PLEDGE AND SECURITY AGREEMENT
Exhibit 3(d)
This Pledge and Security
Agreement (this
“Security
Agreement”) is entered
into as of __________, 2020, by and among Red Oak Capital Fund V,
LLC, a Delaware limited liability company
(“Grantor”), and UMB Bank, N.A., in its capacity as
indenture trustee under the Indenture (as defined below) and
collateral agent hereunder (the “Trustee”), for the benefit of the holders of Series
A Bonds and Series A R-Bonds issued by Grantor under the Indenture
(as defined in the Indenture).
INTRODUCTION
A. The
Indenture contemplates and permits the grant of collateral security
for certain debt securities of the Grantor that may from time to
time be issued thereunder and, as of the date hereof, the only
classes of debt securities issued under the Indenture are
denominated as “Series A Bonds” and “Series A
R-Bonds.” The grant of such collateral security shall be
accomplished pursuant to the Indenture and a Pledge and Security
Agreement by and among the parties.
B. The
Grantor is entering into this Security Agreement to state the terms
under which they have granted a security interest in those assets
specified herein pursuant to the Security Agreement, as collateral
security for the obligations owing in respect of the Bonds (defined
below) issued under the Indenture
(the “Secured
Obligations”). The
Trustee serves as indenture trustee under the Indenture and hereby
agrees to serve as collateral agent hereunder for the benefit of
the holders of Bonds issued under the
Indenture.
AGREEMENT
Now
Therefore, the Grantor and the
Trustee hereby agree as follows:
Article 1
Definitions
1.1. Terms
Defined in the Indenture. All
capitalized terms used herein and not otherwise defined shall have
the meanings assigned to such terms in the
Indenture.
1.2. Terms
Defined in UCC. Terms defined
in the Uniform Commercial Code in effect in the State of Delaware
(the “UCC”) which are not otherwise defined in this
Security Agreement shall have the meanings assigned to such terms
in the UCC. In this regard, the following terms used in this
Security Agreement shall have the meanings set forth in the UCC:
accounts, chattel paper, commercial tort claims, deposit accounts,
documents, equipment, fixtures, general intangibles, goods,
instruments, inventory, investment property, letter-of-credit
rights, securities account, and supporting
obligations.
1.3. Other
Definitions. As used in this
Security Agreement, and in addition to the terms defined elsewhere
in this Security Agreement, the following terms shall have the
following meanings:
“Bonds” are debt securities of Grantor issued as
“Series A Bonds” or “Series A R-Bonds”
under the Indenture.
“Collateral” means all of the assets of the Grantor,
including but not limited to accounts, chattel paper, commercial
tort claims, deposit accounts, documents, equipment, fixtures,
general intangibles, goods, instruments, inventory, investment
property, letters of credit, letter-of-credit rights, securities
accounts, pledged deposits, supporting obligations, wherever
located, in which Grantor now has, or hereafter acquires, any right
or interest.
“Collateral
Documents” has the
meaning set forth in the Indenture.
“Default” means an event described in Section
5.1.
“Governmental
Authority” means any
country or nation, or any state or other political subdivision
thereof or any entity exercising executive, legislative or
judicial, regulatory or administrative functions of or pertaining
to government.
“Holder” means a holder of record of one or more
Series A Bonds and/or Series A R-Bonds.
“Indenture” means that certain Indenture dated as of
__________, 2020 by and between the Grantor and the
Trustee.
“Material Adverse
Effect” means a material
adverse effect on (a) the business, assets, operations or condition
(financial or otherwise) of the Grantor or (b) the validity or
enforceability of this Security Agreement or the Indenture or the
rights or remedies of the Trustee or the
Holders.
“Person” means any individual, corporation,
partnership, limited liability company, joint venture, association,
joint stock company, trust, unincorporated organization or
government or Governmental Authority.
“Pledged
Collateral” means,
collectively, the Collateral of the Grantor pledged pursuant to
this Security Agreement.
“Pledged
Deposits” means all time
deposits of money (other than deposit accounts and instruments),
whether or not evidenced by certificates, which the Grantor may
from time to time designate as pledged to the Trustee or to any
secured party as security for any Secured Obligations, and all
rights to receive interest on said deposits.
“Pledged
Securities” means any
equity interests comprising Collateral that are owned by the
Grantor.
“Receivables” means the accounts, chattel paper,
documents, investment property, instruments or pledged deposits,
and any other rights or claims to receive money which are general
intangibles or which are otherwise included as
collateral.
“Secured
Obligations” is defined
in Paragraph B of the Introduction to this Security
Agreement.
The
foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
Article 2
Grant of Security Interest and Pledge
2.1. Grant
by Grantor. To secure the
prompt and complete payment and performance of the Secured
Obligations, the Grantor, subject to the terms and conditions of
this Security Agreement, hereby pledge, assign and grant to the
Trustee, on behalf of and for the benefit of the Holders, a
security interest in all of Grantor’s right, title and
interest, whether now owned or hereafter acquired, in and to the
Collateral.
Article 3
Representations and Warranties of Grantor
The
Grantor jointly and severally represent and warrant to the Trustee
as follows:
3.1. Title,
Authorization, Validity and Enforceability. The Grantor has good and valid rights in or the
power to transfer the Collateral owned by it and title to the
Collateral with respect to which it has purported to grant a
security interest hereunder, free and clear of all Liens except for
Liens permitted under Section 4.1.4. The Grantor has full corporate
or limited liability company power and authority to grant to the
Trustee the security interest in the Collateral pursuant hereto.
The execution and delivery by the Grantor have been duly authorized
by proper corporate and limited liability company proceedings, as
applicable. This Security Agreement constitutes a legal, valid and
binding obligation of the Grantor and creates a security interest
which is enforceable against the Grantor in all Collateral it now
owns or hereafter acquires, except as enforceability may be limited
by (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws relating to or affecting the
enforcement of creditors’ rights generally, (ii) general
equitable principles (whether considered in a proceeding in equity
or at law), and (iii) requirements of reasonableness, good faith
and fair dealing.
3.2. No
Conflicts or Violation. Neither
the execution and delivery by the Grantor of this Security
Agreement, the creation and perfection of the security interest in
the Collateral granted hereunder, nor compliance with the terms and
provisions hereof, will violate (i) any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on the
Grantor, (ii) the Grantor’s certificate of incorporation or
formation, limited liability company agreement or by-laws (or
similar documents, as applicable), or (iii) the provisions of any
indenture, instrument or agreement to which the Grantor is a party
or is subject, or by which it or its property may be bound or
affected, or conflict with or constitute a default thereunder, or
result in or require the creation or imposition of any Lien in or
on the property of the Grantor pursuant to the terms of any such
indenture, instrument or agreement (other than any Lien of the
Trustee on behalf of the Holders).
3.3. Offices.
The Grantor’ mailing address and the principal location of
their place of business or chief executive office is Red Oak
Capital Group, LLC, 000 Xxxxxxx Xxxxxx XX, Xxxxx 000, Xxxxx Xxxxxx,
Xxxxxxxx 00000.
3.4. Accounts
and Chattel Paper. The names of
the obligors, amounts owing, due dates and other information with
respect to the Accounts and Chattel Paper owned by the Grantor are
and will be correctly stated in all books and records of the
Grantor.
3.5. No
Financing Statements or Security Agreements. No financing statement or security agreement
describing all or any portion of the Collateral which has not
lapsed or been terminated naming the Grantor as debtor has been
filed or is of record in any jurisdiction except financing
statements (i) naming the Trustee on behalf of the Holders as the
secured party and (ii) in respect of Liens permitted by the
Indenture or under Section 4.1.4.
3.6. Governmental
Approvals. No authorization or
approval or other action by, and no notice to or filing with, any
Governmental Authority or regulatory body required for the due
execution, delivery or performance by the Grantor of their
respective obligations under the Indenture or any Collateral
Documents remains unobtained or unfulfilled.
3.7. Compliance
with Laws.
3.7.1 The
Grantor is in material compliance with the requirements of all
applicable laws, a breach of any of which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect.
3.7.2 The
Grantor has not failed to obtain any licenses, permits, franchises
or other governmental authorizations necessary for the ownership of
its properties or the conduct of its business, which failure could
reasonably be expected to have a Material Adverse
Effect.
3.8. No
Proceedings. There is no order,
judgment, decree, injunction, stipulation or consent order of or
with any Governmental Authority to which the Grantor is subject,
and there is no action, suit, arbitration, regulatory proceeding or
investigation pending, before any court, regulatory body,
administrative agency or other tribunal or governmental
instrumentality, against the Grantor or its direct or indirect
subsidiaries that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
Furthermore, there is no action, suit, arbitration, regulatory
proceeding or investigation pending, before any court, regulatory
body, administrative agency or other tribunal or governmental
instrumentality (A) asserting the invalidity of the Indenture or
any Collateral Documents, (B) seeking to prevent the issuance of
Bonds or the consummation of the transactions contemplated by the
Indenture or any registration statement under which Bonds are being
offered and sold, or (C) seeking to adversely affect the federal
income tax attributes of the Grantor.
3.9. Investment
Company Act. The Grantor is not
an “investment company” within the meaning of the
Investment Company Act of 1940.
3.10. Accuracy
of Information. All information
heretofore furnished by or on behalf of the Grantor in connection
with the Collateral Documents, or any transaction contemplated
thereby, is true and accurate in all material respects (without
omission of any information necessary to prevent such information
from being materially misleading).
Article 4
Covenants of the Grantor
From
the date of this Security Agreement and thereafter until this
Security Agreement is terminated, the Grantor agrees:
4.1. General.
4.1.1 Inspection.
The Grantor will permit the Trustee (i) to inspect the Pledged
Collateral, (ii) to examine and make copies of the records of such
Grantor relating to the Pledged Collateral and (iii) to discuss the
Pledged Collateral and the related records of such Grantor with,
and to be advised as to the same by, such Grantor’s officers
and employees, all at such reasonable times and intervals as the
Trustee may determine, upon reasonable notice by the Trustee to
such Grantor and all at such Grantor’s
expense.
4.1.2 Records
and Reports; Notice of Default.
The Grantor shall keep and maintain complete, accurate and proper
books and records with respect to the Pledged Collateral owned by
such Grantor, and furnish to the Trustee, such reports relating to
the Pledged Collateral as the Trustee shall from time to time
reasonably request. The Grantor will give prompt notice in writing
to the Trustee of the occurrence of any Default under Section 5.1
and of any other development, financial or otherwise, which could
reasonably be expected to materially and adversely affect the
Pledged Collateral.
4.1.3 Financing
Statements. The Grantor hereby
authorizes the Trustee to file (provided the Trustee shall have no
obligation to file), and will execute, deliver and file, all
financing statements reasonably describing the Pledged Collateral
owned by such Grantor and other documents and take such other
actions as may from time to time reasonably be requested by the
Trustee, subject in all cases to Liens permitted under the
Indenture and any Collateral Documents, or any other agreement
describing the rights of the Trustee (on behalf of the Holders)
relative to other creditors of the Grantor.
4.1.4 Liens.
No Grantor will create, incur, or suffer to exist any Lien on the
Pledged Collateral owned by such Grantor except Liens (i) permitted
pursuant to the Indenture, this Security Agreement or any
intercreditor agreement, or any other agreement describing the
rights of the Trustee relative to other creditors of the Grantor,
and (ii) (x) created under any debt or obligation senior in right
of payment or priority to the Bond if consented to by the
Holders of at least a majority in principal amount of the
then-outstanding Bonds in accordance with Section 4.08 of the
Indenture,
or (y) created under any
debt or obligation subordinate or pari passu in right of payment or priority to the
Bonds, and (iii) disclosed to the Trustee and Holders of the Bonds
promptly.
4.1.5 Disposition
of Collateral Outside Ordinary Course. The Grantor is not authorized to sell or
otherwise dispose of the Collateral outside of the ordinary course
of business unless consented to by the Trustee, with the consent or
at the direction of the Holders of at least a majority in principal
amount of the then-outstanding Bonds.
4.1.6 Change
in Corporate Existence, Type or Jurisdiction of Organization,
Location, Name. The Grantor
will: (a) preserve its existence and entity structure as in effect
on the date of this Security Agreement; (b) not change its name or
jurisdiction of organization; (c) not maintain its place of
business (if it has only one) or its chief executive office (if it
has more than one place of business) at a location other than a
location specified in Section 3.3; unless, the Grantor shall have
given the Trustee not less than ten days’ prior written
notice of such event or occurrence and the Grantor shall have
either (x) certified to the Trustee that such event or occurrence
will not adversely affect the validity, perfection or priority of
the Trustee’s security interest in the Collateral, or (y)
taken such steps as are necessary or advisable to properly maintain
the validity, perfection and priority of the Trustee’s
security interest in the Collateral owned by the
Grantor.
4.2. Certificated
and Uncertificated Securities.
Upon request, the Grantor will deliver to the Trustee immediately
upon execution of this Security Agreement the originals of all
Pledged Securities (to the extent certificated) and instruments
constituting Pledged Collateral (if any then exist). In addition,
the Grantor will permit the Trustee from time to time to cause the
appropriate issuers (and, if held with a securities intermediary,
such securities intermediary) of uncertificated securities or other
types of securities not represented by certificates which are
Pledged Collateral owned by such Grantor to xxxx their books and
records with the numbers and face amounts of all such
uncertificated securities or other types of securities not
represented by certificates and all replacements thereof to reflect
the Lien of the Trustee granted pursuant to this Security
Agreement.
4.3. No
Interference. The Grantor
agrees that it will not interfere with any right, power and remedy
of the Trustee provided for in this Security Agreement or now or
hereafter existing at law or in equity or by statute or otherwise,
or the exercise or beginning of the exercise by the Trustee of any
one or more of such rights, powers or remedies.
Article 5
Default and Remedies
5.1. Default.
The occurrence of any one or more of the following events shall
constitute a Default:
5.1.1 Any
representation or warranty made by or on behalf of any Grantor
under this Security Agreement shall be materially false as of the
date on which made;
5.1.2 The
breach by any Grantor of any of the terms or provisions of Article
7;
5.1.3 The
breach by Grantor (other than a breach which constitutes a Default
under Sections 5.1.1, 5.1.2 or 5.1.4) of any of the terms or
provisions of this Security Agreement which breach is not remedied
or not begun to have been remedied within 120 days after the giving
of written notice to such Grantor by the Trustee; or
5.1.4 The
occurrence of any “Event of Default” under, and as
defined in, the Indenture.
5.2. Remedies.
Upon the occurrence of a Default hereunder, the Trustee may, and at
the direction of the Holders of at least a majority in principal
amount of the then-outstanding Bonds shall, exercise any or all of
the following rights and remedies (subject in all cases to any
provisions, in favor of any debt that is senior in right of payment
or priority, contained in the Indenture, this Security Agreement or
any other Collateral Documents):
5.2.1 Those
rights and remedies provided in this Security Agreement and the
Indenture.
5.2.2 Those
rights and remedies available to a secured party under the UCC
(whether or not the UCC applies to the affected Pledged Collateral)
or under any other applicable law (including without limitation any
law governing the exercise of a right of setoff or bankers’
lien) when a debtor is in default under a security
agreement.
5.2.3 Without
notice (except as specifically provided in Section 9.1 or elsewhere
herein), demand or advertisement of any kind to any Grantor or any
other Person, enter the premises of the Grantor where any
Collateral is located to collect, receive, assemble, process,
appropriate, sell, lease, assign, grant an option or options to
purchase or otherwise dispose of, deliver, or realize upon, the
Collateral or any part thereof in one or more parcels at public or
private sale or sales (which sales may be adjourned or continued
from time to time with or without notice and may take place at any
Grantor’s premises of elsewhere), for cash, on credit or for
future delivery without assumption of any credit risk, and upon
such other terms as the Trustee may deem commercially
reasonable.
5.2.4 Concurrently
with written notice to the applicable Grantor, transfer and
register in its name or in the name of its nominee the whole or any
part of the Pledged Collateral, to exchange certificates or
instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations, to
exercise the voting and all other rights as a holder with respect
thereto, to collect and receive all cash dividends, interest,
principal and other distributions made thereon and to otherwise act
with respect to the Pledged Collateral as though the Trustee was
the outright owner thereof.
The
Trustee, on behalf of the Holders, may comply with any applicable
state or federal law requirements in connection with a disposition
of the Pledged Collateral, and such compliance will not be
considered to adversely affect the commercial reasonableness of any
sale of the Pledged Collateral. The Trustee shall have the right
upon any such public sale or sales and, to the extent permitted by
law, upon any such private sale or sales, to purchase for the
benefit of the Trustee and the Holders, the whole or any part of
the Pledged Collateral so sold, free of any right of equity
redemption, which equity redemption the Grantor hereby expressly
releases.
Until
the Trustee is able to effect a sale, lease, or other disposition
of Pledged Collateral, the Trustee shall have the right to hold or
use Pledged Collateral, or any part thereof, to the extent that it
deems appropriate for the purpose of preserving Pledged Collateral
or its value or for any other purpose deemed appropriate by the
Trustee. The Trustee may, if it so elects, seek the appointment of
a receiver or keeper to take possession of Pledged Collateral and
to enforce any of the Trustee’s remedies (for the benefit of
the Trustee and Holders), with respect to such appointment without
prior notice or hearing as to such appointment.
Notwithstanding
the foregoing, neither the Trustee nor any Holder shall be required
to (i) make any demand upon, or pursue or exhaust any of their
rights or remedies against, any Grantor, any other obligor,
guarantor, pledgor or any other Person with respect to the payment
of the Secured Obligations or to pursue or exhaust any of their
rights or remedies with respect to any Pledged Collateral therefor
or any direct or indirect guarantee thereof, (ii) marshal the
Pledged Collateral or any guarantee of the Secured Obligations or
to resort to the Pledged Collateral or any such guarantee in any
particular order, or (iii) effect a public sale of any Pledged
Collateral.
The
Grantor recognizes that the Trustee may be unable to effect a
public sale of any or all the Pledged Collateral and may be
compelled to resort to one or more private sales thereof in
accordance with this Section 5.2. The Grantor also acknowledges
that any private sale may result in prices and other terms less
favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private
sale shall not be deemed to have been made in a commercially
unreasonable manner solely by virtue of such sale being private.
The Trustee shall be under no obligation to delay a sale of any of
the Pledged Collateral for the period of time necessary to permit
any Grantor or the issuer of the Pledged Collateral to register
such securities for public sale under the Securities Act of 1933,
or under applicable state securities laws, even if the applicable
Grantor and the issuer would agree to do so.
5.3. Grantor’s
Obligations Upon Default. Upon
the request of the Trustee after the occurrence of a Default, the
Grantor will (subject in all cases to any provisions in favor of
any debt that is senior in right of payment or priority contained
in the Indenture, this Security Agreement or any other Collateral
Documents):
5.3.1 Assemble
and make available to the Trustee the Pledged Collateral and all
books and records relating thereto at any place or places specified
by the Trustee;
5.3.2 Permit
the Trustee, by the Trustee’s representatives and agents, to
enter, occupy and use any premises where all or any part of the
Pledged Collateral, or the books and records relating thereto, or
both, are located, to take possession of all or any part of the
Pledged Collateral, or the books and records relating thereto, or
both, to remove all or any part of the Pledged Collateral, or the
books and records relating thereto, or both, and to conduct sales
of the Pledged Collateral, without any obligation to pay the
Grantor for such use and occupancy; and/or
5.3.3 Take,
or cause an issuer of Pledged Securities to take, any and all
actions necessary to register or qualify the Pledged Collateral to
enable the Trustee to consummate a public sale or other disposition
of such Pledged Securities.
Article 6
Waivers, Amendments and Remedies
No
delay or omission of the Trustee or any secured party to exercise
any right or remedy granted under this Security Agreement shall
impair such right or remedy or be construed to be a waiver of any
Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude any other
or further exercise thereof or the exercise of any other right or
remedy. No waiver, amendment or other variation of the terms,
conditions or provisions of this Security Agreement whatsoever
shall be valid unless in writing signed by the Trustee and the
Grantor. All rights and remedies contained in this Security
Agreement or by law afforded shall be cumulative and all shall be
available to the Trustee and the Holders until the Secured
Obligations have been paid in full.
Article 7
Proceeds; Collection of Receivables
7.1. Collection
of Receivables. Subject to any
provisions of the Indenture, this Security Agreement or any other
Collateral Documents, including any intercreditor agreement or
other agreement describing the rights of the Trustee relative to
other creditors of the Grantor, the Trustee may at any time after
the occurrence and during the continuation of a Default, by giving
the Grantor written notice, elect to require that any Receivables
be paid directly to the Trustee for the benefit of the Holders. In
such event, the Grantor shall, and shall permit the Trustee to,
promptly notify the account debtors or obligors under the
Receivables owned by the Grantor of the Trustee’s interest
therein and direct such account debtors or obligors to make payment
of all amounts then or thereafter due under such Receivables
directly to the Trustee. Upon receipt of any such notice from the
Trustee, the Grantor shall thereafter hold in trust for the
Trustee, on behalf of the Holders, all amounts and proceeds
received by it with respect to the Receivables and immediately and
at all times thereafter deliver to the Trustee all such amounts and
proceeds in the same form as so received, whether by cash, check,
draft or otherwise, with any necessary endorsements. The Trustee
shall hold and apply funds so received as provided by the terms of
Section 7.2.
7.2. Special
Collateral Account. Subject in
all cases to any provisions of the Indenture, this Security
Agreement or any other Collateral Documents, including any
intercreditor agreement or other agreement describing the rights of
the Trustee relative to other creditors of the Grantor, after the
occurrence and during the continuation of a Default, all future
cash proceeds of the Pledged Collateral shall be deposited with the
Trustee and shall be applied by the Trustee to payment of the
Secured Obligations as provided under Section 6.03 of the
Indenture.
Article 8
The Trustee
8.1. Collateral
Agent. UMB Bank, N.A. has been
appointed collateral agent for the Holders hereunder. It is
expressly understood and agreed by the parties to this Security
Agreement that any authority conferred upon the Trustee hereunder
is subject to the terms of the delegation of authority made by the
Holders to the Trustee pursuant to the Indenture, and that the
Trustee has agreed to act (and any successor Trustee shall act) as
such hereunder only on the express conditions contained in the
Indenture and this Article 8. Any successor Trustee appointed
pursuant to the Indenture shall be entitled to all the rights,
interests and benefits of the Trustee
hereunder.
8.2. No
Implied Duty. The Trustee will
not have any fiduciary duties nor will it have responsibilities or
obligations other than those expressly assumed by it in this
Security Agreement and the Indenture. The Trustee will not be
required to take any action that is contrary to applicable law or
any provision of this Security Agreement and the
Indenture.
8.3. Appointment
of Agents and Advisors. The
Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through
agents, attorneys, accountants, appraisers or other experts or
advisors selected by it in good faith as it may reasonably require
and will not be responsible for any misconduct or negligence on the
part of any of them.
8.4. Solicitation
of Instructions.
8.4.1 The
Trustee may at any time solicit written confirmatory instructions,
or an order of a court of competent jurisdiction, as to any action
that it may be requested or required to take, or that it may
propose to take, in the performance of any of its obligations under
this Security Agreement or the Indenture.
8.4.2 No
written direction given to the Trustee that in the sole judgment of
the Trustee imposes, purports to impose or might reasonably be
expected to impose upon the Trustee any obligation or liability not
set forth in or arising under this Security Agreement, or the
Indenture will be binding upon the Trustee unless the Trustee
elects, at its sole option, to accept such direction.
8.5. Limitation
of Liability. The Trustee will
not be responsible or liable for any action taken or omitted to be
taken by it hereunder or under the Indenture, except for its own
gross negligence, bad faith or willful misconduct as determined by
a court of competent jurisdiction. In acting as collateral agent,
the Trustee shall be entitled to all rights, protections,
immunities granted to it under Article VII of the Indenture. In no
event shall the Trustee be responsible or liable to any party for
special, indirect, or consequential loss or damage of any kind
whatsoever (including, but not limited to, loss of profit)
irrespective of whether the Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of
action;
8.6. Entitled
to Rely. The Trustee may seek
and rely upon, and shall be fully protected in relying upon, any
judicial order or judgment, upon any advice, opinion or statement
of legal counsel, independent consultants and other experts
selected by it in good faith, and upon any certification,
instruction, notice or other writing delivered to it by the Grantor
in compliance with the provisions of this Security Agreement or the
Indenture, without being required to determine the authenticity
thereof or the correctness of any fact stated therein or the
propriety or validity of service thereof. The Trustee may act in
reliance upon any instrument comporting with the provisions of this
Security Agreement or the Indenture, or any signature reasonably
believed by it to be genuine and may assume that any Person
purporting to give notice or receipt or advice or make any
statement or execute any document in connection with the provisions
hereof or the Indenture has been duly authorized to do
so.
8.7. Actions
by Trustee. In the event
any provision of this Security Agreement requires the approval,
consent, or action by the Trustee, the Trustee shall have no
obligation to act, approve or provide its consent absent the
receipt of written direction and indemnity satisfactory to it from
the Holders of a majority in aggregate principal amount of the
Bonds Outstanding., and will be fully
protected if it does so, and any action taken, suffered or omitted
pursuant to hereto or thereto shall be binding on the
Holders.
8.8. Security
or Indemnity in favor of the Trustee. The Trustee will not be required to advance or
expend any funds or otherwise incur any financial liability in the
performance of its duties or the exercise of its powers or rights
hereunder unless it has been provided with security or indemnity
reasonably satisfactory to it against any and all liability or
expense which may be incurred by it by reason of taking or
continuing to take such action.
8.1.1 Grantor
agrees to defend, protect, indemnify and hold the Trustee harmless
from and against any and all claims, damages, losses, liabilities,
obligations, penalties, fees, costs and expenses (including,
without limitation, reasonable legal fees, costs, expenses, and
disbursements of Trustee’s counsel) to the extent that they
arise out of or otherwise result from this Agreement (including,
without limitation, enforcement of this Agreement), except claims,
losses or liabilities resulting solely and directly from
Trustee’s gross negligence or willful misconduct, as
determined by a final judgment of a court of competent
jurisdiction.
8.1.2 Grantor
agrees to upon demand pay to the Trustee amount of any and all
compensation for its services and costs and expenses, including the
reasonable fees, costs, expenses and disbursements of counsel for
the Trustee and of any experts and agents (including, without
limitation, any collateral agent which may act as agent of the
Trustee), which the Trustee may incur in connection with (i) the
preparation, negotiation, execution, delivery, recordation,
administration, amendment, waiver or other modification or
termination of this Agreement, (ii) the custody, preservation, use
or operation of, or the sale of, collection from, or other
realization upon, any Collateral, (iii) the exercise or
enforcement of any of the rights of the Trustee hereunder
(including attorneys’ fees in connection therewith), or
(iv) the failure by any Grantor to perform or observe any of
the provisions hereof.
8.9. Rights
of the Trustee. In the event
there is any bona fide, good faith disagreement between the other
parties to this Security Agreement or the Indenture resulting in
adverse claims being made in connection with Pledged Collateral
held by the Trustee, and the terms of this Security Agreement or
the Indenture do not unambiguously mandate the action the Trustee
is to take or not to take in connection therewith under the
circumstances then existing, or the Trustee is in doubt as to what
action it is required to take or not to take hereunder or under the
Indenture, it will be entitled to refrain from taking any action
(and will incur no liability for doing so) until directed otherwise
in writing by the Holders of a majority in aggregate
principal amount of the Bonds Outstanding (and indemnified to its
satisfaction) or by order of a court
of competent jurisdiction.
8.10. Limitations
on Duty of Trustee in Respect of Collateral.
8.10.1 Beyond
the exercise of reasonable care in the custody of Pledged
Collateral in its possession, the Trustee will have no duty as to
any Pledged Collateral in its possession or control or in the
possession or control of any agent or bailee or any income thereon
or as to preservation of rights against prior parties or any other
rights pertaining thereto and the Trustee will not be responsible
for filing any financing or continuation statements or recording
any documents or instruments in any public office at any time or
times or otherwise perfecting or maintaining the perfection of any
Liens on the Pledged Collateral. The Trustee will be deemed to have
exercised reasonable care in the custody of the Pledged Collateral
in its possession if the Pledged Collateral is accorded treatment
substantially equal to that which it accords its own property, and
the Trustee will not be liable or responsible for any loss or
diminution in the value of any of the Pledged Collateral by reason
of the act or omission of any carrier, forwarding agency or other
agent or bailee selected by the Trustee in good faith.
8.10.2 The
Trustee will not be responsible for the existence, genuineness or
value of any of the Pledged Collateral or for the validity,
perfection, priority or enforceability of the Liens in any of the
Pledged Collateral, whether impaired by operation of law or by
reason of any action or omission to act on its part hereunder,
except to the extent such action or omission constitutes gross
negligence, bad faith or willful misconduct on the part of the
Trustee, for the validity or sufficiency of the Pledged Collateral
or any agreement or assignment contained therein, for the validity
of the title of the Grantor to the Pledged Collateral, for insuring
the Pledged Collateral or for the payment of taxes, charges,
assessments or Liens upon the Collateral or otherwise as to the
maintenance of the Pledged Collateral. The Trustee hereby disclaims
any representation or warranty to the present and future Holders
concerning the perfection of the Liens granted hereunder or in the
value of any of the Pledged Collateral.
Article 9
General Provisions
9.1. Notice
of Disposition of Pledged Collateral; Etc. Grantor hereby waives notice of the time and
place of any public sale or the time after which any private sale
or other disposition of all or any part of the Pledged Collateral
may be made. To the extent such notice may not be waived under
applicable law, any notice made shall be deemed reasonable if sent
to the Grantor, addressed as set forth in Section 3.3, at least ten
days prior to (i) the date of any such public sale or (ii) the time
after which any such private sale or other disposition may be made.
To the maximum extent permitted by applicable law, the Grantor
waives all claims, damages, and demands against the Trustee or any
secured party arising out of the repossession, retention or sale of
the Pledged Collateral, except such as arise solely out of the
gross negligence or willful misconduct of the Trustee or such
secured party as finally determined by a court of competent
jurisdiction. To the extent it may lawfully do so, the Grantor
absolutely and irrevocably waives and relinquishes the benefit and
advantage of, and covenants not to assert against the Trustee or
any other secured party, any valuation, stay, appraisal, extension,
moratorium, redemption or similar laws and any and all rights or
defenses it may have as a surety now or hereafter existing which,
but for this provision, might be applicable to the sale of any
Pledged Collateral made under the judgment, order or decree of any
court, or privately under the power of sale conferred by this
Security Agreement, or otherwise. Except as otherwise specifically
provided herein, the Grantor hereby waives presentment, demand,
protest or any notice (to the maximum extent permitted by
applicable law) of any kind in connection with this Security
Agreement or any Pledged Collateral.
9.2. Limitation
on Duties with Respect to Pledged Collateral. The Trustee shall have no obligation to clean-up
or otherwise prepare the Pledged Collateral for sale. The Trustee
and each secured party shall use reasonable care with respect to
the Pledged Collateral in its possession or under its control.
Neither the Trustee nor any secured party shall have any other duty
as to any Pledged Collateral in its possession or control or in the
possession or control of any agent or nominee of the Trustee or
such other secured party, or any income thereon or as to the
preservation of rights against prior parties or any other rights
pertaining thereto.
9.3. Performance
of Grantor’s Obligations.
Without having any obligation to do so, the Trustee may perform or
pay any obligation which any Grantor has agreed to perform or pay
in this Security Agreement and such Grantor shall reimburse the
Trustee for any reasonable amounts paid by the Trustee pursuant to
this Section. The Grantor’s obligation to reimburse the
Trustee pursuant to the preceding sentence shall be a Secured
Obligation payable on demand.
9.4. Authorization
to Take Certain Action. The
Grantor irrevocably authorizes the Trustee at any time and from
time to time in the sole discretion of the Trustee and appoints the
Trustee as its attorney-in-fact (i) to execute on behalf of such
Grantor as debtor and to file financing statements necessary or
desirable in the Trustee’s sole discretion to perfect and to
maintain the Trustee’s security interest in the Collateral,
(ii) to endorse and collect any future cash proceeds of the Pledged
Collateral, (iii) to file a carbon, photographic or other
reproduction of this Security Agreement or any financing statement
with respect to the Pledged Collateral as a financing statement and
to file any other financing statement or amendment of a financing
statement (which does not add new collateral or add a debtor) in
such offices as the Trustee in its sole discretion deems necessary
or desirable to maintain the Trustee’s security interest in
the Collateral, (iv) to contact and enter into one or more
agreements with the issuers of uncertificated securities which are
Collateral owned by such Grantor or with financial intermediaries
holding other Investment Property as may be necessary or advisable
to give the Trustee control over such securities or other
Investment Property, (v) subject to the terms hereof, to enforce
payment of the instruments and Receivables in the name of the
Trustee or such Grantor, (vi) to apply the future proceeds of any
Pledged Collateral received by the Trustee to the Secured
Obligations as provided in Article 8 and (vii) to discharge
past-due taxes, assessments, charges, fees or Liens on the Pledged
Collateral (except for such Liens as are specifically permitted
hereunder or under the Indenture), and the Grantor agrees to
reimburse the Trustee on demand for any reasonable payment made or
any reasonable expense incurred by the Trustee in connection
therewith, provided that this authorization shall not place any
obligation upon the Trustee to take any such actions or relieve any
Grantor of any of its obligations under this Security Agreement or
under the Indenture.
9.5. Specific
Performance of Certain Covenants. The Grantor acknowledges and agrees that a
breach of any of the covenants contained in Sections 4.1.4, 4.1.5
or 5.3 or in Article 8 will cause irreparable injury to the Trustee
and the Holders, that the Trustee and the Holders have no adequate
remedy at law in respect of such breaches and therefore agrees,
without limiting the right of the Trustee or the Holders, to seek
and obtain specific performance of other obligations of the Grantor
contained in this Security Agreement, that the covenants of the
Grantor contained in the Sections referred to in this Section 9.5
shall be specifically enforceable against the
Grantor.
9.6. Use
and Possession of Certain Premises. Upon the occurrence of a Default (but subject to
any provisions of the Indenture, this Security Agreement or any
other Collateral Documents, including any intercreditor agreement
or other agreement describing the rights of the Trustee relative to
other creditors of the Grantor), the Trustee shall be entitled to
occupy and use any premises owned or leased by the Grantor where
any of the Pledged Collateral or any records relating to the
Pledged Collateral are located until the Secured Obligations are
paid or the Pledged Collateral is removed therefrom, whichever
first occurs, without any obligation to pay any Grantor for such
use and occupancy.
9.7. Reinstatement.
This Security Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against
any Grantor for liquidation or reorganization, should any Grantor
become insolvent or make an assignment for the benefit of any
creditor or creditors, or should a receiver or trustee be appointed
for all or any significant part of any Grantor’s assets, and
shall continue to be effective or be reinstated, as the case may
be, if at any time payment and performance of the Secured
Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Secured Obligations, whether as a
“voidable preference,” “fraudulent
conveyance,” or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or
returned.
9.8. Benefit
of Agreement. The terms and
provisions of this Security Agreement shall be binding upon and
inure to the benefit of the Grantor, the Trustee and the Holders
and their respective successors and assigns (including all persons
who become bound as a debtor to this Security Agreement), except
that the Grantor shall not have the right to assign its rights or
delegate their obligations under this Security Agreement or any
interest herein, without the prior written consent of the Trustee.
No sales of participations, assignments, transfers, or other
dispositions of any agreement governing the Secured Obligations or
any portion thereof or interest therein shall in any manner impair
the Lien granted to the Trustee, for the benefit of the Trustee and
the Holders, hereunder.
9.9. Survival
of Representations. All
representations and warranties of the Grantor contained in this
Security Agreement shall survive the execution and delivery of this
Security Agreement.
9.10. Taxes
and Expenses. Any taxes payable
or ruled payable by a federal or state authority in respect of this
Security Agreement shall be paid by the Grantor, together with
interest and penalties, if any. The Grantor shall reimburse the
Trustee for any and all reasonable out-of-pocket expenses and
internal charges (including the fees, charges and disbursements of
one U.S. counsel paid or incurred by the Trustee in connection
with the collection and enforcement of this Security Agreement and
in the audit, analysis, administration, collection, preservation or
sale of the Collateral (including the expenses and charges
associated with any periodic or special audit of the Collateral).
Any and all costs and expenses incurred by the Grantor in the
performance of actions required pursuant to the terms hereof shall
be borne solely by the Grantor.
9.11. Headings.
The title of and section headings in this Security Agreement are
for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security
Agreement.
9.12. Termination.
This Security Agreement shall continue in effect (notwithstanding
the fact that from time to time there may be no Secured Obligations
outstanding) until (i) the Indenture has terminated pursuant to its
express terms and (ii) all of the Secured Obligations have been
indefeasibly paid in cash and performed in
full.
9.13. Entire
Agreement. This Security
Agreement embodies the entire agreement and understanding between
the Grantor and the Trustee relating to the Pledged Collateral and
supersedes all prior agreements and understandings among the
Grantor and the Trustee relating to such Pledged
Collateral.
9.14. Governing
Law; Jurisdiction; Waiver of Jury Trial.
9.14.1 THIS
SECURITY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS
CONFLICTS-OF-LAW PROVISIONS.
9.14.2 The
Grantor hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of the state
courts sitting in Grand Rapids, Michigan, and of the United States
District Court of the Western District of Michigan, Grand Rapids
Division, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Security Agreement
or the Indenture, or for recognition or enforcement of any
judgment, and the Grantor hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding
may be heard and determined in such state or, to the extent
permitted by law, in such federal court. The Grantor agrees that a
final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Security
Agreement or the Indenture shall affect any right that the Trustee,
the Holders may otherwise have to bring any action or proceeding
relating to this Security Agreement or the Indenture against any
Grantor or its properties in the courts of any
jurisdiction.
9.14.3 The
Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection
which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this
Security Agreement or the Indenture in any court referred to in
Section 9.14.2. The Grantor hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such
court.
9.14.4 Each
party to this Security Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.17 of this
Security Agreement. Nothing in this Security Agreement or the
Indenture will affect the right of any party to this Security
Agreement to serve process in any other manner permitted by
law.
9.14.5 WAIVER
OF JURY TRIAL. EACH PARTY HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR
THE INDENTURE (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). THE GRANTOR (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER GRANTOR HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER GRANTOR WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS SECURITY
AGREEMENT AND THE OTHER COLLATERAL DOCUMENTS BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
9.15. Severability.
Any provision in this Security Agreement that is held to be
inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or
the operation, enforceability, or validity of that provision in any
other jurisdiction, and to this end the provisions of this Security
Agreement are declared to be severable.
9.16. Counterparts;
Delivery. This Security
Agreement may be executed in counterparts, each of which shall
constitute an original, but all of which when taken together shall
constitute a single contract. Delivery of an executed counterpart
of a signature page of this Security Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this
Security Agreement.
9.17. Notices.
Any notice required or permitted to be given under this Security
Agreement shall be sent (and deemed received) in the manner and to
the addresses set forth in Section 13.04 of the Indenture. Any
party may change its address for service of notice upon it by a
notice in writing to the other parties as described in Section
13.04 of the Indenture.
9.18. Conflicts
with Indenture. In the event of
any direct conflict between the provisions of this Security
Agreement and the provisions of the Indenture, including without
limitation any direct conflict relating to (i) the rights and
remedies (or the limitations upon such rights and remedies) of the
Holders upon a Default or (ii) the subordination provisions
contained in the Indenture, the provisions of the Indenture shall
control.
* * * *
* * *
In Witness
Whereof, the Grantor and the
Trustee have executed this Pledge and Security Agreement as of the
date first above written.
|
GRANTOR:
|
||
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
TRUSTEE:
|
UMB
BANK, N.A., TRUSTEE
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
Signature Page – Pledge and Security
Agreement
