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SECURITY AGREEMENT
(Pledge--PM Holdings Corporation)
Between
PM HOLDINGS CORPORATION
and
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Administrative Agent
March 12, 1998
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THIS SECURITY AGREEMENT (this "Agreement") is made as of
March 12, 1998, between PM HOLDINGS CORPORATION, a Delaware
corporation with principal offices at 0000 Xxxx 00xx Xxxxxx
Xxxxx, Xxxxxxx, Xxxxxx 00000 ("Pledgor"), and CHASE BANK OF
TEXAS, NATIONAL ASSOCIATION, a national banking association with
offices at 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx, Xxxxx 00000, as
Administrative Agent ("Secured Party") for itself, the Issuing
Banks (as defined in the Credit Agreement), such other banks or
lending institutions (collectively, the "Lenders") which are or
hereafter become parties to the Credit Agreement referred to
below and Secured Affiliates (as defined in the Credit
Agreement).
RECITALS
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A. On even date herewith, Purina Xxxxx, Inc., a Delaware
corporation (the "Borrower"), the Lenders, Secured Party, and the
Issuing Banks, executed that certain Credit Agreement (said
Credit Agreement, as may from time to time be amended, or
supplemented or modified, including, without limitation,
amendments, supplements and modifications that increase the
indebtedness thereunder, the "Credit Agreement") pursuant to
which, upon the terms and conditions stated therein, the Lenders
agree to make loans to and participate in extensions of credit
for the account of the Borrower.
B. Pledgor owns, beneficially and of record, 100% of the
outstanding capital stock of the Borrower.
C. The Lenders and the Issuing Banks have conditioned their
respective obligations under the Credit Agreement upon the
execution and delivery by Pledgor of this Agreement, and Pledgor
has agreed to enter into this Agreement.
Now therefore, in order to comply with the terms and
conditions of the Credit Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Pledgor hereby agrees with Secured Party as
follows:
ARTICLE 1
Security Interest
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Section 1.1 Pledge. Pledgor hereby pledges, assigns, and
grants to Secured Party for the ratable benefit of the Guaranteed
Parties a security interest in and right of set-off against the
assets referred to in Section 1.2 (the "Collateral") to secure
the prompt payment and performance of the "Obligations" (as
defined in Section 2.2) and the performance by Pledgor of this
Agreement.
Section 1.2 Collateral. The Collateral consists of the
following types or items of property:
(a) all shares of capital stock of the Borrower now or
hereafter owned beneficially or of record by the Pledgor,
including, without limitation, the securities described or
referred to in Exhibit A attached hereto and made a part
hereof; and
(b) (i) the certificates or instruments, if any,
representing such securities, (ii) all dividends (cash,
stock or otherwise), cash, instruments, rights to
subscribe, purchase or sell and all other rights and
property from time to time received, receivable or
otherwise distributed in respect of or in exchange for
any or all of such securities, (iii) all replacements,
additions to and substitutions for any of the property
referred to in this Section 1.2, including, without
limitation, claims against third parties, (iv) the
proceeds, interest, profits and other income of or on any
of the property referred to in this Section 1.2, (v) all
books and records relating to any of the property referred
to in this Section 1.2, and (vi) all other assets, rights
and interests relating to any of the property referred to
in this Section 1.2.
Section 1.3 Transfer of Collateral. All certificates or
instruments representing or evidencing the Pledged Securities
shall be delivered to and held pursuant hereto by Secured Party
or a Person designated by Secured Party and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, or (in
the case of either certificated or uncertificated securities)
Secured Party shall have been provided with (a) evidence that
entries have been made on the books of a clearing corporation to
effect the pledge of the Pledged Securities to Secured Party, as
provided in, and in accordance with, Section 8-321 of the Code,
or (b) evidence that a financial intermediary has identified the
Pledged Securities as having been pledged to Secured Party, as
provided in, and in accordance with, Section 8-313(1)(d) of the
Code, or (c) evidence that the Pledged Securities have been
otherwise transferred to Secured Party in accordance with Section
8-313(1) of the Code, all in form and substance satisfactory to
Secured Party. After the occurrence and continuance of an Event
of Default, Secured Party shall have the right, at any time in
its discretion and without notice to Pledgor, to transfer to or
to register in the name of Secured Party or any of its nominees
any or all of the Pledged Securities, subject only to the
revocable rights specified in Section 6.6, and to exchange
certificates or instruments representing or evidencing Pledged
Securities for certificates or instruments of smaller or larger
denominations.
ARTICLE 2
Definitions
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Section 2.1 Terms Defined Herein or in the Credit Agreement.
As used in this Agreement, the terms defined herein shall have
the meanings respectively assigned to them. Other capitalized
terms which are defined in the Credit Agreement but which are not
defined herein shall have the same meanings as defined in the
Credit Agreement.
Section 2.2 Certain Definitions. As used in this Agreement,
the following terms shall have the following meanings, unless the
context otherwise requires:
"Agreement" shall mean this Security Agreement, as the
same may from time to time be amended or supplemented.
"Code" shall mean the Uniform Commercial Code as
presently in effect in the State of New York; provided that
if by reason of mandatory provisions of law, the perfection
or the effect of perfection or nonperfection of the
assignment and security interest in any Collateral is
governed by the Uniform Commercial Code or similar
legislation as in effect in a jurisdiction other than New
York, "Code" shall mean the Uniform Commercial Code or
similar legislation as in effect in such
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other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or
nonperfection. Unless otherwise indicated by the context
herein, all uncapitalized terms which are defined in the
Code shall have their respective meanings as used in
Articles 8 and 9 of the Code.
"Event of Default" shall mean any event specified in
Section 6.1.
"Guaranteed Parties" shall mean each of the
Administrative Agent, the Lenders, the Issuing Banks and
the Secured Affiliates as guaranteed parties under that
certain Guaranty Agreement dated as of March 12, 1998, made
by Pledgor in favor of such guaranteed parties.
"Obligations" shall mean (a) all Lender Indebtedness
now or hereafter owing, pursuant to the Credit Agreement,
the Notes, any Letters of Credit, any other Financing
Document or any Hedge Agreement, including, but not limited
to, (i) the unpaid principal of and accrued interest on any
of the foregoing (including interest accruing on or after
the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim
for post-filing or post-petition interest is allowed in
such proceeding), (ii) payment of and performance of any
and all present or future obligations of the Company
according to the terms of any present or future Hedge
Agreement or any option with respect to any such
transaction now existing or hereafter entered into between
the Company and the Administrative Agent or any Lender or
any Secured Affiliate pursuant to, or in connection with,
the Lender Indebtedness or any Financing Document, and
(iii) the obligation of the Company to otherwise reimburse
any Guaranteed Party, whether on account of fees,
indemnities, costs, taxes, expenses (including all taxes,
expenses, and disbursements described in Sections 2.20 or
9.4 of the Credit Agreement) or otherwise, (b) any and all
other sums payable by the Guarantor or the Company or any
of its Subsidiaries under or in respect of any Financing
Document, and (c) any and all renewals, extensions,
rearrangements, replacements, substitutions, increases
and/or modifications of all or any part of the foregoing.
"Obligor" shall mean any Person, other than Pledgor,
liable (whether directly or indirectly, primarily or
secondarily) for the payment or performance of any of the
Obligations whether as maker, co-maker, endorser,
guarantor, accommodation party, general partner or
otherwise.
"Pledged Securities" shall mean all of the securities
and other property (whether or not the same constitutes a
"security" under the Code) referred to in Section 1.2 and
all additional securities (as that term is defined in the
Code), if any, constituting Collateral under this
Agreement.
ARTICLE 3
Representations and Warranties
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In order to induce Secured Party to accept this Agreement,
Pledgor represents and warrants to Secured Party (which
representations and warranties will survive the creation and
payment of the Obligations) that:
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Section 3.1 Corporate Existence. The Pledgor is a corporation
duly organized, legally existing and in good standing under the
laws of the State of Delaware.
Section 3.2 Corporate Power and Authorization. The Pledgor is
duly authorized and empowered to execute, deliver and perform
this Agreement; and all corporate action on the Pledgor's part
requisite for the due execution, delivery and performance of this
Agreement has been duly and effectively taken.
Section 3.3 Binding Obligations. This Agreement
constitutes a legal, valid, and binding obligation of the
Pledgor, and, upon execution and delivery to the Secured Party
for the benefit of Guaranteed Parties, and (assuming due
authorization, execution and delivery by the other parties
thereto) will be enforceable against the Pledgor in accordance
with its terms, subject to (a) bankruptcy, insolvency, moratorium
and other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally, and (b) general principles
of equity (regardless of whether considered in a proceeding at
law or in equity).
Section 3.4 No Legal Bar or Resultant Lien. This Agreement
does not and will not violate or create a default under any
provisions of the certificate of incorporation or bylaws of the
Pledgor, or any contract, agreement, instrument or Governmental
Requirement to which the Pledgor is subject (other than those
violations and defaults that would not affect the Pledgor's use
of such Property or those permitted by this Agreement), or result
in the creation or imposition of any Lien upon any Property of
the Pledgor except as permitted by the Financing Documents.
Section 3.5 Ownership of Collateral; Encumbrances. Pledgor is
the legal and beneficial owner of the Collateral free and clear
of any adverse claim, lien, security interest, option or other
charge or encumbrance except for the security interest created by
this Agreement, and Pledgor has full right, power and authority
to pledge, assign and grant a security interest in the Collateral
to Secured Party.
Section 3.6 No Required Consent. No authorization, consent,
approval or other action by, and no notice to or filing with, any
Governmental Authority is required for (i) the due execution,
delivery and performance by Pledgor of this Agreement, (ii) the
grant by Pledgor of the security interest granted by this
Agreement, (iii) the perfection of such security interest, or
(iv) the exercise by Secured Party of its rights and remedies
under this Agreement.
Section 3.7 Pledged Securities. The Pledged Securities have
been duly authorized and validly issued, and are fully paid and
non-assessable.
Section 3.8 First Priority Security Interest. The pledge of
Pledged Securities (together with physical delivery of the
certificates representing the Pledged Securities) pursuant to
this Agreement creates a valid and perfected first priority
security interest in the Collateral, enforceable against Pledgor
and all third parties and securing payment of the Obligations,
subject to (a) bankruptcy, insolvency, moratorium and other
similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, and (b) general principles of equity
(regardless of whether considered in a proceeding at law or in
equity).
Section 3.9 Collateral. The delivery at any time by Pledgor
to Secured Party of additional Collateral or of additional
descriptions of Collateral shall constitute a representation and
warranty by Pledgor to Secured Party hereunder that the
representations and warranties of this Article 3 are correct
insofar as they would pertain to such Collateral or the
descriptions thereof.
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Section 3.10 No Material Misstatements. All factual
information, taken as a whole, in any written exhibit, schedule
or report prepared by or on behalf of the Pledgor and furnished
to the Secured Party or the other Guaranteed Parties by or at the
direction of the Pledgor in connection with the negotiation of
this Agreement does not contain any material misstatement of fact
or omit to state a material fact necessary to make the statements
contained therein, in light of the circumstances in which they
were made, not misleading.
Section 3.11 Investment Company Act. The execution and
delivery by the Pledgor of this Agreement and its performance of
the obligations provided for herein, will not result in a
violation of the Investment Company Act of 1940, as amended.
ARTICLE 4
Covenants and Agreements
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Pledgor will at all times comply with the covenants and
agreements contained in this Article 4, from the date hereof and
for so long as any part of the Obligations are outstanding and
the Commitments have not been terminated.
Section 4.1 Sale, Disposition or Encumbrance of Collateral.
Except as otherwise expressly permitted by the Credit Agreement,
Pledgor will not in any way encumber any of the Collateral (or
permit or suffer any of the Collateral to be encumbered) or sell,
pledge, assign, lend or otherwise dispose of or transfer any of
the Collateral to or in favor of any Person other than Secured
Party.
Section 4.2 Dividends or Distributions. So long as no Event
of Default shall have occurred and be continuing, Pledgor shall
be entitled to receive, retain and transfer any and all dividends
and interest paid in respect of the Collateral, provided,
however, that any and all:
(a) dividends and interest paid or payable other than
in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect
of, or in exchange for (including, without limitation, any
certificate or share purchased or exchanged in connection
with a tender offer or merger agreement), any Collateral;
(b) dividends and other distributions paid or payable
in cash in respect of any Collateral in connection with a
partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in surplus, or reclassification; and
(c) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Collateral;
shall be, and shall be forthwith delivered to Secured Party to
hold as, Collateral and shall, if received by Pledgor, be
received in trust for the benefit of Secured Party, be segregated
from the other property or funds of Pledgor, and be forthwith
delivered to Secured Party as Collateral in the same form as so
received (with any necessary endorsement).
Section 4.3 Records and Information. The Pledgor will keep
proper books of record and account in accordance with GAAP. The
Pledgor will permit any officer, employee or agent of the Secured
Party or
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any other Guaranteed Party to visit and inspect any of
the Properties of the Pledgor, examine the Pledgor's books of
record and accounts, take copies and extracts therefrom, and
discuss the affairs, finances and accounts of the Pledgor with
the Pledgor's officers, accountants and auditors, as often and
all at such reasonable times during normal business hours as may
be reasonably requested by the Secured Party or any of the other
Guaranteed Parties.
Section 4.4 Reimbursement of Expenses. Pledgor agrees
to indemnify and hold Secured Party and the other Guaranteed
Parties harmless from and against and covenants to defend Secured
Party and the other Guaranteed Parties against any and all
losses, damages, claims, costs, penalties, liabilities and
expenses, including, without limitation, court costs and
reasonable attorneys' fees, reasonably incurred because of,
incident to, or with respect to the Collateral (including,
without limitation, any exercise of rights or remedies in
connection therewith); provided, however the provisions of this
Section 4.4 shall not apply to any action, suits, proceedings,
claims, costs, losses, liabilities, damages, or expenses to the
extent, but only to the extent, caused by the gross negligence or
willful misconduct of the party seeking indemnification. All
amounts for which Pledgor is liable pursuant to this Section 4.4
shall be due and payable by Pledgor to Secured Party or such
other Guaranteed Party upon demand. If Pledgor fails to make such
payment upon demand (or if demand is not made due to an
injunction or stay arising from bankruptcy or other proceedings)
and Secured Party or any other Guaranteed Party pays such amount,
the same shall be due and payable by Pledgor to Secured Party or
such other Guaranteed Party, plus interest thereon from the date
that is five (5) days following Secured Party's or such other
Guaranteed Party's demand (or from the date that is five (5) days
following Secured Party's or such other Guaranteed Party's
payment if demand is not made due to such proceedings) at the
rate set forth in Section 2.6(c) of the Credit Agreement
("Default Rate"); provided, however, if an Event of Default has
occurred and is continuing, interest will begin to accrue on such
amount from the date of Secured Party's or such other Guaranteed
Party's demand (or from the date of Secured Party's or such other
Guaranteed Party's payment if demand is not made due to such
proceedings).
Section 4.5 Stock Powers. Pledgor shall furnish to Secured
Party such stock powers and other instruments as may be required
by Secured Party to assure the transferability of the Collateral
pursuant to Section 6.2 when and as often as may be requested by
Secured Party.
Section 4.6 Voting and Other Consensual Rights. Except to the
extent otherwise provided in subsection 6.6(d), Pledgor shall be
entitled to exercise any and all voting and other consensual
rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement.
Section 4.7 Pledged Securities Percentage. The Pledged
Securities will at all times constitute 100% of the issued and
outstanding shares of capital stock of the issuer thereof.
Section 4.8 Conduct of Business and Maintenance of Existence.
The Pledgor will preserve, renew and keep in full force and
effect its corporate existence and its rights, privileges and
franchises necessary or desirable in the normal conduct of its
business.
Section 4.9 Further Assurances. The Pledgor will cure
promptly any defects in the execution and delivery of this
Agreement and any other Financing Documents to which the Pledgor
is or becomes a party. The Pledgor at its own expense, as
promptly as practical, will execute and deliver to the Secured
Party and the other Guaranteed Parties upon request all such
instruments and take all such action in order fully to
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effectuate the purposes of this Agreement and any other
Financing Documents to which the Pledgor is or becomes a party.
Section 4.10 Reporting Covenant. So long as any Loan, any
Commitment, any Revolving Credit Exposure, or other Obligation
remains unpaid or outstanding, the Pledgor will furnish to
Secured Party and each other Guaranteed Party, promptly after the
occurrence of any event or circumstance concerning or changing
any of the Collateral that would have a Material Adverse Effect,
notice of such event or circumstance in reasonable detail.
Section 4.11 Dividend Payments. In the event that the Pledgor
receives any dividend, payment, or distribution of any kind from
the Borrower or any of its Subsidiaries not expressly permitted
by Section 6.5 of the Credit Agreement, the Pledgor shall hold
such dividend, payment, or other distribution in trust for the
benefit of the Secured Party and the other Guaranteed Parties,
and shall immediately pay or deliver the same to the Secured
Party, for the benefit of the Guaranteed Parties.
ARTICLE 5
Rights, Duties, and Powers of Secured Party
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The following rights, duties and powers of Secured Party
are applicable irrespective of whether an Event of Default occurs
and is continuing:
Section 5.1 Discharge Encumbrances. Secured Party may, at its
option, discharge any taxes, liens, security interests or other
encumbrances at any time levied or placed on the Collateral, if
Pledgor fails to discharge same within thirty (30) days after
written notice thereof shall have been given to Pledgor by
Secured Party; provided, however, notwithstanding the foregoing,
(a) after the occurrence and during the continuance of an Event
of Default, Secured Party may, at its option, discharge any such
encumbrance, and (b) in any event, Secured Party may, at its
option, discharge any such encumbrance at any time if failure to
do so would have a material adverse effect on all or any part of
the Collateral. Pledgor agrees to reimburse Secured Party upon
demand for any payment so made, plus interest thereon from the
date of Secured Party's demand at the Default Rate.
Section 5.2 Transfer of Collateral. Subject to the provisions
of the Credit Agreement, Secured Party may transfer any or all of
the Obligations, and upon any such transfer Secured Party may
transfer its interest in any or all of the Collateral and shall
be fully discharged thereafter from all liability therefor. Any
transferee of the Collateral shall be vested with all rights,
powers and remedies of Secured Party hereunder.
Section 5.3 Cumulative and Other Rights. The rights, powers
and remedies of Secured Party hereunder are in addition to all
rights, powers and remedies given by law or in equity. The
exercise by Secured Party of any one or more of the rights,
powers and remedies herein shall not be construed as a waiver of
any other rights, powers and remedies, including, without
limitation, any other rights of set-off. If any of the
Obligations are given in renewal, extension for any period or
rearrangement, or applied toward the payment of debt secured by
any lien, Secured Party shall be, and is hereby, subrogated to
all the rights, titles, interests and liens securing the debt so
renewed, extended, rearranged or paid.
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Section 5.4 Disclaimer of Certain Duties.
(a) The powers conferred upon Secured Party by this
Agreement are to protect its interest in the Collateral and shall
not impose any duty upon Secured Party or any other Guaranteed
Party to exercise any such powers. Pledgor hereby agrees that
Secured Party shall not be liable for, nor shall the indebtedness
evidenced by the Obligations be diminished by, Secured Party's
delay or failure to collect upon, foreclose, sell, take
possession of or otherwise obtain value for the Collateral.
(b) Subject to the provisions of the Credit Agreement,
Secured Party shall be under no duty whatsoever to make or give
any presentment, notice of dishonor, protest, demand for
performance, notice of non-performance, notice of intent to
accelerate, notice of acceleration, or other notice or demand in
connection with any Collateral or the Obligations, or to take any
steps necessary to preserve any rights against any Obligor or
other Person. Pledgor waives any right of marshaling in respect
of any and all Collateral, and waives any right to require
Secured Party or any other Guaranteed Party to proceed against
any Obligor or other Person, exhaust any Collateral or enforce
any other remedy which Secured Party or any other Guaranteed
Party now has or may hereafter have against any Obligor or other
Person.
Section 5.5 Modification of Obligations; Other Security.
Pledgor waives (a) any and all notice of acceptance, creation,
modification, rearrangement, renewal or extension for any period
of any instrument executed by any Obligor in connection with the
Obligations, and (b) any defense of any Obligor by reason of
disability, lack of authorization, cessation of the liability of
any Obligor or for any other reason. Pledgor authorizes Secured
Party, without notice or demand and without any reservation of
rights against Pledgor and without affecting Pledgor's liability
hereunder, from time to time to (x) take and hold from other
Persons other property, other than the Collateral, as security
for the Obligations, and exchange, enforce, waive and release any
or all of the Collateral, (y) apply the Collateral in the manner
permitted by this Agreement, and (z) renew, extend for any
period, accelerate, amend or modify, supplement, enforce,
compromise, settle, waive or release the obligations of any
Obligor or any instrument or agreement of such other Person with
respect to any or all of the Obligations or Collateral.
Section 5.6 Custody and Preservation of the Collateral.
Secured Party shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially
equal to that which comparable secured parties accord comparable
collateral, it being understood and agreed, however, that neither
Secured Party nor any other Guaranteed Party shall have
responsibility for (a) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not Secured Party
has or is deemed to have knowledge of such matters, or (b) taking
any necessary steps to preserve rights against Persons or
entities with respect to any Collateral.
Section 5.7 Limited Right of Subrogation. Notwithstanding any
payment or payments made by the Pledgor hereunder or any set-off
or application of funds of the Pledgor by the Secured Party or
any other Guaranteed Party, the Pledgor shall not be entitled to
be subrogated to any of the rights of the Secured Party or any
other Guaranteed Party against the Borrower, any Pledgor or any
collateral security or guaranty or right of offset held by any
such Person for the payment of the Obligations, nor shall the
Pledgor seek or be entitled to seek any contribution or
reimbursement from the Borrower or any other guarantor in respect
of payments made by the Pledgor hereunder, until all Obligations
are paid in full and the Commitments are terminated. If any
amount shall be paid to the Pledgor on account of such
subrogation rights at any time when all of the Obligations shall
not have been paid in full, such amount shall be held by the
Pledgor in trust
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for the Secured Party and the other Guaranteed
Parties, segregated from other funds of the Pledgor, and shall,
forthwith upon receipt by the Pledgor, be turned over to the
Secured Party in the exact form received by the Pledgor (duly
indorsed by the Pledgor to the Secured Party, if required), to be
applied against the Obligations, whether matured or unmatured in
such order as the Secured Party may determine.
Section 5.8 Amendments, etc. with respect to the Obligations;
Waiver of Rights. The Pledgor shall remain obligated hereunder
notwithstanding that, without any reservation of rights against
the Pledgor and without notice to or further assent by the
Pledgor, any demand for payment of any of the Obligations made by
the Secured Party or any other Guaranteed Party may be rescinded
and any of the Obligations continued, and the Obligations, or the
liability of any other party upon or for any part thereof, or any
collateral security or guaranty therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered, or released by the Secured Party or the
other Guaranteed Parties and the Credit Agreement, the Notes, and
any collateral security document or other guaranty or document in
connection therewith (including, without limitation, the other
Financing Documents) may be amended, modified, supplemented, or
terminated, in whole or in part, as the Secured Party and the
other Guaranteed Parties may deem advisable from time to time,
and any collateral security or guaranty or right of offset at any
time held by the Secured Party or the other Guaranteed Parties
for the payment of the Obligations may be sold, exchanged,
waived, surrendered, or released, all without the
necessity of any reservation of rights against the Pledgor and
without notice to or further assent by the Pledgor which will
remain bound hereunder, notwithstanding any such renewal,
extension, modification, acceleration, compromise, amendment,
supplement, termination, sale, exchange, waiver, surrender, or
release. When making any demand hereunder against the Pledgor,
the Secured Party may, but shall be under no obligation to, make
a similar demand on the Borrower or any guarantor, and any
failure by the Secured Party to make any such demand or to
collect any payments from the Borrower or any such other
guarantor, or any release of the Borrower or other guarantor,
shall not relieve the Pledgor of its obligations or liabilities
hereunder, and shall not impair or affect the rights and
remedies, express or implied, or as a matter of law, of the
Secured Party or the other Guaranteed Parties against the
Pledgor. For the purposes hereof "demand" shall include the
commencement and continuance of any legal proceedings.
Section 5.9 Nature of Obligation; Waivers. The Pledgor waives
any and all notice of the creation, renewal, extension, or
accrual of any of the Obligations and notice of or proof of
reliance by the Secured Party or the other Guaranteed Parties
upon this Agreement or acceptance of this Agreement, and the
Obligations (and any of them) shall conclusively be deemed to
have been created, contracted, or incurred and extended, amended,
and waived in reliance upon this Agreement, and all dealings
between the Borrower or the Pledgor and the Secured Party or any
other Guaranteed Party shall likewise be conclusively presumed to
have been had or consummated in reliance upon this Agreement. The
Pledgor waives diligence, presentment, protest, demand for
payment, and notice of default or nonpayment, notice of intention
to accelerate maturity, and notice of acceleration of maturity to
or upon the Borrower or the Pledgor with respect to the
Obligations. The Pledgor understands and agrees that this
Agreement shall be construed as a continuing, absolute,
completed, unconditional pledge, without regard to (a) the
validity, regularity or enforceability of any collateral security
pledged to secure or guaranty the payment or performance of the
Obligations or right of offset with respect thereto at any time
or from time to time held by the Secured Party or the other
Guaranteed Parties, (b) any defense, set-off, or counterclaim
which may at any time be available to or be asserted by the
Borrower or any Person liable for the Obligations against the
Secured Party or the other Guaranteed Parties, or (c) any other
circumstance whatsoever (with or without notice to or knowledge
of the Borrower or the Pledgor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of any
Person liable for the Obligations, or of the Pledgor under this
Agreement, in bankruptcy
-9-
or in any other instance. When pursuing any of their
rights and remedies against the Pledgor hereunder, the Secured
Party and the other Guaranteed Parties may, but shall be under no
obligation to, pursue such rights and remedies as they may have
against the Borrower or any Person or against any collateral
security or guaranty for the Obligations or any right of offset
with respect thereto, and any failure by the Secured Party or the
other Guaranteed Parties to pursue such other rights or remedies
or to collect any payments from the Borrower or any such Person
or to realize upon any such collateral security or guaranty or to
exercise any such right of offset, or any release of the Borrower
or any such Person or any such collateral security, guaranty or
right of offset, shall not relieve the Pledgor of any liability
hereunder, and shall not impair or affect the rights and
remedies, whether express, implied, or available as a matter of
law, of the Secured Party or any other Guaranteed Party against
the Pledgor. This Agreement shall remain in full force and effect
and be binding in accordance with and to the extent of its terms
upon the Pledgor and its successors and assigns, and shall inure
to the benefit of the Secured Party and the other Guaranteed
Parties, and their respective successors, indorsees, transferees,
and assigns, until all the Obligations and the obligations of the
Pledgor under this Agreement shall have been satisfied by payment
in full.
ARTICLE 6
Events of Default
-----------------
Section 6.1 Events. It shall constitute an Event of Default
under this Agreement if an Event of Default occurs and is
continuing under the Credit Agreement.
Section 6.2 Remedies. Upon the occurrence and during the
continuance of any Event of Default, Secured Party, upon the
written or telex request of the Required Lenders, shall take any
or all of the following actions without notice (except where
expressly required below or in the Credit Agreement) or demand to
Pledgor:
(a) Pursuant to the terms of the Credit Agreement,
declare all or part of the indebtedness pursuant to the
Obligations immediately due and payable and enforce payment
of the same.
(b) Sell, in one or more sales and in one or more
parcels, or otherwise dispose of any or all of the
Collateral in any commercially reasonable manner as Secured
Party may elect, in a public or private transaction, at any
location as deemed reasonable by Secured Party for cash or
for future delivery at such price as Secured Party may deem
fair, and (unless prohibited by the Code, as adopted in any
applicable jurisdiction) Secured Party or any other
Guaranteed Party may be the purchaser of any or all
Collateral so sold and may apply upon the purchase price
therefor any Obligations secured hereby. Any such sale or
transfer by Secured Party either to itself or to any other
Person shall be absolutely free from any claim of right by
Pledgor, including any equity or right of redemption, stay
or appraisal which Pledgor has or may have under any rule
of law, regulation or statute now existing or hereafter
adopted. Upon any such sale or transfer, Secured Party
shall have the right to deliver, assign and transfer to the
purchaser or transferee thereof the Collateral so sold or
transferred. If Secured Party deems it advisable to do so,
it may restrict the bidders or purchasers of any such sale
or transfer to Persons or entities who will represent and
agree that they are purchasing the Collateral for their own
account and not with the view to the distribution or resale
of any of the Collateral. Secured Party may, at its
discretion, provide for a public sale, and any such public
sale shall be held at such time or times within ordinary
business hours and at such
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place or places as Secured Party
may fix in the notice of such sale. Secured Party shall not
be obligated to make any sale pursuant to any such notice.
Secured Party may, without notice or publication, adjourn
any public or private sale by announcement at any time and
place fixed for such sale, and such sale may be made at any
time or place to which the same may be so adjourned. In the
event any sale or transfer hereunder is not completed or is
defective in the opinion of Secured Party, such sale or
transfer shall not exhaust the rights of Secured Party
hereunder, and Secured Party shall have the right to cause
one or more subsequent sales or transfers to be made
hereunder. If only part of the Collateral is sold or
transferred such that the Obligations remain outstanding
(in whole or in part), Secured Party's rights and remedies
hereunder shall not be exhausted, waived or modified, and
Secured Party is specifically empowered to make one or more
successive sales or transfers until all the Collateral
shall be sold or transferred and all the Obligations are
paid. In the event that Secured Party elects not to sell
the Collateral, Secured Party retains its rights to dispose
of or utilize the Collateral or any part or parts thereof
in any manner authorized or permitted by law or in equity,
and to apply the proceeds of the same towards payment of
the Obligations. Each and every method of disposition of
the Collateral described in this subsection or in
subsection (d) shall constitute disposition in a
commercially reasonable manner.
(c) Apply proceeds of the disposition of the
Collateral to the Obligations in any manner elected by
Secured Party and permitted by the Code or otherwise
permitted by law or in equity. Such application may
include, without limitation, the reasonable attorneys' fees
and legal expenses incurred by Secured Party and the other
Guaranteed Parties.
(d) Appoint any Person as agent to perform any act or
acts necessary or incident to any sale or transfer by
Secured Party of the Collateral.
(e) Receive, change the address for delivery, open and
dispose of mail addressed to Pledgor, and to execute,
assign and endorse negotiable and other instruments for the
payment of money, documents of title, or other evidences of
payment, but only in respect of the Collateral on behalf of
and in the name of Pledgor.
(f) Exercise all other rights and remedies permitted
by law or in equity.
Section 6.3 Attorney-in-Fact. Pledgor hereby irrevocably
appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of
Pledgor or otherwise, from time to time in Secured Party's
discretion upon the occurrence and during the continuance of an
Event of Default, but at Pledgor's cost and expense and without
notice to Pledgor, to take any action and to execute any
assignment, certificate, financing statement, stock power,
notification, document or instrument which Secured Party may deem
necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, to receive, endorse and
collect all instruments made payable to Pledgor representing any
dividend, interest payment or other distribution in respect of
the Collateral or any part thereof and to give full discharge for
the same.
Section 6.4 No Liability for Deficiency. Notwithstanding
anything contained herein to contrary, it is expressly agreed
that Secured Party's rights and remedies hereunder are expressly
limited to the Collateral, and Pledgor shall have no personal
liability for the payment of any sums hereunder, except to the
extent of the Collateral. If any claim of the Guaranteed Parties
against the Pledgor shall be asserted under this Agreement, the
Guaranteed Parties' rights in respect of the Obligations shall be
limited to satisfaction
-11-
out of, and enforcement against, the
Collateral, and, except as hereinafter set forth, the Guaranteed
Parties shall not have the right to proceed directly or
indirectly against the Pledgor or against any of its Properties
(other than the Collateral) for the satisfaction
of any of the Obligations or of any such claim or
liability or for any deficiency judgment (except that the
Guaranteed Parties shall not be deemed by the provisions of this
Section 6.4 to have waived any rights under any applicable law to
the extent enforceable out of the Collateral or against the
Pledgor relating to any dividend or distribution to the Pledgor
in violation of the Credit Agreement or any other Financing
Document). Notwithstanding any of the foregoing, it is expressly
understood and agreed, however, that nothing contained in this
Section 6.4 shall in any manner or way (a) constitute or be
deemed to be a release of the Obligations or any such claim or
liability or the Obligations secured by, or impair the
enforceability of, the Liens and rights created by or arising
from or in connection with the Credit Agreement, this Agreement
and the other Financing Documents or, except as provided in the
preceding sentence, restrict the remedies (including the right to
join the Pledgor in any legal action, claim or proceeding)
available to the Guaranteed Parties to realize upon the
Collateral; (b) affect or diminish any covenant of the Pledgor;
or (c) be deemed to release or in any manner limit the liability
of the Pledgor for its fraudulent actions. The matters set forth
in this Section 6.4 shall survive the termination of this
Agreement.
Section 6.5 Reasonable Notice. If any applicable
provision of any law requires Secured Party or any other
Guaranteed Party to give reasonable notice of any sale or
disposition or other action, Pledgor hereby
agrees that ten days' prior written notice shall constitute
reasonable notice thereof. Such notice, in the case of public
sale, shall state the time and place fixed for such sale and, in
the case of private sale, the time after which such sale is to be
made.
Section 6.6 Pledged Securities. Upon the occurrence and
during the continuance of an Event of Default:
(a) All rights of Pledgor to receive the dividends and
interest payments which it would otherwise be authorized to
receive and retain pursuant to Section 4.2 shall cease, and
all such rights shall thereupon become vested in Secured
Party who shall thereupon have the sole right to receive
and hold as Collateral such dividends and interest
payments, but Secured Party shall have no duty to receive
and hold such dividends and interest payments and shall not
be responsible for any failure to do so or delay in so
doing.
(b) All dividends and interest payments which are
received by Pledgor contrary to the provisions of this
Section 6.6 shall be received in trust for the benefit of
Secured Party, shall be segregated from other funds of
Pledgor and shall be forthwith paid over to Secured Party
as Collateral in the same form as so received (with any
necessary indorsement).
(c) Secured Party may exercise any and all rights of
conversion, exchange, subscription or any other rights,
privileges or options pertaining to any of the Pledged
Securities as if it were the absolute owner thereof,
including without limitation, the right to exchange at its
discretion, any and all of the Pledged Securities upon the
merger, consolidation, reorganization, recapitalization or
other readjustment of any issuer of such Pledged Securities
or upon the exercise by any such issuer or Secured Party of
any right, privilege or option pertaining to any of the
Pledged Securities, and in connection therewith, to deposit
and deliver any and all of the Pledged Securities with any
committee, depository, transfer agent, registrar or other
designated agency upon such terms and conditions as it may
determine, all without liability except to account for
property actually received
-12-
by it, but Secured Party shall have no duty to exercise any
of the aforesaid rights, privileges or options and shall not
be responsible for any failure to do so or delay in so
doing.
(d) If the issuer of any Pledged Securities is the
subject of bankruptcy, insolvency, receivership,
custodianship or other proceedings under the supervision of
any court or governmental agency or instrumentality, then
all rights of Pledgor to exercise the voting and other
consensual rights which Pledgor would otherwise be entitled
to exercise pursuant to Section 4.6 with respect to the
Pledged Securities issued by such issuer shall cease, and
all such rights shall thereupon become vested in Secured
Party who shall thereupon have the sole right to exercise
such voting and other consensual rights, but Secured Party
shall have no duty to exercise any such voting or other
consensual rights and shall not be responsible for any
failure to do so or delay in so doing.
Section 6.7 Non-judicial Enforcement. Secured Party may
enforce its rights hereunder without prior judicial process or
judicial hearing, and to the extent permitted by law Pledgor
expressly waives any and all legal rights which might otherwise
require Secured Party to enforce its rights by judicial process.
ARTICLE 7
Miscellaneous Provisions
------------------------
Section 7.1 Notices. Any notice required or permitted to be
given under or in connection with this Agreement shall be given
in accordance with the notice provisions of the Credit Agreement
to the address of the Pledgor provided in the introductory
paragraph of this Agreement.
Section 7.2 Amendments and Waivers. Secured Party's
acceptance of partial or delinquent payments or any forbearance,
failure or delay by Secured Party in exercising any right, power
or remedy hereunder shall not be deemed a waiver of any
obligation of Pledgor or any Obligor, or of any right, power or
remedy of Secured Party; and no partial exercise of any right,
power or remedy shall preclude any other or further exercise
thereof. Secured Party may remedy any Event of Default hereunder
or in connection with the Obligations without waiving the Event
of Default so remedied. Pledgor hereby agrees that if Secured
Party agrees to a waiver of any provision hereunder, or an
exchange of or release of the Collateral, or the addition or
release of any Obligor or other Person, any such action shall not
constitute a waiver of any of Secured Party's other rights or of
Pledgor's obligations hereunder. This Agreement may be amended
only by an instrument in writing executed jointly by Pledgor and
Secured Party and may be supplemented only by documents delivered
or to be delivered in accordance with the express terms hereof.
Section 7.3 Copy as Financing Statement. A photocopy or other
reproduction of this Agreement may be delivered by Pledgor or
Secured Party to any financial intermediary or other third party
for the purpose of transferring or perfecting any or all of the
Pledged Securities to Secured Party or its designee or assignee.
Section 7.4 Possession of Collateral. Secured Party shall be
deemed to have possession of any Collateral in transit to it or
set apart for it (or, in either case, to or for any of its
agents, affiliates or correspondents).
-13-
Section 7.5 Redelivery of Collateral. If any sale or transfer
of Collateral by Secured Party results in full satisfaction of
the Obligations, and after such sale or transfer and discharge
there remains a surplus of proceeds, Secured Party will deliver
to Pledgor such excess proceeds in a commercially reasonable
time; provided, however, that neither Secured Party nor any other
Guaranteed Party shall have any liability for any interest, cost
or expense in connection with any reasonable delay in delivering
such proceeds to Pledgor.
Section 7.6 Governing Law; Submission to Jurisdiction; etc.
(a) Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed in
accordance with and be governed by the laws of the State of New
York (including Section 5- 1401 of the New York General
Obligations Law, or any similar successor provision thereto, but
excluding all other conflict-of-laws rules)and to the extent
controlling, laws of the United States of America.
(b) SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE OTHER FINANCING
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF
NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
PLEDGOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, BUT NOT LIMITED TO, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(c) WAIVER OF JURY TRIAL & CONSEQUENTIAL DAMAGES. TO THE
MAXIMUM EXTENT ALLOWED BY APPLICABLE LAW, PLEDGOR AND SECURED
PARTY (I) IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
FINANCING DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (II)
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (III) CERTIFIES THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER;
AND (IV) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE OTHER FINANCING DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BASED UPON, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
(d) Designation of Process Agent. Pledgor hereby
irrevocably designates CT Corporation System, with an office on
the date hereof at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, as
the designee, appointee and process agent of Pledgor to receive,
for and on behalf of Pledgor, service of process in such
respective jurisdictions in any legal action or proceeding with
respect to this Agreement or the other Financing Documents. It is
understood that a copy of such process served on such agent will
be promptly forwarded by mail to Pledgor at its address set forth
opposite its signature below, but the failure of Pledgor to
receive such copy shall not affect in any way the service of such
process. Pledgor further irrevocably consents to the service of
process of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to Pledgor at its said address,
-14-
such service to become effective on the earlier to occur of (i)
actual receipt of such service of process and (ii) 30 days after
such mailing.
(e) Service of Process. Nothing herein shall affect the
right of Secured Party to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise
proceed against Pledgor in any other jurisdiction.
Section 7.7 Continuing Security Agreement.
------------------------------
(a) Except as may be expressly applicable pursuant to
Section 9.505 of the Code, no action taken or omission to act by
Secured Party or the other Guaranteed Parties hereunder,
including, without limitation, any exercise of voting or
consensual rights pursuant to Section 4.6 or any other action
taken or inaction pursuant to Section 6.2, shall be deemed to
constitute a retention of the Collateral in satisfaction of the
Obligations or otherwise to be in full satisfaction of the
Obligations, and the Obligations shall remain in full force and
effect, until Secured Party shall have applied payments of
collections from Collateral toward the Obligations or until such
subsequent time as is hereinafter provided in subsection (b)
below.
(b) To the extent that any payments on the Obligations or
proceeds of the Collateral are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be
repaid to a trustee, debtor in possession, receiver or other
Person under any bankruptcy law, common law or equitable cause,
then to such extent the Obligations so satisfied shall be revived
and continue as if such payment or proceeds had not been received
by Secured Party or the other Guaranteed Parties, and Secured
Party's and the other Guaranteed Parties' ratable security
interests, rights, powers and remedies hereunder shall continue
in full force and effect. In such event, this Agreement shall be
automatically reinstated if it shall theretofore have been
terminated pursuant to Section 7.8.
Section 7.8 Termination. The grant of a security interest
hereunder and all of Secured Party's and the other Guaranteed
Parties' rights, powers and remedies in connection therewith
shall remain in full force and effect until Secured Party has (a)
retransferred and delivered all Collateral in its possession to
Pledgor, and (b) executed a written release or termination
statement and reassigned to Pledgor without recourse or warranty
any remaining Collateral and all rights conveyed hereby. Upon (x)
the complete payment of the Obligations, (y) the termination of
the Commitments, and (z) the compliance by Pledgor with all
covenants and agreements hereof, Secured Party, at the written
request and expense of Pledgor, will release, reassign and
transfer the Collateral to Pledgor and declare this Agreement to
be of no further force or effect. Notwithstanding the foregoing,
the reimbursement and indemnification provisions of Section 4.4
and the provisions of subsection 7.7(b) shall survive the
termination of this Agreement.
Section 7.9 Invalidity. In the event that one or more of the
provisions contained in this Agreement shall, for any reason, be
held invalid, illegal or unenforceable in any respect (a) Pledgor
agrees that such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement, and (b) Pledgor
and Secured Party (acting on behalf of and at the direction of
the Guaranteed Parties) will negotiate in good faith to amend
such provision so as to be legal, valid and enforceable.
Section 7.10 Counterparts, Effectiveness. This Agreement may
be executed in two or more counterparts. Each counterpart is
deemed an original, but all such counterparts taken together
constitute one and the same instrument. This Agreement becomes
effective upon the execution hereof by Pledgor and
-15-
delivery of the same to Secured Party, and it is not
necessary for Secured Party to execute any acceptance hereof or
otherwise signify or express its acceptance hereof.
-16-
PLEDGOR:
--------
PM HOLDINGS CORPORATION
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief
Executive Officer
Address for notice:
0000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
SECURED PARTY:
--------------
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Administrative Agent
By: /s/ X.X. Xxxxx
---------------------------------
Name: X.X. Xxxxx
Title: Vice-President
-17-
EXHIBIT A
PLEDGED SECURITIES
Issuer Class of Stock Certificate Holder No. of Shares
Stock No.
==========================================================================
Purina Xxxxx, Common 4 PM Holdings 1,000
Inc Corporation
