal Book Entry
Regulations (as defined below) are used in this Pledge Agreement as such terms
are defined in such Article 8 or 9 and/or the Federal Book Entry Regulations.
The term "Federal Book Entry Regulations" means (a) the federal regulations
contained in Subpart B ("Treasury/Reserve Automated Debt Entry System (TRADES)")
governing book-entry securities consisting of U.S. Treasury bonds, notes and
bills and Subpart D ("Additional Provisions") of 31 C.F.R. Part 357, 31 C.F.R.
ss. 357.2, ss. 357.10 through ss. 357.14 and ss. 357.41 through ss. 357.44 and
(b) to the extent substantially identical to the federal regulations referred to
in clause(a) above (as in effect from time to time), the federal regulations
governing other book-entry securities.
AGREEMENT
NOW, THEREFORE, in consideration of the premises herein
contained, and in order to induce the initial Holder of the Xerox Funding
Debentures to purchase the Xerox Funding Debentures, the Pledgor hereby agrees
with the Trustee, for the benefit of the Trustee and for the ratable benefit of
the Holder of the Xerox Funding Debentures, as follows:
SECTION 1. Pledge and Grant of Security Interest. The Pledgor
hereby pledges to the Trustee, for its benefit and for the ratable benefit of
the Holder of the Xerox Funding Debentures, and hereby grants to the Trustee, a
security interest and continuing lien in, the Pledgor's right, title and
interest in and to the following, in each case, whether now owned or hereafter
acquired by the Pledgor, wherever located and whether now or hereafter existing
or arising (hereinafter collectively referred to as the "Collateral"):
(a) the Pledged Financial Assets and the certificates, if any,
representing the Pledged Financial Assets, and all dividends,
interest, money (as defined in the UCC), instruments (as defined in
the UCC, the "Instruments") and other property from time to time
received, receivable or otherwise distributed or distributable in
respect of or in exchange for any or all of such Pledged Financial
Assets;
(b) the Pledged Account and all security entitlements with
respect thereto, all Pledged Security Entitlements with respect to all
Pledged Financial Assets from time to time credited to the Pledged
Account, any and all securities accounts in which the Pledged Security
Entitlements are carried, and all dividends, interest, cash,
instruments and other property from time to time
received, receivable or otherwise distributed or distributable in
respect of or in exchange for any or all of such Pledged Security
Entitlements;
(c) all other securities, securities entitlements and other
financial assets hereafter acquired by the Pledgor pursuant to the
Xerox Funding Indenture; and
(d) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of
the types described in clauses (a), (b) and (c) of this Section 1).
SECTION 2. Security for the Obligations. This Pledge Agreement
secures, and the Collateral is collateral security for, the prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of the Obligations or other obligations of the Pledgor, whether for
principal, premium, if any; interest, fees or otherwise, now or hereafter
existing, under this Pledge Agreement, the Xerox Funding Debentures or the Xerox
Funding Indenture (all such obligations being the "Secured Obligations").
Without limiting the generality of the foregoing, this Pledge Agreement secures,
and the Collateral is collateral security for, the payment of all amounts that
constitute part of the Secured Obligations and would be owed by the Pledgor to
the Trustee or the Holder under the Xerox Funding Debentures or the Xerox
Funding Indenture but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving the Pledgor.
SECTION 3. Maintaining the Pledged Account. So long as any
Secured Obligations shall remain outstanding:
(a) The Pledgor will maintain separately the Pledged Account with
Xxxxx Fargo Bank Minnesota, National Association.
(b) It shall be a term and condition of the Pledge Agreement,
notwithstanding any term or condition to the contrary in any other
agreement relating to the Pledged Account, and except as otherwise
provided by the provisions of Section 5 and Section 18 hereof, that no
funds shall be paid or released to or for the account of, or withdrawn
by or for the account of, the Pledgor or any other Person from the
Pledged Account.
The Pledged Account shall be subject to such applicable laws, and
such applicable regulations of the Board of Governors of the Federal
Reserve System and of any other appropriate banking or governmental
authority, as may now or hereafter be in effect.
SECTION 4. Delivery of Collateral. (a) All United States Treasury
securities underlying any Pledged Securities Entitlements shall be delivered by
either (i) causing such United States Treasury securities to be credited to a
securities account of the Account Holder at a Federal Reserve Bank and causing
the Account Holder to credit such United States Treasury securities to the
Pledged Account or (ii) causing such United States Treasury securities to be
credited to a securities account at a Federal Reserve Bank of another securities
intermediary with whom the Account Holder maintains a securities account (such
other securities
intermediary, the "Clearing Bank") and causing the Clearing Bank to credit such
United States Treasury securities to the account of the Account Holder and
causing the Account Holder to credit such United States Treasury securities to
the Pledged Account. All cash, certificated securities or instruments
constituting or representing or evidencing the Pledged Financial Assets shall be
delivered to the Account Holder in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, and in each case shall be credited by the Account Holder to the Pledged
Account.
(b) With respect to any Collateral in which the Pledgor has any
right, title or interest and that constitutes a security entitlement, the
Pledgor shall cause the securities intermediary with respect to such security
entitlement to agree in writing with the Pledgor and the Trustee that such
securities intermediary will comply with entitlement orders (that is,
notifications communicated to such securities intermediary directing transfer or
redemption of the financial asset to which the Pledgor has a security
entitlement) originated by the Trustee without further consent of the Pledgor,
such agreement to be in substantially the form of Annex A hereto or otherwise in
form and substance satisfactory to the Trustee.
(c) With respect to any Collateral that constitutes a securities
account, the Pledgor will comply with subsection (b) of this Section 4 with
respect to all security entitlements carried in such securities account.
(d) Prior to or concurrently with the execution and delivery
hereof and prior to the transfer to the Trustee of the Pledged Security
Entitlements, as provided in subsections (a) through (c) of this Section 4, the
Pledgor shall establish the Pledged Account with Xxxxx Fargo Bank Minnesota,
National Association. Upon transfer of the Pledged Financial Assets to the
Trustee, as confirmed to the Trustee by the securities intermediary, the Trustee
shall make appropriate book entries indicating that the Pledged Financial Assets
have been credited to and are held in the Pledged Account. Subject to the other
terms and conditions of this Pledge Agreement, all funds or other property held
by the Trustee pursuant to this Pledge Agreement shall be held in the Pledged
Account (except as expressly provided in Sections 5(a), (b) and (c) hereof) for
the ratable benefit of the Holder of the Xerox Funding Debentures and segregated
from all other funds or other property otherwise held by the Trustee.
(e) All Collateral shall be retained in the Pledged Account
pending disbursement pursuant to the terms hereof.
(f) Concurrently with the execution and delivery of this Pledge
Agreement, the Trustee is delivering to the Pledgor a duly executed Control
Agreement (the "Control Agreement"), in the form of Annex A hereto.
(g) To the extent required to perfect the security interest in
the Collateral granted hereunder; concurrently with the execution and delivery
of this Pledge Agreement, the Pledgor is delivering to the Trustee
acknowledgment copies or stamped receipt copies of proper financing statements,
duly filed on or before November 27, 2001 under the UCC, covering the Collateral
described in this Pledge Agreement.
SECTION 5. Disbursements. (a) Three business days prior to the
due date of any of the first twelve scheduled interest payments on the Xerox
Funding Debentures, the Pledgor may, pursuant to written instructions given by
the Pledgor to the Trustee (an "Issuer Order"), direct the Trustee to release
from the Pledged Account and pay to the Holder of the Xerox Funding Debentures
proceeds sufficient to provide for payment in full of such interest then due on
the Xerox Funding Debentures. Upon receipt of an Issuer Order, the Trustee will
(i) issue a Payment Order (as defined in the Control Agreement) to the Account
Holder for the release from the Pledged Account of funds to the Trustee in an
amount sufficient to provide for the payment of the interest on the Xerox
Funding Debentures in accordance with such Issuer Order and (ii) pay such funds
to the Holder of the Xerox Funding Debentures in accordance with the Xerox
Funding Indenture and the Xerox Funding Debentures. Nothing in this Section 5
shall affect the Trustee's rights to apply the Collateral to the payments of
amounts due on the Xerox Funding Debentures upon acceleration thereof.
(b) If the Pledgor makes any of the first twelve scheduled
interest payments on the Xerox Funding Debentures or portion of such an interest
payment from a source of funds other than the Pledged Account ("Pledgor Funds"),
the Pledgor may, after payment in full of such interest payment, direct the
Trustee pursuant to an Issuer Order to issue a Payment Order (as defined in the
Control Agreement) to the Account Holder for the release to the Pledgor or to
another party at the direction of the Pledgor (the "Pledgor's Designee") of
proceeds from the Pledged Account in an amount less than or equal to the amount
of Pledgor Funds applied to such interest payment. Upon receipt by the Trustee
of such Issuer Order and provided the Trustee has received such interest
payment, the Trustee shall direct the Account Holder pursuant to a Payment Order
to pay over to the Pledgor or the Pledgor's Designee, as the case may be, the
requested amount from proceeds in the Pledged Account as soon as practicable.
(c) At least three Business Days prior to the due date of each of
the first twelve scheduled interest payments on the Xerox Funding Debentures,
the Pledgor shall give the Trustee notice (by Issuer Order) as to whether such
interest payment will be made pursuant to Section 5(a) or 5(b) above and the
respective amounts of interest that will be paid from the Pledged Account and
from Pledgor Funds. Any Pledgor Funds to be used to make any interest payment
shall be delivered to the Trustee, in immediately available funds, prior to
10:00 a.m. (New York City time) on such interest payment date. If no such notice
is given or such Pledgor Funds have not been so delivered, the Trustee will act
pursuant to Section 5(a) above as if it had received an Issuer Order pursuant
thereto for the payment in full of the interest then due from the Pledged
Account.
(d) The Trustee shall instruct the Account Holder to liquidate
Collateral in the Pledged Account (pursuant to written instructions from
Pledgor) in order to make any of the scheduled payments of interest on the Xerox
Funding Debentures, unless there are sufficient funds in the Pledged Account on
such interest payment date. The Trustee shall be entitled to instruct the
Account Holder to sell any Collateral as contemplated hereunder prior to the
maturity of such Collateral and shall not be responsible for any costs and
expenses of such sale.
(e) Nothing contained in this Pledge Agreement shall (i) afford
the Pledgor any right to issue entitlement orders with respect to any of the
Pledged Security Entitlements or any securities account in which
any such security entitlement may be carried, or otherwise afford the Pledgor
control of any Pledged Security Entitlement or (ii) otherwise give rise to any
rights of Pledgor with respect to the Pledged Financial Assets or any securities
account in which any such security entitlement may be carried, other than the
Pledgor's rights under this Pledge Agreement as the beneficial owner of
collateral pledged to (except as expressly provided in Sections 5(a) and (b)
hereof) the Trustee in its capacity as such (and not as a securities
intermediary) before the payment in full, when due, of the first twelve
scheduled interest payments on the Xerox Funding Debentures. The Pledgor
acknowledges, confirms and agrees that the Trustee is an entitlement holder of
the Pledged Security Entitlements solely as Trustee for the Holder of the Xerox
Funding Debentures and not as a securities intermediary.
SECTION 6. Investing of Amounts in the Pledged Account. If
requested and as directed by the Pledgor, the Trustee will, subject to the
provisions of Sections 3, 5 and 13 of this Pledge Agreement, from time to time,
instruct the Account Holder to invest interest paid on the Pledged Financial
Assets and reinvest other proceeds of any Pledged Financial Assets that may
mature or be sold, in each case, in (i) identified United States Treasury
securities or (ii) selected shares of a money market fund registered under the
Investment Company Act of 1940, as amended, the portfolio of which consists of
United States Treasury securities, in each case credited to the Pledged Account.
The Pledgor may, at any time, so long as no Event of Default has occurred and is
continuing, substitute other United States Treasury securities, having an
equivalent value, for all (but not less than all) of the Pledged Financial
Assets.
SECTION 7. Representations and Warranties. The Pledgor hereby
represents and warrants that:
(a) This Pledge Agreement has been duly authorized, validly
executed and delivered by the Pledgor and constitutes a valid and binding
agreement of the Pledgor, enforceable against the Pledgor in accordance with its
terms, except as (i) the enforceability hereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, preference, reorganization, moratorium or
similar laws now or hereafter in effect relating to or affecting creditors'
rights or remedies generally, (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability, (iii) the exculpation
provisions and rights to indemnification hereunder may be limited by U.S.
federal and state securities laws and public policy considerations and (iv) the
waiver of rights and defenses contained in Section 13(d), Section 19.8 and
Section 19.12 hereof may be limited by applicable law.
(b) The Pledgor's exact legal name, as defined in Section
9-503(a) of the UCC, is Xerox Funding LLC II. The Pledgor is located (within the
meaning of Section 9-307 of the UCC) in the State of Delaware.
(c) The Pledgor is the legal and beneficial owner of the
Collateral free and clear of any lien, claim, option or right of others (except
for the security interests created by this Pledge Agreement). No effective
financing statement or instrument similar in effect covering all or any part of
the Collateral or listing the Pledgor or any trade name of the Pledgor is on
file in any public or recording office, other than the financing statements
filed pursuant to this Pledge Agreement, if any.
(d) All filings and other actions (including, without limitation,
(A) actions necessary to obtain control of the Collateral as provided in Section
9-106 of the UCC and (B) actions necessary to perfect the Trustee's security
interest with respect to the Collateral evidenced by a certificate of ownership)
necessary to perfect the security interest in the Collateral created under this
Pledge Agreement have been duly made or taken and are in full force and effect,
and this Pledge Agreement creates in favor of the Trustee for its benefit and
the ratable benefit of the Holder of the Xerox Funding Debentures a valid and,
together with such filings and other actions, perfected first priority security
interest in the Collateral, securing the payment of the Secured Obligations.
(e) The execution and delivery by the Pledgor of, and the
performance by the Pledgor of its obligations under, this Pledge Agreement will
not contravene any provision of applicable law or the Certificate of
Incorporation of the Pledgor or any material agreement or other material
instrument binding upon the Pledgor or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Pledgor, or
result in the creation or imposition of any lien on any assets of the Pledgor,
except for the security interests granted under this Pledge Agreement.
(f) No consent of any other person and no approval,
authorization, order of, action by notice to, filing or qualification with, any
governmental authority, regulatory body, agency or other third party is required
for (i) the grant by the Pledgor of the assignment, pledge and security interest
granted under this Pledge Agreement, (ii) the execution or delivery by the
Pledgor of, or the performance by the Pledgor of its obligations under, this
Pledge Agreement, (iii) the perfection or maintenance of the assignment, pledge
and security interest created hereunder (including the first priority nature of
such assignment, pledge or security interest), except for the filing of
financing and contribution statements under the UCC, which financing statements
have been duly filed and are in full force and effect, or (iv) for the exercise
by the Trustee of its voting or other rights provided for in this Pledge
Agreement or the remedies in respect of the Collateral pursuant to this Pledge
Agreement, except as may be required in connection with the disposition of any
portion of the Collateral by laws affecting the offering and sale of securities
generally.
(g) There are no legal or governmental proceedings pending or, to
the best of the Pledgor's knowledge, threatened to which the Pledgor is a party
or to which any of the properties of the Pledgor is subject that would
materially adversely affect the power or ability of the Pledgor to perform its
obligations under this Pledge Agreement or to consummate the transactions
contemplated hereby.
(h) The pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by law or governmental regulation (including,
without limitation, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System) applicable to the Pledgor.
(i) No Event of Default (as defined below) exists.
(j) The jurisdiction (for purposes of Section 8-110(e) of the
UCC) of the securities intermediary that maintains the Pledged Account and all
securities accounts carrying the Pledged Securities Entitlements is New York.
SECTION 8. Further Assurances. (a) The Pledgor agrees that from
time to time, at the expense of the Pledgor, the Pledgor will promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Trustee may reasonably request,
in order to perfect and protect any pledge or security interest granted or
purported to be granted hereunder or to enable the Trustee to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, the Pledgor will: (i) if any
Collateral shall be evidenced by a promissory note or other instrument, deliver
and pledge to the Trustee hereunder such note or instrument, duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Trustee; (ii) execute and file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Trustee may reasonably
request, in order to perfect and preserve the pledge and security interest
granted or purported to be granted hereby; (iii) deliver and pledge to the
Trustee, for its benefit and the ratable benefit of the Holder of the Xerox
Funding Debentures, certificates representing Collateral that constitute
certificated securities, accompanied by undated stock or bond powers executed in
blank; and (iv) deliver to the Trustee evidence that all other action that the
Trustee may deem reasonably necessary or desirable in order to perfect and
protect the security interest created by Pledgor under this Pledge Agreement has
been taken.
(b) The Pledgor hereby authorizes the Trustee to file one or more
financing or continuation statements, and amendments thereto, including, without
limitation, one or more financing statements indicating that such financing
statements cover all assets or all personal property (or words of similar
effect), in each case without the signature of the Pledgor, and regardless of
whether any particular asset described in such financing statements falls within
the scope of UCC or the granting clause of this Pledge Agreement. A photocopy or
other reproduction of this Pledge Agreement or any financing statement covering
the Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law. The Pledgor ratifies its authorization for the Trustee
to have filed such financing statements, continuation statements or amendments
filed prior to the date hereof.
(c) The Pledgor will furnish to the Trustee from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Trustee may
reasonably request, all in reasonable detail.
(d) The Pledgor will promptly pay all reasonable costs incurred
in connection with any of the foregoing within 45 days of receipt of an invoice
therefor. The Pledgor also agrees, whether or not requested by the Trustee, to
take all actions that are necessary to perfect or continue the perfection of, or
to protect the first priority of, the Trustee's security interest in and to the
Collateral, including the filing of all necessary financing and continuation
statements, and to protect the Collateral against the rights, claims or
interests of third persons (other than any such rights, claims or interests
created by or arising through the Trustee).
SECTION 9. Covenants. (a) The Pledgor covenants and
agrees with the Trustee and the Holder of the Xerox Funding Debentures that from
and after the date of this Pledge Agreement until the earlier of payment in full
in cash of (x) each of the first twelve scheduled interest payments on the Xerox
Funding Debentures when due under the terms of the Xerox Funding Indenture or
(y) all obligations due and owing under the Xerox Funding Indenture and the
Xerox Funding Debentures in the event such obligations become due and payable
prior to the payment of the first twelve scheduled interest payments on the
Xerox Funding Debentures:
(i) that (A) it will not (and will not purport to)
sell, assign or otherwise dispose of, or grant any option or
warrant with respect to, any of the Collateral or its beneficial
interest therein, and (B) it will not create or suffer to exist
any lien or other adverse interest upon or with respect to any of
the Collateral or its beneficial interest therein (except for the
security interests granted under this Pledge Agreement); and
(ii) that it will not (A) enter into any agreement
or understanding that restricts or inhibits or purports to
restrict or inhibit the Trustee's rights or remedies hereunder,
including, without limitation, the Trustee's right to sell or
otherwise dispose of the Collateral or (B) fail to pay or
discharge any tax, assessment or levy of any nature with respect
to its beneficial interest in the Collateral not later than five
days prior to the date of any proposed sale under any judgment,
writ or warrant of attachment with respect to such beneficial
interest; and
(iii) that it will not change its name, type of
organization, jurisdiction of organization, organizational
identification number or location from those set forth in Section
7(b) hereof without first giving at least 30 days' prior written
notice to the Trustee and taking all action required by the
Trustee for the purpose of perfecting or protecting the security
interest granted by this Pledge Agreement.
SECTION 10. Power of Attorney. In addition to all of the powers
granted to the Trustee pursuant to the Xerox Funding Indenture, the Pledgor
hereby irrevocably appoints the Trustee as the Pledgor's attorney-in-fact (with
full power of substitution), with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Trustee's discretion, to take any action and to execute any instrument that is
necessary or advisable or as the Trustee may deem necessary or advisable to
accomplish the purposes of this Pledge Agreement, including, without limitation:
(a) to ask for, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral,
(b) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a) above,
(c) to file any claims or take any action or institute any
proceedings that the Trustee may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of the Trustee with
respect to any of the Collateral, and
(d) to pay or discharge taxes or liens levied or placed upon the
Collateral that the Pledgor has failed to pay or discharge in accordance
herewith, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Trustee in its sole reasonable
discretion, and such payments made by the Trustee to become part of the
Obligations of the Pledgor to the Trustee, due and payable immediately upon
demand;
provided, however, that the Trustee shall have no obligation to perform any of
the foregoing actions. The Trustee's authority under this Section 10 shall
include, without limitation, the authority to endorse and negotiate any checks
or instruments representing proceeds of Collateral in the name of the Pledgor,
execute and give receipt for any certificate of ownership or any document
constituting Collateral, transfer title to any item of Collateral, sign the
Pledgor's name on all financing statements (to the extent permitted by
applicable law) or any other documents deemed necessary or appropriate by the
Trustee to preserve, protect or perfect the security interest in the Collateral
granted hereunder and to file the same, prepare, file and sign the Pledgor's
name on any notice of lien, and to take any other actions arising from or
incident to the powers granted to the Trustee in this Pledge Agreement. This
power of attorney is coupled with an interest and is irrevocable by the Pledgor.
SECTION 11. No Assumption of Duties; Reasonable Care; Resignation
of Pledge Trustee. (a) The powers conferred on the Trustee hereunder are solely
to protect the security interest of the Trustee for its benefit and the ratable
benefit of the Holder of the Xerox Funding Debentures in the Collateral and
shall not impose any duty on the Trustee to exercise any such powers. Except for
the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Trustee shall have no duty as to
any Collateral as to (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Trustee has or is deemed to have knowledge of
such matters, (ii) taking of any necessary steps to preserve rights against any
parties or any other rights pertaining to any Collateral or (iii) investing or
reinvesting any of the Collateral or any loss on any investment. The Trustee
shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which it accords its own property. The
Trustee shall be entitled to all the rights, benefits, privileges and immunities
accorded to it under the Xerox Funding Indenture.
(b) Subject to the appointment and acceptance of a successor
Trustee as provided below, (a) the Trustee may resign at any time by giving not
less than 20 days prior notice thereof to the Pledgor and the Holders, (b) if
the Trustee fails to perform any of its material obligations hereunder in any
material respect for a period of not less than 20 days after receiving written
notice of such failure by the Holders and such failure shall be continuing, the
Trustee may be removed by the Holders. Upon any such resignation or removal, the
Pledgor shall have the right to appoint a successor Trustee. If no successor
Trustee shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Trustee's giving of notice of resignation or
such removal, then the retiring Trustee, may, at the expense of the Pledgor,
petition any court of competent jurisdiction for the appointment of a
successor Trustee. The Trustee shall be a bank or other financial institution
which has an office in New York, New York with a combined capital and surplus of
at least $50,000,000. Upon the acceptance of any appointment as Trustee
hereunder by a successor Trustee, such successor shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Trustee and the retiring Trustee shall take all appropriate action to transfer
any money and property held by it hereunder (including the Collateral) to such
successor. The retiring Trustee shall, upon such succession, be discharged from
its duties and obligations as Trustee. After any retiring Trustee's resignation
hereunder as Trustee, the provisions of Section 11(a) and 12 shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Trustee.
SECTION 12. Indemnity and Expenses. (a) The Pledgor agrees to
indemnify, defend and save and hold harmless the Trustee and its officers,
directors, employees, agents and advisors (each, an "Indemnified Party") from
and against, and shall pay on demand, any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or
resulting from this Pledge Agreement (including, without limitation, enforcement
of this Pledge Agreement), except to the extent such claim, damage, loss,
liability or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct.
(b) The Pledgor will upon demand pay to the Trustee the amount of
any and all reasonable fees and expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Trustee may incur in connection with (i) the review, negotiation and
administration of this Pledge Agreement, (ii) the custody or preservation of, or
the sale of, collection from or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Trustee or the
Holder of the Xerox Funding Debentures hereunder or (iv) the failure by the
Pledgor to perform or observe any of the provisions hereof.
SECTION 13. Remedies. If any Event of Default under the Xerox
Funding Indenture or default hereunder (any such Event of Default or default
being referred to in this Pledge Agreement as an "Event of Default") shall have
occurred and be continuing:
(a) The Trustee and the Holder of the Xerox Funding Debentures
may exercise in respect of the Collateral, in addition to all other rights and
remedies given by law or by this Pledge Agreement or the Xerox Funding
Indenture, all of the rights and remedies of a secured party under the UCC
(whether or not the UCC applies to the affected Collateral) and also may: (i)
require the Pledgor to, and the Pledgor hereby agrees that it will at its
expense and upon request of the Trustee forthwith, assemble all or part of the
Collateral as directed by the Trustee and make it available to the Trustee at a
place and time to be designated by the Trustee that is reasonably convenient to
both parties and (ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at any broker's board or
at public or private sale, in one or more sales or lots, at any of the Trustee's
offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Trustee may deem
commercially reasonable. The Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to the Pledgor 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 Trustee shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Trustee 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
purchaser of any or all Collateral so sold shall thereafter hold the same
absolutely, free from any claim, encumbrance or right of any kind whatsoever
created by or through the Pledgor. Any sale of the Collateral conducted in
conformity with reasonable commercial practices of banks, insurance companies,
commercial finance companies, or other financial institutions disposing of
property similar to the Collateral shall be deemed to be commercially
reasonable. The Trustee or the Holder of Xerox Funding Debentures may, in its
own name or in the name of a designee or nominee, buy any of the Collateral at
any public sale and, if permitted by applicable law, at any private sale. All
expenses (including court costs and reasonable attorneys' fees, expenses and
disbursements) of, or incident to, the enforcement of any of the provisions
hereof shall be recoverable from the proceeds of the sale or other disposition
of the Collateral.
(b) Any cash held by or on behalf of the Trustee and all cash
proceeds received by or on behalf of the Trustee in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Trustee, be held by the Trustee as collateral for,
and/or then or at any time thereafter applied (after payment of any amounts
payable to the Trustee pursuant to Section 12(b) of this Pledge Agreement) in
whole or in part by the Trustee for the ratable benefit of the Holder of the
Xerox Funding Debentures against, all or any part of the Secured Obligations in
such order as the Trustee shall elect. Any surplus of such cash or cash proceeds
held by or on behalf of the Trustee and remaining after payment in full of all
the Secured Obligations shall be paid over to the Pledgor.
(c) The Trustee may, without notice to the Pledgor except as
required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Secured Obligations against the Pledged
Account or any part thereof.
(d) The Pledgor agrees to (i) provide the Trustee with such
information as may be necessary, or in the opinion of the Trustee, advisable to
enable the Trustee to effect the sale of the Collateral and (ii) use its
reasonable best efforts to do or cause to be done all such other acts and things
as may be necessary to make such sale or sales of all or any portion of the
Collateral pursuant to this Section 13 valid and binding and in compliance with
any and all other applicable requirements of law. The Pledgor further agrees
that a breach of any of the covenants contained in this Section 13(d) will cause
irreparable injury to the Trustee and the Holder of the Xerox Funding
Debentures, that the Trustee and the Holder of the Xerox Funding Debentures have
no adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 13(d) shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such covenants
except for a defense that no Event of Default has occurred and is continuing.
(e) The Pledgor acknowledges the impossibility of ascertaining
the amount of damages that would be suffered by the Trustee or the Holder of the
Xerox Funding Debentures by reason of the failure by the Pledgor to perform any
of the covenants contained in Section 13(d) above and, consequently, agrees
that, if the Pledgor shall fail to perform any of such covenants, it will pay,
as liquidated damages and not as a penalty, an amount equal to the value of the
Collateral on the date the Trustee shall demand compliance with Section 13(d)
above.
SECTION 14. Security Interest Absolute. All rights of the Trustee
and the Holder of the Xerox Funding Debentures and the pledges, assignments and
security interests hereunder, and all obligations of the Pledgor hereunder,
shall be irrevocable, absolute and unconditional irrespective of, and the
Pledgor hereby irrevocably waives (to the maximum extent permitted by applicable
law) any defenses it may now have or may hereafter acquire in any way relating
to, any or all of the following:
(a) any lack of validity or enforceability of the Xerox Funding
Indenture or Xerox Funding Debentures or any other agreement or instrument
relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other amendment
or waiver of or any consent to any departure from the Xerox Funding Indenture or
Xerox Funding Debentures or any other agreement or instrument relating thereto;
(c) any taking, exchange or release of, or non-perfection of any
liens on, any Collateral or any other collateral for all or any of the Secured
Obligations;
(d) any manner of application of any Collateral or any other
collateral, or proceeds thereof, to all or any of the Secured Obligations, or
any manner of sale or other disposition of any Collateral or any other
collateral for all or any of the Secured Obligations or any other assets of the
Pledgor;
(e) any change, restructuring or termination of the corporate
structure or existence of the Pledgor; or
(f) to the extent permitted by applicable law, any other
circumstance (including, without limitation, any statute of limitations) or any
existence of or reliance on any representation by the Trustee or the Holder of
the Xerox Funding Debentures, which might otherwise constitute a defense
available to, or a discharge of, the Pledgor in respect of the Secured
Obligations or of this Pledge Agreement.
This Pledge Agreement shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Secured Obligations is
rescinded or must otherwise be returned by the Trustee or the Holder of the
Xerox Funding Debentures or by any other Person upon the insolvency, bankruptcy
or reorganization of the Pledgor or otherwise, all as though such payment had
not been made.
SECTION 15. Amendments, Waivers and Consents. (a) No amendment or
waiver of any provision of this Pledge Agreement, and no consent
to any departure by the Pledgor from any provision of this Pledge Agreement,
shall in any event be effective unless the same shall be in writing and signed
by the Trustee and the Pledgor, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of the Trustee or the Holder of the Xerox Funding
Debentures to exercise, and no delay in exercising any right hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.
SECTION 16. Notices. Any notice or communication given hereunder
shall be sufficiently given if in writing and delivered in person or mailed by
first class mail, commercial courier service or telecopier communication,
addressed as follows; or, as to any party, at such other address as shall be
designated by such party in a written notice to the other parties:
if to the Pledgor:
Xerox Funding LLC II
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Treasurer
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxx
if to the Trustee:
Xxxxx Fargo Bank Minnesota, National Association
Sixth and Marquette
MAC X0000-000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Corporate Trust Services
Fax: (000) 000-0000
All such notices and other communications shall, when mailed, delivered or
telecopied, respectively, be effective when deposited in the mails, delivered or
telecopied, respectively, addressed as aforesaid.
SECTION 17. Continuing Security Interest. This Pledge Agreement
shall create a continuing security interest in the Collateral and (a) shall,
unless otherwise provided in this Pledge Agreement, remain in full force and
effect until the payment in full in cash of the Secured Obligations, (b) be
binding upon the Pledgor, its successors and assigns and (c) inure, together
with the rights and remedies of the Trustee hereunder, to the benefit of the
Trustee and the Holder of the Xerox Funding Debentures and their respective
successors, transferees and assigns.
SECTION 18. Termination. So long as no Event of Default
shall have occurred and be continuing, this Pledge Agreement (other than
Pledgor's obligations under Section 12 hereof) shall terminate upon the earlier
of (i) the redemption, purchase by the Pledgor or conversion of the Xerox
Funding Debentures in whole, (ii) the payment in full of each of the first
twelve scheduled interest payments on the Xerox Funding Debentures when due, or
(iii) the discharge of the Xerox Funding Indenture. Upon any such termination,
without any necessary action on the part of the Pledgor, (i) the Control
Agreement(s) will terminate and control of the Pledged Account and the Pledged
Security Entitlements shall revert to the Pledgor, (ii) the Trustee shall
promptly obtain from the Account Holder and deliver to the Pledgor all
certificates and instruments representing any portion of the Pledged Financial
Assets constituting certificated securities and (iii) the Trustee shall no
longer have any rights in any of the Collateral.
SECTION 19. Miscellaneous Provisions.
SECTION 19.1. No Adverse Interpretation of Other Agreements. This
Pledge Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor or any subsidiary thereof. No such pledge, security or
debt agreement (other than the Xerox Funding Indenture) may be used to interpret
this Pledge Agreement.
SECTION 19.2. Severability. The provisions of this Pledge
Agreement are severable, and if any clause or provision shall be held invalid,
illegal or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect in that jurisdiction only such
clause or provision, or part thereof, and shall not in any manner affect such
clause or provision in any other jurisdiction or any other clause or provision
of this Pledge Agreement in any jurisdiction.
SECTION 19.3. Headings. The headings in this Pledge Agreement
have been inserted for convenience of reference only, are not to be considered a
part hereof and shall in no way modify or restrict any of the terms or
provisions hereof.
SECTION 19.4. Counterpart Originals. This Pledge Agreement may be
signed in two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement. Delivery
of an executed counterpart of a signature page to this Pledge Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Pledge Agreement.
SECTION 19.5. Benefits of Pledge Agreement. Nothing in this
Pledge Agreement, express or implied, shall give to any person, other than the
parties hereto and their successors hereunder, and the Holder of the Xerox
Funding Debentures and the Account Holder, any benefit or any legal or equitable
right, remedy or claim under this Pledge Agreement.
SECTION 19.6. Interpretation of Agreement. To the extent a term
or provision of this Pledge Agreement conflicts with the Xerox Funding
Indenture, the Xerox Funding Indenture shall control with respect to the subject
matter of such term or provision. Acceptance of or acquiescence in a course of
performance rendered under this Pledge Agreement shall not be relevant to
determine the meaning of this Pledge Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
SECTION 19.7. Survival of Representations and Covenants. All
representations, warranties and covenants of the Pledgor contained herein shall
survive the execution and delivery of this Pledge Agreement, and shall terminate
only upon the termination of this Pledge Agreement, except as otherwise
specified in such representatives, warranties and covenants.
SECTION 19.8. Waivers. The Pledgor waives presentment and demand
for payment of any of the Obligations, protest and notice of dishonor or default
with respect to any of the Obligations, and all other notices to which the
Pledgor might otherwise be entitled, except as otherwise expressly provided
herein or in the Xerox Funding Indenture.
SECTION 19.9. Authority of the Trustee. (a) The Trustee shall
have and be entitled to exercise all powers hereunder that are specifically
granted to the Trustee by the terms hereof, together with such powers as are
reasonably incident thereto. The Trustee may perform any of its duties hereunder
or in connection with the Collateral by or through agents or employees and shall
be entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. Except as otherwise expressly provided in this
Pledge Agreement or the Xerox Funding Indenture, neither the Trustee nor any
director, officer, employee, attorney or agent of the Trustee shall be liable to
the Pledgor for any action taken or omitted to be taken by the Trustee, in its
capacity as Trustee, hereunder, except for its own bad faith, gross negligence
or willful misconduct, and the Trustee shall not be responsible for the
validity, effectiveness or sufficiency hereof or of any document or security
furnished pursuant hereto. The Trustee and its directors, officers, employees,
attorneys and agents shall be entitled to rely on any communication, instrument
or document believed by it or them to be genuine and correct and to have been
signed or sent by the proper person or persons.
(b) The Pledgor acknowledges that the rights and responsibilities
of the Trustee under this Pledge Agreement with respect to any action taken by
the Trustee or the exercise or non-exercise by the Trustee of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Pledge Agreement shall, as between the Trustee and the
Holder of the Xerox Funding Debentures, be governed by the Xerox Funding
Indenture and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Trustee and the Pledgor, the
Trustee shall be conclusively presumed to be acting as agent for the Holder of
the Xerox Funding Debentures with full and valid authority so to act or refrain
from acting, and the Pledgor shall not be obligated or entitled to make any
inquiry respecting such authority.
SECTION 19.10. Final Expression. This Pledge Agreement, together
with the Xerox Funding Indenture and any other agreement executed in connection
herewith, is intended by the parties as a final expression of this Pledge
Agreement and is intended as a complete and exclusive statement of the terms and
conditions thereof.
SECTION 19.11. Rights of the Holder of the Xerox Funding
Debentures. No Holder of Xerox Funding Debentures shall have any independent
rights hereunder other than those rights granted to an individual Holder of the
Xerox Funding Debentures pursuant to the Xerox Funding Indenture;
provided that nothing in this subsection shall limit any rights granted to the
Trustee under the Xerox Funding Debentures or the Xerox Funding Indenture.
SECTION 19.12. Governing Law; Submission to Jurisdiction; Waiver
of Jury Trial; Waiver of Damages. (a) This Pledge Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.
(b) The Pledgor agrees that the Trustee shall, in its capacity as
trustee or in the name and on behalf of the Holder of Xerox Funding Debentures,
have the right, to the extent permitted by applicable law, to proceed against
the Pledgor or the Collateral in a court in any location reasonably selected in
good faith (and having personal or in rem jurisdiction over the Pledgor or the
Collateral, as the case may be) to enable the Trustee to realize on the
Collateral, or to enforce a judgment or other court order entered in favor of
the Trustee. The Pledgor agrees that it will not assert any counterclaims,
setoffs or crossclaims in any proceeding brought by the Trustee to realize on
such property or to enforce a judgment or other court order in favor of the
Trustee, except for such counterclaims, setoffs or crossclaims which, if not
asserted in any such proceeding, could not otherwise be brought or asserted. The
Pledgor waives any objection that it may have to the location of the court in
The City of New York once the Trustee has commenced a proceeding described in
this paragraph including, without limitation, any objection to the laying of
venue or based on the grounds of forum non conveniens.
(c) The Pledgor agrees that neither the Holder of Xerox Funding
Debentures nor (except as otherwise provided in this Pledge Agreement or the
Xerox Funding Indenture) the Trustee in its capacity as trustee shall have any
liability to the Pledgor (whether arising in tort, contract or otherwise) for
losses suffered by the Pledgor in connection with, arising out of, or in any way
related to, the transactions contemplated and the relationship established by
this Pledge Agreement, or any act, omission or event occurring in connection
therewith, unless it is determined by a final and nonappealable judgment of a
court that is binding on the Trustee or such Holder of Xerox Funding Debentures,
as the case may be, that such losses were the result of acts or omissions on the
part of the Trustee or such Holder of Xerox Funding Debentures, as the case may
be, constituting bad faith, gross negligence or willful misconduct.
(d) To the extent permitted by applicable law, the Pledgor waives
the posting of any bond otherwise required of the Trustee or the Holder of Xerox
Funding Debentures in connection with any judicial process or proceeding to
enforce any judgment or other court order pertaining to this Pledge Agreement or
any related agreement or document entered in favor of the Trustee or the Holder
of Xerox Funding Debentures, or to enforce by specific performance, temporary
restraining order or preliminary or permanent injunction, this Pledge Agreement
or any related agreement or document between the Pledgor on the one hand and the
Trustee and/or the Holder of the Xerox Funding Debentures on the other hand.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the Pledgor and the Trustee have each caused
this Pledge Agreement to be duly executed and delivered as of the date first
above written.
Pledgor:
XEROX FUNDING LLC II
By:
-------------------------------
Name:
Title:
Trustee:
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By:
-------------------------------
Name:
Title:
SCHEDULE I
Pledged Financial Assets
Security Maturity Date CUSIP No.
-------- ------------- ---------
Treasury xxxx 02/7/2002 000000XX0
Coupon 05/15/2002 000000X00
Strip 08/15/2002 000000XX0
Coupon 11/15/2002 000000XX0
Strip 02/15/2003 000000XX0
Coupon 05/15/2003 000000XX0
Strip 08/15/2003 000000XX0
Coupon 11/15/2003 000000XX0
Strip 02/15/2004 912810BH9
Coupon 05/15/2004 000000X00
Strip 08/15/2004 000000XX0
Strip 11/15/2004 000000XX0
ANNEX A
CONTROL AGREEMENT
This CONTROL AGREEMENT (the "Agreement") dated as of November 27,
2001 by and among Xerox Funding LLC II (the "Pledgor") and Xxxxx Fargo Bank
Minnesota, National Association, a national banking association with trust
power, in its capacity as trustee (the "Trustee") and Xxxxx Fargo Bank
Minnesota, National Association, a national banking association, in its capacity
as securities intermediary and depository bank (the "Account Holder").
PRELIMINARY STATEMENTS:
(1) The Pledgor has granted the Trustee a security interest (the
"Security Interest") in certain security entitlements (the "Pledged Security
Entitlements") with respect to certain U.S. Treasury securities identified on
Schedule I attached hereto maintained by the Trustee with the Account Holder and
carried from time to time and all other financial assets credited from time to
time (the "Pledged Financial Assets") in an account with the Account Holder, ABA
No. 000000000, Account No. 00000000 at its office at Sixth and Marquette, MAC
N9303-120, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Corporate Trust Services, in
the name of "Xerox Funding LLC II, subject to the security interest of Xxxxx
Fargo Bank Minnesota, National Association, as Trustee for the benefit of the
holder of the 7 1/2% Convertible Junior Subordinated Debentures due 2021 of
Xerox Funding LLC II, Collateral Pledge Account" (the "Pledged Account") and all
additions thereto and substitutions and proceeds thereof (collectively, the
"Collateral"), pursuant to, and as more particularly described in, a Pledge
Agreement dated as of November 27, 2001, among the Pledgor and the Trustee (as
the same may hereafter be amended, supplemented or otherwise modified from time
to time, the "Pledge Agreement"; terms defined in the Pledge Agreement and not
otherwise defined herein are used herein as therein defined). The Pledgor
acknowledges having received value for such pledge of the Collateral.
(2) Terms defined in Article 8 or 9 of the Uniform Commercial
Code as in effect in the State of New York (the "UCC") are used in this
Agreement (including, without limitation, paragraph (1) above) as such terms are
defined in such Article 8 or 9.
(3) The Pledgor, the Trustee and the Account Holder are
delivering this Agreement pursuant to the terms of the Pledge Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, the parties hereto hereby agree as follows:
SECTION 1. Notice of Exclusive Control. The Pledgor and Trustee
are entering into this Agreement to perfect, and confirm the first priority lien
of, the Trustee's security interest in the Collateral. The Account Holder agrees
to promptly make all necessary entries or notations in its books and records to
reflect the Trustee's security interest in the Collateral and to apply any value
distributed on account of any Pledged Financial Assets as directed in writing by
the Trustee without further consent from the Pledgor.
SECTION 2. The Account. The Account Holder represents and
warrants to, and agrees with, the Pledgor and the Trustee and the Holder of the
Xerox Funding Debentures that:
(a) The Account Holder shall not change the name or account
number of the Pledged Account without the prior written consent of the Trustee.
(b) The Account Holder maintains the Pledged Account for the
Trustee, and all property (including, without limitation, all funds and
financial assets) held by the Account Holder for the account of the Pledgor is,
and will continue to be, credited to the Pledged Account.
(c) To the extent that funds are credited to the Pledged Account,
the Pledged Account is a deposit account; and to the extent that financial
assets are credited to the Pledged Account, the Pledged Account is a securities
account. The Account Holder is (i) the bank with which the Pledged Account is
maintained and (ii) the securities intermediary with respect to financial assets
held in the Pledged Account. The Trustee is (x) the Account Holder's customer
with respect to the Pledged Account and (y) the entitlement holder with respect
to financial assets credited from time to time to the Pledged Account.
(d) All financial assets in registered form or payable to or to
the order of and credited to the Pledged Account shall be registered in the name
of, payable to or to the order of, or endorsed to, the Account Holder and in no
case during the term of the Pledge Agreement will any financial asset credited
to the Pledged Account be registered in the name of, payable to or to the order
of, or endorsed to, the Pledgor, except to the extent the foregoing have been
subsequently endorsed by the Pledgor to the Account Holder or in blank.
(e) Notwithstanding any other agreement to the contrary, the
Account Holder's jurisdiction with respect to the Pledged Account for purposes
of the UCC (including Sections 9-304 and 8-110 thereof) is, and will continue to
be for so long as the Security Interest shall be in effect, the State of New
York.
(f) The Account Holder does not know of any claim to or interest
in the Pledged Account or any property (including, without limitation, all funds
and financial assets) credited to the Pledged Account, except for claims and
interests of the parties referred to in this Agreement.
SECTION 3. Control by Trustee. (a) The Account Holder will comply
with (A) all written instructions directing disposition of the funds in the
Pledged Account (such instructions, a "Payment Order"), (B) all notifications
and entitlement orders that the Account Holder receives directing it to transfer
or redeem any financial asset in the Pledged Account and (C) all other
directions concerning the Collateral, including, without limitation, directions
to distribute to the Trustee proceeds of any such transfer or redemption or
interest on any property in the Pledged Account (any such instruction,
notification or direction referred to in clause (A), (B) or (C) above being an
"Account Direction"), in each case of clauses (A), (B) and (C) above originated
by the Trustee without further consent by the Pledgor or any other person.
(b) The Trustee hereby acknowledges that it shall maintain the
Pledged Account on behalf of the Holder of the Xerox Funding Debentures.
SECTION 4. Priority of Trustee's Security Interest. (a) The
Account Holder (i) subordinates to the Security Interest and in favor of the
Trustee any security interest, lien, or right of setoff the Account Holder may
have, now or in the future, against the Pledged Account or property in the
Pledged Account, and (ii) agrees that it will not exercise any right in respect
of any such security interest or lien or any such right of setoff until the
Security Interest is terminated, except that the Account Holder will retain its
prior lien on property in the Pledged Account to secure payment for property
purchased for the Pledged Account and normal commissions and fees for the
Pledged Account.
(b) The Account Holder will not enter into any other agreement
with any Person relating to Account Directions or other directions with respect
to the Pledged Account.
SECTION 5. Statements, Confirmations, and Notices of Adverse
Claims. (a) The Account Holder will send copies of all statements and
confirmations for the Pledged Account simultaneously to the Pledgor and the
Trustee.
(b) When the Account Holder knows of any claim or interest in the
Pledged Account or any property credited to the Pledged Account other than the
claims and interests of the parties referred to in this Agreement, the Account
Holder will promptly notify the Trustee and the Pledgor of such claim or
interest.
SECTION 6. The Account Holder's Responsibility. (a) The Account
Holder will not be liable to the Pledgor or the Trustee or the Holder of the
Xerox Funding Debentures for complying with an Account Direction or other
direction concerning the Collateral originated by the Trustee, even if the
Pledgor notifies the Account Holder that the Trustee is not legally entitled to
issue the Account Direction or such other direction unless the Account Holder
takes the action after it is served with an injunction, restraining order, or
other legal process enjoining it from doing so, issued by a court of competent
jurisdiction, and had a reasonable opportunity to act on the injunction,
restraining order or other legal process.
(b) This Agreement does not create any obligation of the Account
Holder except for those expressly set forth in this Agreement and in Part 5 of
Article 8 of the UCC and in Article 4 of the UCC. In particular, the Account
Holder need not investigate whether the Trustee is entitled under the Trustee's
agreements with the Pledgor to give an Account Direction or other direction
concerning the Pledged Account. The Account Holder may conclusively rely on
notices and communications it believes given by the appropriate party.
(c) In no event shall the Account Holder or any of its
affiliates, shareholders, directors, officers, employees or agents be liable for
indirect, special, punitive, incidental or consequential damages of any kind
whatsoever even if advised of the possibility of such damages, other than such
damages caused by its own bad faith, gross negligence or willful misconduct.
(d) Without limiting the foregoing, and notwithstanding any
provision to the contrary elsewhere, the Account Holder and its affiliates,
shareholders, directors, officers, employees or agents:
(i) shall have no responsibilities, obligations or duties in
respect of the subject matter hereof other than those expressly set
forth in this Agreement, and no implied duties, responsibilities,
covenants or obligations shall be read into this Agreement against the
Account Holder. Without limiting the foregoing, the Account Holder
shall have no duty or authority to determine and/or investigate
whether or not an event of default exists under any agreement between
the Pledgor and the Trustee, or to determine and/or investigate
whether or not the Trustee is entitled to give any Account Direction
with respect to the Collateral;
(ii) may in any instance where the Account Holder determines that
it lacks or is uncertain as to its authority to take or refrain from
taking certain action hereunder, or as to any of the requirements of
this Agreement under the circumstance before it, delay or refrain from
taking any action unless and until it shall have received appropriate
written instructions from the Trustee or advice from legal counsel
selected by it (or other appropriate advisor), as the case may be,
detailing the action required to be taken hereunder and the Account
Holder may rely conclusively on any such instructions or advice;
(iii) so long as it and they shall have acted (or refrained from
acting) in good faith and within the reasonable belief that such
action or omission is duly authorized or within the discretion or
powers granted to it hereunder, shall not be responsible or liable for
any error of judgment in any action taken, suffered or omitted by it
or them, or for any act done or step taken or omitted, or for any
mistake of fact or law, unless such action constitutes gross
negligence or willful misconduct as finally determined by a
nonappealable judgment of a court of competent jurisdiction on its (or
their) part;
(iv) will not be responsible or liable to the Pledgor, the
Trustee, or any other person or entity whatsoever for the due
execution, legality, validity, enforceability, genuineness,
effectiveness or sufficiency of this Agreement (provided, however,
that the Account Holder warrants that the Account Holder has legal
capacity and has been duly authorized to enter into this Agreement) or
for any statement, warranty or representation made by any other party
in connection with this Agreement;
(v) will not incur any responsibility or liability by acting or
not acting in reliance upon advice of counsel, or upon any notice,
consent, certificate, instruction, Account Direction, statement, wire
instruction, telecopy or other writing reasonably and in good faith
believed by it or them to be genuine and in conformance with this
Agreement and signed or sent by the proper party or parties and
contemplated herein;
(vi) shall not be required to expend or risk its or their own
funds, or to take any action (including the institution or defense of
legal proceedings) which in its or their reasonable judgment may
cause it or them to incur or suffer any expense or liability, unless the
Account Holder shall have been provided with security or indemnity,
acceptable to Account Holder in its sole discretion, for the payment of the
costs, expenses (including reasonable attorneys' fees) and liabilities
which may be incurred therein or thereby.
(e) If any Collateral subject to this Agreement is at any time
attached or levied upon, or in case the transfer or delivery of any such
Collateral shall be stayed or enjoined, or in the case of any other legal
process or judicial order affecting such Collateral, the Account Holder is
authorized to comply with any such order in any manner as the Account Holder or
its legal counsel reasonably deems appropriate. The Account Holder shall give
prompt written notice, unless legally prohibited from doing so, to the Pledgor
and the Trustee of any such attachment, levy, stay, injunction or legal process.
If the Account Holder complies with any process, order, writ, judgment or decree
relating to the Collateral subject to this Agreement, then the Account Holder
shall not be liable or responsible to the Pledgor, the Trustee, or any other
person or entity whatsoever even if such order, writ, judgment, decree or
process is subsequently modified, vacated or otherwise determined to have been
without legal force or effect.
(f) The Account Holder shall not be liable or responsible for any
delays or failures in performance of any of its duties hereunder which result
from events or conditions beyond its reasonable control and so long as the same
exist or continue and cannot reasonably be remedied by the Account Holder in
accordance with its normal business practices. Such events or conditions shall
include, but shall not be limited to, acts of God, strikes, lockouts, riots,
acts of war or terrorism, epidemics, nationalization, expropriation, currency
restrictions, governmental regulations superimposed after the fact, fire,
communication line failures (including the unavailability of the Federal Reserve
Bank wire or telex or other wire or communication facility), power failures,
earthquakes or other disasters.
SECTION 7. Indemnity. The Pledgor will indemnify the Account
Holder, its officers, directors, employees and agents against claims,
liabilities and expenses arising out of this Agreement (including, without
limitation, reasonable attorney's fees and disbursements), except to the extent
the claims, liabilities or expenses are caused by the Account Holder's gross
negligence or willful misconduct as found by a court of competent jurisdiction
in a final, non-appealable judgment.
SECTION 8. Termination; Survival. (a) This Agreement shall
terminate automatically upon receipt by the Account Holder of written notice
executed by two officers of the Trustee that (i) all of the Secured Obligations
have been paid in full in cash or otherwise satisfied or (ii) all of the
Collateral has been released, which ever is earlier, and the Account Holder
shall thereafter be relieved of all duties and obligations hereunder. The
Account Holder may terminate this Agreement on 60 days' prior notice to the
Trustee and the Pledgor, provided that before such termination the Account
Holder and the Pledgor shall make arrangements to transfer the property in the
Pledged Account to another securities intermediary that shall have executed,
together with the Trustee and the Pledgor, a control agreement in favor of the
Trustee and the Holder of the Xerox Funding Debentures in respect of such
property in substantially the form of this Agreement or otherwise in form and
substance satisfactory to
the Trustee.
(b) In the event that the Trustee no longer serves as Trustee for
the Collateral, the Trustee, the Account Holder and the Pledgor shall make
arrangements for another Person to assume the rights and obligations of the
Trustee hereunder, and such Person shall have executed, together with the
Account Holder and the Pledgor, a control agreement in favor of such Person and
the Holder of the Xerox Funding Debentures in substantially the form of this
Agreement or otherwise in form and substance satisfactory to the Trustee.
(c) Sections 7 and 8 will survive termination of this Agreement.
SECTION 9. Conflict with Other Agreements. (a) In the event of
any conflict between this Agreement (or any portion thereof) and any other
agreement now existing or hereafter entered into, the terms of this Agreement
shall prevail;
(b) No amendment or modification of this Agreement or waiver of
any right hereunder shall be binding on any party hereto unless it is in writing
and is signed by all of the parties hereto;
(c) The Account Holder hereby confirms and agrees that:
(i) There are no other agreements entered into between the
Account Holder and the Pledgor with respect to the Pledged Account;
(ii) It has not entered into, and until the termination of
the this Agreement will not enter into, any agreement with any other
person relating to the Pledged Account and/or any financial assets
credited thereto pursuant to which it has agreed to comply with
entitlement orders (as defined in Section 8-102(a)(8) of the UCC) of
such other person; and
(iii) It has not entered into, and until the termination of
this Agreement will not enter into, any agreement with the Pledgor or
the Trustee purporting to limit or condition the obligation of the
Account Holder to comply with Account Directions as set forth in
Section 3 hereof.
SECTION 10. Permitted Investments. In accordance with the Pledge
Agreement, the Trustee (or the Pledgor, as the case may be) shall direct the
Account Holder with respect to the selection of investments to be made with the
funds in the Pledged Account.
SECTION 11. Entire Agreement. This Agreement is the entire
agreement, and supersedes any prior agreements, and contemporaneous oral
agreements, of the parties concerning its subject matter. The Trustee and the
Account Holder shall be entitled to all the rights, benefits, privileges and
immunities accorded to the Trustee under the Xerox Funding Indenture.
SECTION 12. Amendments. No modification, amendment or waiver of,
nor consent to any departure by any party from, any provision of this Agreement
will be effective unless made in writing signed by the
parties hereto, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.
SECTION 13. Financial Assets. The Account Holder agrees with
Trustee and the Pledgor that, to the fullest extent permitted by applicable law,
all property credited from time to time to the Pledged Account will be treated
as financial assets under Article 8 of the UCC.
SECTION 14. Notices. All notices, demands, requests, consents,
approvals and other communications required or permitted hereunder must be in
writing and will be effective upon receipt if delivered personally, or if sent
by facsimile transmission with confirmation of delivery, or by nationally
recognized overnight courier service, to the Pledgor's and the Trustee's
addresses as set forth in the Pledge Agreement, and to the Account Holder's
address as set forth below, or to such other address as any party may give to
the others in writing for such purpose.
SECTION 15. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Pledgor, the Trustee and the Account
Holder, and thereafter shall be binding upon and inure to the benefit of the
Pledgor, the Trustee and the Account Holder and their respective successors and
assigns.
SECTION 16. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.
SECTION 17. Governing Law and Jurisdiction. THIS AGREEMENT WILL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. Each of the parties hereby irrevocably submits for itself and its property
in any legal action or proceeding relating to this Agreement, or for recognition
and enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction and venue of the courts of the State of New York, the courts of the
United States of America in New York, and appellate courts from any thereof.
SECTION 18. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) OF
ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. EACH
PARTY HERETO ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.
Pledgor:
XEROX FUNDING LLC II
By:
-----------------------------------
Name:
Title:
Trustee:
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By:
-----------------------------------
Name:
Title:
Account Holder:
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Account Holder
By:
-----------------------------------
Name:
Title:
Address:
Sixth and Marquette
MAC X0000-000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Corporate Trust Services
Fax: (000) 000-0000
SCHEDULE I
Pledged Financial Assets
Security Maturity Date CUSIP No.
-------- ------------- ---------
Treasury xxxx 02/7/2002 000000XX0
Coupon 05/15/2002 000000X00
Strip 08/15/2002 000000XX0
Coupon 11/15/2002 000000XX0
Strip 02/15/2003 000000XX0
Coupon 05/15/2003 000000XX0
Strip 08/15/2003 000000XX0
Coupon 11/15/2003 000000XX0
Strip 02/15/2004 912810BH9
Coupon 05/15/2004 000000X00
Strip 08/15/2004 000000XX0
Strip 11/15/2004 000000XX0
