PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of December 10, 1998 (as same may
be amended, amended and restated, modified or supplemented from time to time,
this "Agreement"), made by Superior National Insurance Group, Inc. (the
"Borrower"), the Subsidiary Guarantors (as defined in the Credit Agreement
referred to below) and each other Subsidiary of the Borrower that is required
to execute a counterpart hereof pursuant to Section 25 of this Agreement,
(the "Pledgors", and each, a "Pledgor"), and The Chase Manhattan Bank, not in
its individual capacity but solely as Collateral Agent (including any
successor collateral agent, the "Pledgee") for the benefit of (x) the Banks
and the Administrative Agent under, and any other lenders from time to time
party to, the Credit Agreement hereinafter referred to (such Banks, the
Administrative Agent and other lenders, if any, are hereinafter called the
"Bank Creditors") and (y) if The Chase Manhattan Bank, in its individual
capacity ("Chase") and/or any Bank or any Affiliate of a Bank enters into one
or more interest rate agreements relating to the Loans (including, without
limitation, interest rate swaps, caps, floors, collars and similar
agreements) (collectively, the "Interest Rate Agreements") with, or
guaranteed by, any of the Pledgors, Chase, any such Bank or Banks or a
syndicate of financial institutions organized by Chase or an affiliate of
Chase (even if Chase or the respective Bank subsequently ceases to be a Bank
under the Credit Agreement for any reason), so long as any such Bank or
Affiliate participates in the extension of such Interest Rate Agreements, and
their subsequent assigns, if any (collectively, the "Interest Rate
Creditors", and the Interest Rate Creditors together with the Bank Creditors,
are hereinafter called the "Secured Creditors"). Except as otherwise defined
herein, terms used herein and defined in the Credit Agreement shall be used
herein as so defined.
W I T N E S S E T H:
WHEREAS, the Borrower, the financial institutions from time to
time party thereto (the "Banks") and The Chase Manhattan Bank, as
Administrative Agent (in its capacity as Administrative Agent, being herein
referred to as the "Administrative Agent") have entered into a Credit
Agreement, dated as of December 10, 1998, providing for the making of Loans
to the Borrower (as used herein, the term "Credit Agreement" means the Credit
Agreement described above in this paragraph, as the same may be amended,
amended and restated, modified or supplemented from time to time, and
including any successor agreement extending the maturity of, or restructuring
(including, but not limited to, the inclusion of additional borrowers
thereunder that are Subsidiaries of the Borrower and whose obligations are
guaranteed by the Borrower thereunder or any increase in the amount borrowed)
of all or any portion of the Indebtedness under such agreement or any
successor agreements);
WHEREAS, the Borrower may from time to time be party to one or
more Interest Rate Agreements with the Interest Rate Creditors;
WHEREAS, pursuant to a Subsidiary Guaranty, dated as of December
10, 1998 (as amended, amended and restated, modified or supplemented from time
to time, the "Subsidiary Guaranty"), each Pledgor (other than the Borrower) has
jointly and severally
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guaranteed to the Secured Creditors the payment when due of all obligations
and liabilities of the Borrower under or with respect to the Credit Documents
and the Interest Rate Agreements;
WHEREAS, it is a condition precedent to the making of Loans to
the Borrower under the Credit Agreement that each Pledgor shall have executed
and delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor will obtain benefits from the incurrence
of Loans by the Borrower and the Borrower's entering into Interest Rate
Agreements and, accordingly, desires to execute this Agreement in order to
satisfy the conditions precedent described in the preceding paragraph and to
induce the Banks to make Loans to the Borrower and to induce the Interest
Rate Creditors to enter into Interest Rate Agreements with the Borrower;
NOW, THEREFORE, in consideration of the benefits accruing to
each Pledgor, the receipt and sufficiency of which are hereby acknowledged,
each Pledgor hereby makes the following representations and warranties to the
Pledgee and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each
Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness (including, without limitation,
indemnities, Fees and interest thereon) of such Pledgor owing to the
Bank Creditors, whether now existing or hereafter incurred under,
arising out of, or in connection with the Credit Agreement and the other
Credit Documents to which such Pledgor is a party (including all such
obligations, liabilities and indebtedness under the Subsidiary Guaranty
to which such Pledgor is a party) and the due performance and compliance
by such Pledgor with all of the terms, conditions and agreements
contained in the Credit Agreement and such other Credit Documents (all
such obligations, liabilities and indebtedness under this clause (i),
except to the extent guaranteeing obligations of the Borrower under
Interest Rate Agreements, being herein collectively called the "Credit
Agreement Obligations");
(ii) the full and prompt payment when due (whether at stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness (including, without limitation, indemnities, fees and
interest thereon) of such Pledgor owing to the Interest Rate Creditors,
now existing or hereafter incurred under, arising out of or in
connection with any Interest Rate Agreement, whether such Interest Rate
Agreement is now in existence or hereinafter arising, and the due
performance and compliance with the terms, conditions and agreements of
each such Interest Rate Agreement by such Pledgor including, in the case
of Pledgors other than the Borrower, all obligations liabilities and
indebtedness under the Subsidiary Guaranty in respect of the Interest
Rate Agreements, and the due performance and compliance by such Pledgor
with all of the terms, conditions and agreements contained in each such
Interest Rate Agreement (all such
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obligations, liabilities and indebtedness under this clause (ii) being
herein collectively called the "Interest Rate Obligations");
(iii) any and all sums advanced by the Pledgee in order to
preserve the Collateral (as hereinafter defined) and/or preserve its
security interest therein;
(iv) in the event of any proceeding for the collection of the
Obligations (as defined below) or the enforcement of this Agreement,
after an Event of Default (such term, as used in this Agreement, shall
mean any Event of Default under, and as defined in, the Credit Agreement
or any payment default under any Interest Rate Agreement and shall in
any event include, without limitation, any payment default (after the
expiration of any applicable grace period) on any of the Obligations (as
defined below)) shall have occurred and be continuing, the reasonable
expenses of retaking, holding, preparing for sale or lease, selling or
otherwise disposing of or realizing on the Collateral, or of any
exercise by the Pledgee of its rights hereunder, together with
reasonable attorneys' fees and court costs; and
(v) all amounts paid by any Indemnitee to which such
Indemnitee has the right to reimbursement under Section 11 of this
Agreement.
all such obligations, liabilities, indebtedness, sums and expenses set forth
in clauses (i) through (v) of this Section 1 being collectively called the
"Obligations", it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether
outstanding on the date of this Agreement or extended from time to time after
the date of this Agreement.
2. DEFINITIONS; ANNEXES. (a) Unless otherwise defined
herein, all capitalized terms used herein and defined in the Credit Agreement
shall be used herein as therein defined. Reference to singular terms shall
include the plural and vice versa.
(b) The following capitalized terms used herein shall have
the definitions specified below:
"ADMINISTRATIVE AGENT" has the meaning set forth in the Recitals
hereto.
"ADVERSE CLAIM" has the meaning given such term in Section
8-102(a)(1) of the UCC.
"AGREEMENT" has the meaning set forth in the first paragraph
hereof.
"BANK CREDITORS" has the meaning set forth in the first paragraph
hereof.
"BANKS" has the meaning set forth in the Recitals hereto.
"CERTIFICATED SECURITY" has the meaning given such term in
Section 8-102(a)(4) of the UCC.
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"CLEARING CORPORATION" has the meaning given such term in
Section 8-102(a)(5) of the UCC.
"COLLATERAL" has the meaning set forth in Section 3.1 hereof.
"COLLATERAL ACCOUNTS" means any and all accounts established
and maintained by the Pledgee in the name of any Pledgor to which Collateral
may be credited.
"CREDIT AGREEMENT" has the meaning set forth in the Recitals
hereto.
"CREDIT AGREEMENT OBLIGATIONS" has the meaning set forth in
Section 1 hereof.
"EVENT OF DEFAULT" has the meaning set forth in Section 1
hereof.
"FINANCIAL ASSET" has the meaning given such term in Section
8-102(a)(9) of the UCC.
"INDEMNITEES" has the meaning set forth in Section 11 hereof.
"INSTRUMENT" has the meaning given such term in Section
9-105(1)(i) of the UCC.
"INTEREST RATE AGREEMENTS" has the meaning set forth in the
first paragraph hereof.
"INTEREST RATE OBLIGATIONS" has the meaning set forth in
Section 1 hereof.
"INVESTMENT PROPERTY" has the meaning given such term in
Section 9-115(f) of the UCC.
"LIMITED LIABILITY COMPANY ASSETS" means all assets, whether
tangible or intangible and whether real, personal or mixed (including,
without limitation, all limited liability company capital and interest in
other limited liability companies), at any time owned or represented by any
Limited Liability Company Interest.
"LIMITED LIABILITY COMPANY INTERESTS" means the entire limited
liability company membership interest at any time owned by any Pledgor in any
limited liability company which is a Subsidiary.
"NOTES" means (x) all intercompany notes at any time issued to
each Pledgor and (y) all surplus notes at any time issued to, or held by,
each Pledgor.
"OBLIGATIONS" has the meaning set forth in Section 1 hereof.
"PARTNERSHIP ASSETS" means all assets, whether tangible or
intangible and whether real, personal or mixed (including, without
limitation, all partnership capital and interest in other partnerships), at
any time owned or represented by any Partnership Interest.
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"PARTNERSHIP INTEREST" means the entire general partnership
interest or limited partnership interest at any time owned by any Pledgor in
any general partnership or limited partnership, in each case which is a
Subsidiary.
"PLEDGED NOTES" has the meaning set forth in Section 3.5
hereof.
"PLEDGEE" has the meaning set forth in the first paragraph
hereof.
"PLEDGOR" has the meaning set forth in the first paragraph
hereof.
"PROCEEDS" has the meaning given such term in Section 9-306(l)
of the UCC.
"REQUIRED BANKS" has the meaning given such term in the Credit
Agreement.
"SECURED CREDITORS" has the meaning set forth in the first
paragraph hereof.
"SECURED DEBT AGREEMENTS" has the meaning set forth in Section
5 hereof.
"SECURITIES ACCOUNT" has the meaning given such term in
Section 8-501(a) of the UCC.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
as in effect from time to time.
"SECURITY" and "SECURITIES" means all Stock and Notes.
"SECURITY ENTITLEMENT" has the meaning given such term in
Section 8-102(a)(17) of the UCC.
"STOCK" means all of the issued and outstanding shares of
capital stock or other ownership interests of any Subsidiary at any time
owned by any Pledgor.
"TERMINATION DATE" has the meaning set forth in Section 19
hereof.
"UCC" means the Uniform Commercial Code as in effect in the
State of New York from time to time; PROVIDED that all references herein to
specific sections or subsections of the UCC are references to such sections
or subsections, as the case may be, of the Uniform Commercial Code as in
effect in the State of New York on the date hereof.
"UNCERTIFICATED SECURITY" has the meaning given such term in
Section 8-102(a)(18) of the UCC.
3. PLEDGE OF SECURITY INTEREST, ETC.
3.1 PLEDGE. To secure the Obligations now or hereafter owed
or to be performed by such Pledgor, each Pledgor does hereby grant, pledge
and assign to the Pledgee for the benefit of the Secured Creditors, and does
hereby create a continuing security interest (subject to those
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Liens permitted to exist with respect to the Collateral pursuant to the terms
of all Secured Debt Agreements then in effect) in favor of the Pledgee for
the benefit of the Secured Creditors in, all of the right, title and interest
in and to the following, whether now existing or hereafter from time to time
acquired (collectively, the "Collateral"):
(a) each of the Collateral Accounts, including any and all
assets of whatever type or kind deposited by such Pledgor in such
Collateral Account, whether now owned or hereafter acquired, existing or
arising, including, without limitation, all Financial Assets, Investment
Property, moneys, checks, drafts, Instruments, Securities or interests
therein of any type or nature deposited or required by the Credit
Agreement or any other Secured Debt Agreement to be deposited in such
Collateral Account, and all investments and all certificates and other
Instruments (including depository receipts, if any) from time to time
representing or evidencing the same, and all dividends, interest,
distributions, cash and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any
or all of the foregoing;
(b) all Securities of such Pledgor from time to time;
(c) all Limited Liability Company Interests of such Pledgor
from time to time and all of its right, title and interest in each
limited liability company to which each such interest relates, whether
now existing or hereafter acquired, including, without limitation:
(A) all the capital thereof and its interest in all
profits, losses, Limited Liability Company Assets and other
distributions to which such Pledgor shall at any time be entitled
in respect of such Limited Liability Company Interests;
(B) all other payments due or to become due to such
Pledgor in respect of Limited Liability Company Interests,
whether under any limited liability company agreement or
otherwise, whether as contractual obligations, damages, insurance
proceeds or otherwise;
(C) all of its claims, rights, powers, privileges,
authority, options, security interests, liens and remedies, if
any, under any limited liability company agreement or operating
agreement, or at law or otherwise in respect of such Limited
Liability Company Interests;
(D) all present and future claims, if any, of such
Pledgor against any such limited liability company for moneys
loaned or advanced, for services rendered or otherwise;
(E) all of such Pledgor's rights under any limited
liability company agreement or operating agreement or at law to
exercise and enforce every right, power, remedy, authority,
option and privilege of such Pledgor relating to such Limited
Liability Company Interests, including any power to terminate,
cancel or modify any limited liability company agreement or
operating agreement, to
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execute any instruments and to take any and all other action
on behalf of and in the name of any of such Pledgor in respect
of such Limited Liability Company Interests and any such
limited liability company, to make determinations, to exercise
any election (including, but not limited to, election of
remedies) or option or to give or receive any notice, consent,
amendment, waiver or approval, together with full power and
authority to demand, receive, enforce, collect or receipt for
any of the foregoing or for any Limited Liability Company
Asset, to enforce or execute any checks, or other instruments
or orders, to file any claims and to take any action in
connection with any of the foregoing; and
(F) all other property hereafter delivered in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
other property and all cash, securities, interest, dividends,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all thereof;
(d) all Partnership Interests of such Pledgor from time to
time and all of its right, title and interest in each partnership to
which each such interest relates, whether now existing or hereafter
acquired, including, without limitation:
(A) all the capital thereof and its interest in all
profits, losses, Partnership Assets and other distributions to
which such Pledgor shall at any time be entitled in respect of
such Partnership Interests;
(B) all other payments due or to become due to such
Pledgor in respect of Partnership Interests, whether under any
partnership agreement or otherwise, whether as contractual
obligations, damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges,
authority, options, security interests, liens and remedies, if
any, under any partnership agreement or operating agreement, or
at law or otherwise in respect of such Partnership Interests;
(D) all present and future claims, if any, of such
Pledgor against any such partnership for moneys loaned or
advanced, for services rendered or otherwise;
(E) all of such Pledgor's rights under any partnership
agreement or operating agreement or at law to exercise and
enforce every right, power, remedy, authority, option and
privilege of such Pledgor relating to such Partnership Interests,
including any power to terminate, cancel or modify any
partnership agreement or operating agreement, to execute any
instruments and to take any and all other action on behalf of and
in the name of any of such Pledgor in respect of such Partnership
Interests and any such partnership, to make determinations, to
exercise any election (including, but not limited to, election of
remedies) or option
Page 8
or to give or receive any notice, consent, amendment, waiver
or approval, together with full power and authority to demand,
receive, enforce, collect or receipt for any of the foregoing
or for any Partnership Asset, to enforce or execute any
checks, or other instruments or orders, to file any claims and
to take any action in connection with any of the foregoing
(with all of the foregoing rights only to be exercisable upon
the occurrence and during the continuation of an Event of
Default); and
(F) all other property hereafter delivered in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
other property and all cash, securities, interest, dividends,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all thereof; and
(e) all Proceeds of any and all of the foregoing.
Nothing in this Agreement is to be construed as a pledge of any tangible or
intangible asset or right of a Regulated Insurance Company, however, this
Agreement includes the pledge of capital stock of each Regulated Insurance
Company. [Notwithstanding anything to the contrary contained herein (i) SNIG is
not pledging any capital stock of SNCHC or its general partnership interest in
SNAC and (ii) SNCHC is not pledging its general partnership interest in SNAC.]
3.2 PROCEDURES. (a) To the extent that any Pledgor at any
time or from time to time owns, acquires or obtains any right, title or
interest in any Collateral, such Collateral shall automatically (and without
the taking of any action by the respective Pledgor) be pledged pursuant to
Section 3.1 of this Agreement and, in addition thereto, such Pledgor shall
(to the extent provided below) take the following actions as set forth below
(as promptly as practicable and, in any event, within 10 days after it
obtains such Collateral) for the benefit of the Pledgee and the Secured
Creditors:
(i) with respect to a Certificated Security (other than a
Certificated Security credited on the books of a Clearing Corporation),
the respective Pledgor shall physically deliver such Certificated
Security to the Pledgee, endorsed to the Pledgee or endorsed in blank;
(ii) with respect to an Uncertificated Security (other than an
Uncertificated Security credited on the books of a Clearing
Corporation), the respective Pledgor shall cause the issuer of such
Uncertificated Security to duly authorize and execute, and deliver to
the Pledgee, an agreement for the benefit of the Pledgee and the Secured
Creditors substantially in the form of Annex G hereto (appropriately
completed to the satisfaction of the Pledgee and with such
modifications, if any, as shall be satisfactory to the Pledgee) pursuant
to which such issuer agrees to comply with any and all instructions
originated by the Pledgee without further consent by the registered
owner and not to comply with instructions regarding such Uncertificated
Security (and any Partnership Interests and
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Limited Liability Company Interests issued by such issuer) originated
by any other Person other than a court of competent jurisdiction;
(iii) with respect to a Certificated Security, Uncertificated
Security, Partnership Interest or Limited Liability Company Interest
credited on the books of a Clearing Corporation (including a Federal
Reserve Bank, Participants Trust Company or The Depository Trust
Company), the respective Pledgor shall promptly notify the Pledgee
thereof and shall promptly take all actions required (i) to comply with
the applicable rules of such Clearing Corporation and (ii) to perfect
the security interest of the Pledgee under applicable law (including, in
any event, under Sections 9-115 (4)(a) and (b), 9-115 (1)(e) and 8-106
(d) of the UCC). The Pledgor further agrees to take such actions as the
Pledgee deems necessary or desirable to effect the foregoing;
(iv) with respect to a Partnership Interest or a Limited
Liability Company Interest (other than a Partnership Interest or Limited
Liability Interest credited on the books of a Clearing Corporation), (1)
if such Partnership Interest or Limited Liability Company Interest is
represented by a certificate, the procedure set forth in Section
3.2(a)(i), and (2) if such Partnership Interest or Limited Liability
Company Interest is not represented by a certificate, the procedure set
forth in Section 3.2(a)(ii);
(v) with respect to any Note, physical delivery of such Note
to the Pledgee, endorsed to the Pledgee or endorsed in blank; and
(vi) with respect to cash, to the extent not otherwise
provided in the Security Agreement, (i) establishment by the Pledgee of
a cash account in the name of such Pledgor over which the Pledgee shall
have exclusive and absolute control and dominion (and no withdrawals or
transfers may be made therefrom by any Person except with the prior
written consent of the Pledgee) and (ii) deposit of such cash in such
cash account.
(b) In addition to the actions required to be taken pursuant to
preceding Section 3.2(a), each Pledgor shall take the following additional
actions with respect to the Securities and Collateral (as defined below):
(i) with respect to all Collateral of such Pledgor whereby or
with respect to which the Pledgee may obtain "control" thereof within
the meaning of Section 8-106 of the UCC (or under any provision of the
UCC as same may be amended or supplemented from time to time, or under
the laws of any relevant State other than the State of New York), the
respective Pledgor shall take all actions as may be requested from time
to time by the Pledgee so that "control" of such Collateral is obtained
and at all times held by the Pledgee; and
(ii) each Pledgor shall from time to time cause appropriate
financing statements (on Form UCC-1 or other appropriate form) under the
Uniform Commercial Code as in effect in the various relevant States, on
form covering all Collateral hereunder (with the form of such financing
statements to be satisfactory to the Pledgee), to be filed in the
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relevant filing offices so that at all times the Pledgee has a
security interest in all Collateral that is Investment Property, which
is perfected by the filing of such financing statements (in each case
to the maximum extent perfection by filing may be obtained under the
laws of the relevant States, including, without limitation, Section
9-115(4)(b) of the UCC).
3.3 SUBSEQUENTLY ACQUIRED COLLATERAL. If any Pledgor shall
acquire (by purchase, stock dividend or otherwise) any additional Collateral
at any time or from time to time after the date hereof, such Collateral shall
automatically (and without any further action being required to be taken) be
subject to the pledge and security interests created pursuant to Section 3.1
and, furthermore, the Pledgor will promptly thereafter take (or cause to be
taken) all action with respect to such Collateral in accordance with the
procedures set forth in Section 3.2, and will promptly thereafter deliver to
the Pledgee (i) a certificate executed by a principal executive officer of
such Pledgor describing such Collateral and certifying that the same has been
duly pledged in favor of the Pledgee (for the benefit of the Secured
Creditors) hereunder and (ii) supplements to Annexes A through F hereto as
are necessary to cause such annexes to be complete and accurate at such time.
3.4 TRANSFER TAXES. Each pledge of Collateral under Section
3.1 or Section 3.3 shall be accompanied by any transfer tax stamps required
in connection with the pledge of such Collateral.
3.5 DEFINITION OF PLEDGED NOTES. All Notes at any time
pledged or required to be pledged hereunder are hereinafter called the
"Pledged Notes".
3.6 CERTAIN REPRESENTATIONS AND WARRANTIES REGARDING THE
COLLATERAL. Each Pledgor represents and warrants that on the date hereof (i)
each Subsidiary of such Pledgor, and the direct ownership thereof, is listed
in Annex A hereto; (ii) the Stock held by such Pledgor consists of the number
and type of shares of the stock of the corporations as described in Annex B
hereto; (iii) such Stock constitutes that percentage of the issued and
outstanding capital stock of the issuing corporation as is set forth in Annex
B hereto; (iv) the Notes held by such Pledgor consist of the promissory notes
described in Annex C hereto where such Pledgor is listed as the lender; (v)
the Limited Liability Company Interests held by such Pledgor consist of the
number and type of interests of the Persons described in Annex D hereto; (vi)
each such Limited Liability Company Interest constitutes that percentage of
the issued and outstanding equity interest of the issuing Person as set forth
in Annex D hereto; (vii) the Partnership Interests held by such Pledgor
consist of the number and type of interests of the Persons described in Annex
E hereto; (viii) each such Partnership Interest constitutes that percentage
or portion of the entire partnership interest of the Partnership as set forth
in Annex E hereto; (ix) the Pledgor has complied with the respective
procedure set forth in Section 3.2(a) with respect to each item of Collateral
described in Annexes A through E hereto; and (x) on the date hereof, such
Pledgor owns no other Securities, Limited Liability Company Interests or
Partnership Interests.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical
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possession of the Collateral, which may be held (in the discretion of the
Pledgee) in the name of the relevant Pledgor, endorsed or assigned in blank
or in favor of the Pledgee or any nominee or nominees of the Pledgee or a
sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
there shall have occurred and be continuing an Event of Default (or a Default
under Section 8.05 of the Credit Agreement), each Pledgor shall be entitled
to exercise all voting rights attaching to any and all Collateral owned by
it, and to give consents, waivers or ratifications in respect thereof
PROVIDED that no vote shall be cast or any consent, waiver or ratification
given or any action taken which would violate, result in breach of any
covenant contained in, or be inconsistent with, any of the terms of this
Agreement, the Credit Agreement, any other Credit Document or any Interest
Rate Agreement (collectively, the "Secured Debt Agreements"), or which would
have the effect of impairing the value of the Collateral or any part thereof
or the position or interests of the Pledgee or any Secured Creditor therein.
All such rights of a Pledgor to vote and to give consents, waivers and
ratifications shall cease in case an Event of Default (or a Default under
Section 8.05 of the Credit Agreement) shall occur and be continuing and
Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until an
Event of Default (or a Default under Section 8.05 of the Credit Agreement)
shall have occurred and be continuing, all cash dividends, cash
distributions, cash Proceeds and other cash amounts payable in respect of the
Collateral shall be paid to the respective Pledgor. Subject to Section 3.2
hereof, the Pledgee shall be entitled to receive directly, and to retain as
part of the Collateral:
(i) all other or additional stock, notes, limited liability
company interests, partnership interests, instruments or other
securities or property (including, but not limited to, cash dividends
other than as set forth above) paid or distributed by way of dividend or
otherwise in respect of the Collateral;
(ii) all other or additional stock, notes, limited liability
company interests, partnership interests, instruments or other
securities or property (including, but not limited to, cash) paid or
distributed in respect of the Collateral by way of stock-split, spin-off,
split-up, reclassification, combination of shares or similar
rearrangement; and
(iii) all other or additional stock, notes, limited liability
company interests, partnership interests, instruments or other
securities or property (including, but not limited to, cash) which may
be paid in respect of the Collateral by reason of any consolidation,
merger, exchange of stock, conveyance of assets, liquidation or similar
corporate reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive the proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. All dividends, distributions or
other payments which are received by the respective Pledgor contrary to the
provisions of this Section 6 or Section 7 shall be received in trust for the
benefit of the Pledgee, shall be segregated from other property or funds of
such Pledgor and shall be forthwith
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paid over to the Pledgee as Collateral in the same form as so received (with
any necessary endorsement).
7. REMEDIES IN CASE OF AN EVENT OF DEFAULT OR CERTAIN
DEFAULTS. In case an Event of Default shall have occurred and be continuing,
the Pledgee shall be entitled to exercise all of the rights, powers and
remedies (whether vested in it by this Agreement or by any other Secured Debt
Agreement or by law) for the protection and enforcement of its rights in
respect of the Collateral, including, without limitation, all the rights and
remedies of a secured party upon default under the Uniform Commercial Code of
the State of New York, and the Pledgee shall be entitled, without limitation,
to exercise any or all of the following rights, which each Pledgor hereby
agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the
Collateral otherwise payable under Section 6 to such Pledgor;
(ii) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(iii) to accelerate any Pledged Note which may be accelerated
in accordance with its terms, and take any other lawful action to
collect upon any Pledged Note (including, without limitation, to make
any demand for payment thereon);
(iv) to vote all or any part of the Collateral (whether or not
transferred into the name of the Pledgee) and give all consents, waivers
and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner thereof (each
Pledgor hereby irrevocably constituting and appointing the Pledgee the
proxy and attorney-in-fact of such Pledgor, with full power of
substitution to do so);
(v) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to redeem
or otherwise (all of which are hereby waived by each Pledgor), for cash,
on credit or for other property, for immediate or future delivery
without any assumption of credit risk, and for such price or prices and
on such terms as the Pledgee in its absolute discretion may determine;
PROVIDED that at least 10 days' notice of the time and place of any such
sale shall be given to such Pledgor. The Pledgee shall not be obligated
to make such sale of Collateral regardless of whether any such notice of
sale has theretofore been given. Each purchaser at any such sale shall
hold the property so sold absolutely free from any claim or right on the
part of each Pledgor, and each Pledgor hereby waives and releases to the
fullest extent permitted by law any right or equity of redemption with
respect to the Collateral, whether before or after sale hereunder, all
rights, if any, of marshaling the Collateral and any other security for
the Obligations or otherwise, and all rights, if any, of stay and/or
appraisal which it now has or may at any time in the future have under
rule of law or statute now existing or hereafter enacted. At any such
sale, unless prohibited by applicable law, the
Page 13
Pledgee on behalf of all Secured Creditors (or certain of them) may
bid for and purchase (by bidding in Obligations or otherwise) all or
any part of the Collateral so sold free from any such right or equity
of redemption. Neither the Pledgee nor any Secured Creditor shall be
liable for failure to collect or realize upon any or all of the
Collateral or for any delay in so doing nor shall any of them be under
any obligation to take any action whatsoever with regard thereto; and
(vi) to set-off any and all Collateral against any and all
Obligations, and to withdraw any and all cash or other Collateral from
any and all Collateral Accounts and to apply such cash and other
Collateral to the payment of any and all Obligations;
provided that, upon the occurrence of a Default under Section 8.05 of the Credit
Agreement, the Pledgee may exercise the rights specified in clause (i) above.
Any and all remedies and rights notwithstanding, in the event of default and
acceleration of the Obligations hereunder and under the Credit Agreement,
neither the Collateral Agent nor any Secured Creditor shall vote, sell, or in
any manner exercise control as to any Regulated Insurance Company pledged as
Collateral without first filing for and obtaining written prior approval
pursuant to California Insurance Code Section 1215.2.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of
the Pledgee provided for in this Agreement or any other Secured Debt Agreement,
or now or hereafter existing at law or in equity or by statute shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by the Pledgee or
any Secured Creditor of any one or more of the rights, powers or remedies
provided for in this Agreement or any other Secured Debt Agreement or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Pledgee or any Secured
Creditor of all such other rights, powers or remedies, and no failure or delay
on the part of the Pledgee or any Secured Creditor to exercise any such right,
power or remedy shall operate as a waiver thereof. Unless otherwise required by
the Credit Documents, no notice to or demand on any Pledgor in any case shall
entitle such Pledgor to any other or further notice or demand in similar other
circumstances or constitute a waiver of any of the rights of the Pledgee or any
Secured Creditor to any other or further action in any circumstances without
demand or notice. The Secured Creditors agree that this Agreement may be
enforced only by the action of the Pledgee, acting upon the instructions of the
Required Banks (or, after the date on which all Credit Agreement Obligations
have been paid in full, the holders of at least a majority of the Interest Rate
Obligations) and that no other Secured Creditor shall have any right
individually to seek to enforce or to enforce this Agreement or to realize upon
the security to be granted hereby, it being understood and agreed that such
rights and remedies may be exercised by the Pledgee or the holders of at least a
majority of the Interest Rate Obligations, as the case may be, for the benefit
of the Secured Creditors upon the terms of this Agreement and the other Credit
Documents.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral pursuant to the
terms of this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied as follows:
Page 14
(i) first, to the payment of all Obligations owing the Pledgee
of the type provided in clauses (iii) and (iv) of the definition of
Obligations contained in Section 1 hereof;
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Obligations shall be paid to the Secured Creditors as provided in
Section 9(c) hereof with each Secured Creditor receiving an amount equal
to its outstanding Obligations or, if the proceeds are insufficient to
pay in full all such Obligations, its Pro Rata Share (as defined below)
of the amount remaining to be distributed; and
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii) and following the
termination of this Agreement pursuant to Section 19 hereof, to the
relevant Pledgor or, to the extent directed by such Pledgor or a court
of competent jurisdiction, to whomever may be lawfully entitled to
receive such surplus.
(b) For purposes of this Agreement, "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such Secured Creditor's
Obligations and the denominator of which is the then outstanding amount of
all Obligations.
(c) All payments required to be made to the Bank Creditors
hereunder shall be made to the Administrative Agent under the Credit
Agreement for the account of the Bank Creditors and all payments required to
be made to the Interest Rate Creditors hereunder shall be made directly to
the respective Interest Rate Creditors.
(d) For purposes of applying payments received in accordance
with this Section 9, the Pledgee shall be entitled to rely upon (i) the
Administrative Agent under the Credit Agreement and (ii) the Interest Rate
Creditors for a determination (which the Administrative Agent, each Interest
Rate Creditor and the Secured Creditors agree (or shall agree) to provide
upon request of the Collateral Agent) of the outstanding Obligations owed to
the Bank Creditors or the Interest Rate Creditors, as the case may be.
Unless it has actual knowledge (including by way of written notice from a
Bank Creditor or an Interest Rate Creditor) to the contrary, the
Administrative Agent under the Credit Agreement, in furnishing information
pursuant to the preceding sentence, and the Collateral Agent, in acting
hereunder, shall be entitled to assume that (x) no Credit Agreement
Obligations other than principal, interest and regularly accruing fees are
owing to any Bank Creditor and (y) no Interest Rate Agreement, or Interest
Rate Obligations in respect thereof, are in existence.
(e) It is understood and agreed that the Pledgors shall
remain liable to the extent of any deficiency between the amount of the
proceeds of the Collateral hereunder and the aggregate amount of the
Obligations.
Page 15
10. PURCHASERS OF COLLATERAL. Upon any sale of the
Collateral by the Pledgee hereunder (whether by virtue of the power of sale
herein granted, pursuant to judicial process or otherwise), the receipt of
the Pledgee or the officer making the sale shall be a sufficient discharge to
the purchaser or purchasers of the Collateral so sold, and such purchaser or
purchasers shall not be obligated to see to the application of any part of
the purchase money paid over to the Pledgee or such officer or be answerable
in any way for the misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i)
to indemnify and hold harmless the Pledgee, each Secured Creditor and their
respective successors, assigns, employees, agents and servants (individually
an "Indemnitee", and collectively, the "Indemnitees") from and against any
and all claims, demands, losses, judgments and liabilities (including
liabilities for penalties) of whatsoever kind or nature, and (ii) to
reimburse each Indemnitee for all reasonable costs and expenses, including
reasonable attorneys' fees, in each case arising out of or resulting from
this Agreement or the exercise by any Indemnitee of any right or remedy
granted to it hereunder or under any other Secured Debt Agreement (but
excluding any claims, demands, losses, judgments and liabilities (including
liabilities for penalties) or expenses of whatsoever kind or nature to the
extent incurred or arising by reason of gross negligence or willful
misconduct of such Indemnitee). In no event shall any Indemnitee hereunder
be liable, in the absence of gross negligence or willful misconduct on its
part, for any matter or thing in connection with this Agreement other than to
account for monies or other property actually received by it in accordance
with the terms hereof. If and to the extent that the obligations of any
Pledgor under this Section 11 are unenforceable for any reason, each Pledgor
hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable law.
The indemnity obligations of each Pledgor contained in this Section 11 shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Interest Rate
Agreements and the payment of all other Obligations and notwithstanding the
discharge thereof.
12. FURTHER ASSURANCES; POWER OF ATTORNEY. (a) Each Pledgor
agrees that it will join with the Pledgee in executing and, at such Pledgor's
own expense, file and refile under the Uniform Commercial Code such financing
statements, continuation statements and other documents in such offices as
the Pledgee (acting on its own or on the instructions of the Required Banks)
may reasonably deem necessary or appropriate and wherever required or
permitted by law in order to perfect and preserve the Pledgee's security
interest in the Collateral hereunder and hereby authorizes the Pledgee to
file financing statements and amendments thereto relative to all or any part
of the Collateral without the signature of such Pledgor where permitted by
law, and agrees to do such further acts and things and to execute and deliver
to the Pledgee such additional conveyances, assignments, agreements and
instruments as the Pledgee may reasonably require or deem advisable to carry
into effect the purposes of this Agreement or to further assure and confirm
unto the Pledgee its rights, powers and remedies hereunder or thereunder.
Page 16
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor
and in the name of such Pledgor or otherwise, from time to time after the
occurrence and during the continuance of an Event of Default, in the
Pledgee's discretion to take any action and to execute any instrument which
the Pledgee may deem necessary or advisable to accomplish the purposes of
this Agreement.
13. THE PLEDGEE AS COLLATERAL AGENT. The Pledgee will hold
in accordance with this Agreement all items of the Collateral at any time
received under this Agreement. It is expressly understood and agreed that
the obligations of the Pledgee as holder of the Collateral and interests
therein and with respect to the disposition thereof, and otherwise under this
Agreement, are only those expressly set forth in this Agreement. The Pledgee
shall act hereunder on the terms and conditions set forth herein and in
Article 10 of the Credit Agreement.
14. TRANSFER BY THE PLEDGORS. No Pledgor will sell or
otherwise dispose of, grant any option with respect to, or mortgage, pledge
or otherwise encumber any of the Collateral or any interest therein (except
in accordance with the terms of this Agreement and the Credit Documents).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PLEDGORS. (a) Each Pledgor represents, warrants and covenants that:
(i) it is the legal, beneficial and record owner of, and has
good and marketable title to, all Collateral consisting of one or more
Securities and that it has sufficient interest in all Collateral in
which a security interest is purported to be created hereunder for such
security interest to attach (subject, in each case, to no pledge, lien,
mortgage, hypothecation, security interest, charge, option, Adverse
Claim or other encumbrance whatsoever, except the liens and security
interests created by this Agreement);
(ii) it has full power, authority and legal right to pledge
all the Collateral pledged by it pursuant to this Agreement;
(iii) this Agreement has been duly authorized, executed and
delivered by such Pledgor and constitutes a legal, valid and binding
obligation of such Pledgor enforceable against such Pledgor in
accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether
enforcement is sought in equity or at law);
(iv) except to the extent already obtained or made, no consent
of any other party (including, without limitation, any stockholder or
creditor of such Pledgor or any of their Subsidiaries) and no consent,
license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority is required to be obtained by such Pledgor in connection with
(a) the execution, delivery or performance of this Agreement, (b) the
validity or
Page 17
enforceability of this Agreement (except as set forth in clause (iii)
above), (c) the perfection or enforceability of the Pledgee's security
interest in the Collateral or (d) the exercise by the Pledgee of any
of its rights or remedies provided herein, except (x) as may be
required in connection with the disposition of the Securities by laws
affecting the offering and sale of securities generally or (y) in
connection with the exercise of rights and remedies pursuant to this
Agreement, those approvals required to be obtained pursuant to
California Insurance Code Section 1215.2;
(v) the execution, delivery and performance of this Agreement
will not violate any provision of any applicable law or regulation or of
any order, judgment, writ, award or decree of any court, arbitrator or
governmental authority, domestic or foreign, applicable to such Pledgor,
or of the certificate of incorporation, operating agreement, limited
liability company agreement or by-laws of such Pledgor or of any
securities issued by such Pledgor or any of its Subsidiaries, or of any
mortgage, deed of trust, indenture, lease, loan agreement, credit
agreement or other contract, agreement or instrument or undertaking to
which such Pledgor or any of its Subsidiaries is a party or which
purports to be binding upon such Pledgor or any of its Subsidiaries or
upon any of their respective assets and will not result in the creation
or imposition of (or the obligation to create or impose) any lien or
encumbrance on any of the assets of such Pledgor or any of its
Subsidiaries except as contemplated by this Agreement (other than the
Liens created by the Collateral Documents);
(vi) all of the Collateral (consisting of Securities, Limited
Liability Company Interests or Partnership Interests) has been duly and
validly issued, is fully paid and non-assessable and is subject to no
options to purchase or similar rights;
(vii) each of the Pledged Notes constitutes, or when executed by
the obligor thereof will constitute, the legal, valid and binding
obligation of such obligor, enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at
law); and
(viii) the pledge, collateral assignment and delivery to the
Pledgee of the Collateral consisting of certificated securities pursuant
to this Agreement creates a valid and perfected first priority security
interest in such Securities, and the proceeds thereof, subject to no
prior Lien or encumbrance or to any agreement purporting to grant to any
third party a Lien or encumbrance on the property or assets of such
Pledgor which would include the Securities (other than Permitted Liens)
and the Pledgee is entitled to all the rights, priorities and benefits
afforded by the UCC or other relevant law as enacted in any relevant
jurisdiction to perfect security interests in respect of such
Collateral; and
(ix) "control" (as defined in Section 8-106 of the UCC) has been
obtained by the Pledgee over all Collateral consisting of Securities
(including Notes which are Securities)
Page 18
with respect to which such "control" may be obtained pursuant to Section
8-106 of the UCC.
(b) Each Pledgor covenants and agrees that it will defend the
Pledgee's right, title and security interest in and to the Securities and the
proceeds thereof against the claims and demands of all persons whomsoever;
and each Pledgor covenants and agrees that it will have like title to and
right to pledge any other property at any time hereafter pledged to the
Pledgee as Collateral hereunder and will likewise defend the right thereto
and security interest therein of the Pledgee and the Secured Creditors.
(c) Each Pledgor covenants and agrees that it will take no
action which would violate any of the terms of any Secured Debt Agreement.
16. CHIEF EXECUTIVE OFFICE; RECORDS. The chief executive
office of each Pledgor is located at the address specified in Annex F hereto.
Each Pledgor will not move its chief executive office except to such new
location as such Pledgor may establish in accordance with the last sentence
of this Section 16. The originals of all documents in the possession of such
Pledgor evidencing all Collateral, including but not limited to all Limited
Liability Company Interests and Partnership Interests, and the only original
books of account and records of the Pledgor relating thereto are, and will
continue to be, kept at such chief executive office at the location specified
in Annex F hereto, or at such new locations as the Pledgor may establish in
accordance with the last sentence of this Section 16. All Limited Liability
Company Interests and Partnership Interests are, and will continue to be,
maintained at, and controlled and directed (including, without limitation,
for general accounting purposes) from, such chief executive office location
specified in Annex F hereto, or such new locations as the Pledgor may
establish in accordance with the last sentence of this Section 16. No
Pledgor shall establish a new location for such offices until (i) it shall
have given to the Collateral Agent not less than 30 days' prior written
notice of its intention so to do, clearly describing such new location and
providing such other information in connection therewith as the Collateral
Agent may reasonably request and (ii) with respect to such new location, it
shall have taken all action, satisfactory to the Collateral Agent, to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force
and effect. Promptly after establishing a new location for such offices in
accordance with the immediately preceding sentence, the respective Pledgor
shall deliver to the Pledgee a supplement to Annex F hereto so as to cause
such Annex F hereto to be complete and accurate.
17. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of
each Pledgor under this Agreement shall be absolute and unconditional and
shall remain in full force and effect without regard to, and shall not be
released, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever (other than termination of this
Agreement pursuant to Section 19 hereof), including, without limitation:
(i) any renewal, extension, amendment or modification of, or
addition or supplement to or deletion from any Secured Debt Agreement
(other than this Agreement
Page 19
in accordance with its terms), or any other instrument or agreement
referred to therein, or any assignment or transfer of any thereof;
(ii) any waiver, consent, extension, indulgence or other
action or inaction under or in respect of any such agreement or
instrument or this Agreement (other than a waiver, consent or extension
with respect to this Agreement in accordance with its terms);
(iii) any furnishing of any additional security to the Pledgee
or its assignee or any acceptance thereof or any release of any security
by the Pledgee or its assignee;
(iv) any limitation on any party's liability or obligations
under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof; or
(v) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating
to any Pledgor or any Subsidiary of any Pledgor, or any action taken
with respect to this Agreement by any trustee or receiver, or by any
court, in any such proceeding, whether or not such Pledgor shall have
notice or knowledge of any of the foregoing.
18. REGISTRATION, ETC. (a) If an Event of Default shall
have occurred and be continuing and any Pledgor shall have received from the
Pledgee a written request or requests that such Pledgor cause any
registration, qualification or compliance under any Federal or state
securities law or laws to be effected with respect to all or any part of the
Collateral consisting of Securities, Limited Liability Company Interests or
Partnership Interests, such Pledgor as soon as practicable and at its expense
will use its best efforts to cause such registration to be effected (and be
kept effective) and will use its best efforts to cause such qualification and
compliance to be effected (and be kept effective) as may be so requested and
as would permit or facilitate the sale and distribution of such Collateral
consisting of Securities, Limited Liability Company Interests or Partnership
Interests, including, without limitation, registration under the Securities
Act of 1933, as then in effect (or any similar statute then in effect),
appropriate qualifications under applicable blue sky or other state
securities laws and appropriate compliance with any other governmental
requirements; PROVIDED, that the Pledgee shall furnish to such Pledgor such
information regarding the Pledgee as such Pledgor may request in writing and
as shall be required in connection with any such registration, qualification
or compliance. Each Pledgor will cause the Pledgee to be kept reasonably
advised in writing as to the progress of each such registration,
qualification or compliance and as to the completion thereof, will furnish to
the Pledgee such number of prospectuses, offering circulars and other
documents incident thereto as the Pledgee from time to time may reasonably
request, and will indemnify, to the extent permitted by law, the Pledgee and
all other Secured Creditors participating in the distribution of such
Collateral consisting of Securities, Limited Liability Company Interests or
Partnership Interests against all claims, losses, damages and liabilities
caused by any untrue statement (or alleged untrue statement) of a material
fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like)
a material fact required to be stated therein
Page 20
or necessary to make the statements therein not misleading, except insofar as
the same may have been caused by an untrue statement or omission based upon
information furnished in writing to such Pledgor by the Pledgee expressly for
use therein.
(b) If at any time when the Pledgee shall determine to
exercise its right to sell all or any part of the Collateral consisting of
Securities, Limited Liability Company Interests or Partnership Interests
pursuant to Section 7, and such Collateral or the part thereof to be sold
shall not, for any reason whatsoever, be effectively registered under the
Securities Act of 1933, as then in effect, the Pledgee may, in its sole and
absolute discretion, sell such Collateral or part thereof by private sale in
such manner and under such circumstances as the Pledgee may deem necessary or
advisable in order that such sale may legally be effected without such
registration. Without limiting the generality of the foregoing, in any such
event the Pledgee, in its sole and absolute discretion: (i) may proceed to
make such private sale notwithstanding that a registration statement for the
purpose of registering such Collateral or part thereof shall have been filed
under such Securities Act; (ii) may approach and negotiate with a single
possible purchaser to effect such sale; and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is purchasing for
its own account, for investment, and not with a view to the distribution or
sale of such Collateral or part thereof. In the event of any such sale, the
Pledgee shall incur no responsibility or liability for selling all or any
part of the Collateral at a price which the Pledgee, in its sole and absolute
discretion, may in good xxxxx xxxx reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were deferred until the registration as aforesaid.
19. TERMINATION; RELEASE. (a) On the Termination Date (as
defined below), this Agreement shall terminate (provided that all indemnities
set forth herein including, without limitation, in Section 11 hereof shall
survive any such termination) and the Pledgee, at the request and expense of
the respective Pledgor, will execute and deliver to such Pledgor a proper
instrument or instruments acknowledging the satisfaction and termination of
this Agreement (including, without limitation, UCC termination statements and
instruments of satisfaction, discharge and/or reconveyance), and will duly
assign, transfer and deliver to such Pledgor (without recourse and without
any representation or warranty) such of the Collateral as may be in the
possession of the Pledgee and as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement, together with any moneys at
the time held by the Pledgee or any of its sub-agents hereunder and, with
respect to any Collateral consisting of an Uncertificated Security (other
than an Uncertificated Security credited on the books of a Clearing
Corporation), a Partnership Interest or a Limited Liability Company Interest,
a termination of the agreement relating thereto executed and delivered by the
issuer of such Uncertificated Security pursuant to Section 3.2(a)(ii) or by
the respective partnership or limited liability company pursuant to Section
3.2(a)(iv). As used in this Agreement, "Termination Date" shall mean the
date upon which the Total Commitments and all Interest Rate Agreements have
been terminated, no Note is outstanding (and all Loans have been paid in
full) and all other Obligations then due and payable have been paid in full.
(b) In the event that any part of the Collateral is sold or
otherwise disposed of in connection with a sale or disposition permitted by
the Credit Agreement or is otherwise released
Page 21
at the direction of the Required Banks (or all the Banks if required by
Section 11.12 of the Credit Agreement), and the proceeds of such sale or
sales or from such release are applied in accordance with the terms of the
Credit Agreement to the extent required to be so applied, the Pledgee, at the
request and expense of the respective Pledgor will duly assign, transfer and
deliver to such Pledgor (without recourse and without any representation or
warranty) such of the Collateral as is then being (or has been) so sold or
released and as may be in possession of the Pledgee and has not theretofore
been released pursuant to this Agreement.
(c) At any time that any Pledgor desires that Collateral be
released as provided in the foregoing Section 19(a) or (b), it shall deliver
to the Pledgee a certificate signed by a principal executive officer of such
Pledgor stating that the release of the respective Collateral is permitted
pursuant to Section 19(a) or (b). If reasonably requested by the Pledgee
(although the Pledgee shall have no obligation to make any such request), the
relevant Pledgor shall furnish appropriate legal opinions (from counsel
reasonably acceptable to the Pledgee) to the effect set forth in the
immediately preceding sentence. The Pledgee shall have no liability
whatsoever to any Secured Creditor as the result of any release of Collateral
by it as permitted by this Section 19.
(d) The Pledgee shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it in
accordance with this Section 19.
20. NOTICES, ETC. All notices and other communications
hereunder shall be in writing and shall be delivered or mailed by first class
mail, postage prepaid, addressed:
(i) if to any Pledgor, at its address set forth opposite its
signature below;
(ii) if to the Pledgee, at:
The Chase Manhattan Bank
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000;
(iii) if to any Bank (other than the Pledgee), at such address
as such Bank shall have specified in the Credit Agreement;
(iv) if to any Interest Rate Creditor, at such address as such
Interest Rate Creditor shall have specified in writing to the Borrower
and the Pledgee;
or at such address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
21. THE PLEDGEE. The Pledgee will hold, directly or
indirectly in accordance with this Agreement, all items of the Collateral at
any time received by it under this Agreement.
Page 22
It is expressly understood and agreed that the obligations of the Pledgee
with respect to the Collateral, interests therein and the disposition
thereof, and otherwise under this Agreement, are only those expressly set
forth in the UCC and this Agreement.
22. WAIVER; AMENDMENT. Except as contemplated in Section 25
hereof, none of the terms and conditions of this Agreement may be changed,
waived, discharged or terminated in any manner whatsoever unless such change,
waiver, discharge or termination is in writing duly signed by each Pledgor to
be bound thereby and the Collateral Agent (with the consent of the Required
Banks or, to the extent required by Section 11.12 of the Credit Agreement,
all of the Banks), PROVIDED, HOWEVER, that no such change, waiver,
modification or variance shall be made to Section 9 hereof or this Section 22
without the consent of each Secured Creditor adversely affected thereby,
PROVIDED FURTHER that any change, waiver, modification or variance affecting
the rights and benefits of a single Class (as defined below) of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors of such Class of
Secured Creditors. For the purpose of this Agreement, the term "Class" shall
mean each class of Secured Creditors, i.e., whether (x) the Bank Creditors as
holders of the Credit Agreement Obligations, (y) the Interest Rate Creditors
as holders of the Interest Rate Obligations. For the purpose of this
Agreement, the term "Requisite Creditors" of any Class shall mean each of (x)
with respect to each of the Credit Agreement Obligations, the Required Banks
and (y) with respect to the Interest Rate Obligations, the holders of 51% of
all obligations outstanding from time to time under the Interest Rate
Agreements.
23. MISCELLANEOUS. This Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and
effect, subject to release and/or termination as set forth in Section 19,
(ii) be binding upon each Pledgor, its successors and assigns; PROVIDED,
HOWEVER, that no Pledgor shall assign any of its rights or obligations
hereunder without the prior written consent of the Pledgee (with the prior
written consent of the Required Banks, or to the extent required by Section
11.12 of the Credit Agreement, all of the Banks), and (iii) inure, together
with the rights and remedies of the Pledgee hereunder, to the benefit of the
Pledgee, the Secured Creditors and their respective successors, transferees
and assigns. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. The headings of the several
sections and subsections in this Agreement are for purposes of reference only
and shall not limit or define the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall be an original,
but all of which together shall constitute one instrument. In the event that
any provision of this Agreement shall prove to be invalid or unenforceable,
such provision shall be deemed to be severable from the other provisions of
this Agreement which shall remain binding on all parties hereto.
24. WAIVER OF JURY TRIAL. Each Pledgor hereby irrevocably
waives all right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this agreement or the transactions contemplated
hereby.
25. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof
Page 23
pursuant to the Credit Agreement shall automatically become a Pledgor
hereunder by executing a counterpart hereof and delivering the same to the
Pledgee.
26. RECOURSE. This Agreement is made with full recourse to
the Pledgors and pursuant to and upon all the representations, warranties,
covenants and agreements on the part of the Pledgors contained herein and in
the other Secured Debt Agreements and otherwise in writing in connection
herewith or therewith.
27. LIMITED OBLIGATIONS. It is the desire and intent of each
Pledgor and the Secured Creditors that this Agreement shall be enforced
against each Pledgor to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Notwithstanding anything to the contrary contained herein, in furtherance of
the foregoing, it is noted that the obligations of each Pledgor constituting
a Subsidiary Guarantor have been limited as provided in the Subsidiary
Guaranty.
28. PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY
MEMBER. (a) Nothing herein shall be construed to make the Pledgee or any
other Secured Creditor liable as a member of any limited liability company or
partnership and neither the Pledgee nor any other Secured Creditor by virtue
of this Agreement or otherwise (except as referred to in the following
sentence) shall have any of the duties, obligations or liabilities of a
member of any limited liability company or partnership. The parties hereto
expressly agree that, unless the Pledgee shall become the absolute owner of
Collateral consisting of a Limited Liability Company Interest or Partnership
Interest pursuant hereto, this Agreement shall not be construed as creating a
partnership or joint venture among the Pledgee, any other Secured Creditor
and/or any Pledgor.
(b) Except as provided in the last sentence of paragraph
(a) of this Section 28, the Pledgee, by accepting this Agreement, did not
intend to become a member of any limited liability company or partnership or
otherwise be deemed to be a co-venturer with respect to any Pledgor or any
limited liability company or partnership either before or after an Event of
Default shall have occurred. The Pledgee shall have only those powers set
forth herein and the Secured Creditors shall assume none of the duties,
obligations or liabilities of a member of any limited liability company or
partnership or any Pledgor except as provided in the last sentence of
paragraph (a) of this Section 28.
(c) The Pledgee and the other Secured Creditors shall not
be obligated to perform or discharge any obligation of any Pledgor as a
result of the pledge hereby effected.
(d) The acceptance by the Pledgee of this Agreement, with
all the rights, powers, privileges and authority so created, shall not at any
time or in any event obligate the Pledgee or any other Secured Creditor to
appear in or defend any action or proceeding relating to the Collateral to
which it is not a party, or to take any action hereunder or thereunder, or to
expend any money or incur any expenses or perform or discharge any
obligation, duty or liability under the Collateral.
Page 24
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
ADDRESSES:
SUPERIOR NATIONAL INSURANCE GROUP,
INC., as a Pledgor
By: /s/ J. XXXXX XXXXXX
-------------------------------
Name: J. Xxxxx Xxxxxx
Title: Executive Vice President
& Chief Financial
Officer
SUPERIOR PACIFIC INSURANCE GROUP,
INC., as a Pledgor
By: /s/ J. XXXXX XXXXXX
-------------------------------
Name: J. Xxxxx Xxxxxx
Title: Executive Vice President
& Chief Financial
Officer
BUSINESS INSURANCE GROUP, INC.,
as a Pledgor
By: /s/ J. XXXXX XXXXXX
-------------------------------
Name: J. Xxxxx Xxxxxx
Title: Executive Vice President
& Chief Financial
Officer
PACIFIC INSURANCE BROKERAGE, INC.
By: /s/ J. XXXXX XXXXXX
-------------------------------
Name: J. Xxxxx Xxxxxx
Title: Executive Vice President
& Chief Financial
Officer
Page 25
INFONET MANAGEMENT SYSTEMS, INC.
By: /s/ J. XXXXX XXXXXX
-------------------------------
Name: J. Xxxxx Xxxxxx
Title: Executive Vice President
& Chief Financial
Officer
SN INSURANCE SERVICES, INC.
By: /s/ J. XXXXX XXXXXX
-------------------------------
Name: J. Xxxxx Xxxxxx
Title: Executive Vice President
& Chief Financial
Officer
SN INSURANCE ADMINISTRATORS, INC.
By: /s/ J. XXXXX XXXXXX
-------------------------------
Name: J. Xxxxx Xxxxxx
Title: Vice President
THE CHASE MANHATTAN BANK,
as Collateral Agent and Pledgee
By: /s/ XXXXXXXX XXXXXXX, XX.
------------------------------
Name: Xxxxxxxx Xxxxxxx, Xx.
Title: Vice President
ANNEX G
FORM OF AGREEMENT REGARDING UNCERTIFICATED SECURITIES, LIMITED LIABILITY
COMPANY INTERESTS AND PARTNERSHIP INTERESTS
AGREEMENT (as amended, modified or supplemented from time to
time, this "Agreement"), dated as of _________ __, _____, among each of the
undersigned pledgors (each a "Pledgor" and, collectively, the "Pledgors"),
__________, not in its individual capacity but solely as Collateral Agent (the
"Pledgee"), and __________, as the issuer of the Uncertificated Securities,
Limited Liability Company Interests and/or Partnership Interests (each as
defined below) (the "Issuer").
W I T N E S S E T H :
WHEREAS, each Pledgor and the Pledgee are entering into a Pledge
Agreement, dated as of December __, 1998 (as amended, amended and restated,
modified or supplemented from time to time, the "Pledge Agreement"), under
which, among other things, in order to secure the payment of the Obligations (as
defined in the Pledge Agreement), each Pledgor will pledge to the Pledgee for
the benefit of the Secured Creditors (as defined in the Pledge Agreement), and
grant a security interest in favor of the Pledgee for the benefit of the Secured
Creditors in, all of the right, title and interest of such Pledgor in and to any
and all (1) "uncertificated securities" (as defined in Section 8-102(a)(18) of
the Uniform Commercial Code, as adopted in the State of New York)
("Uncertificated Securities"), (2) Partnership Interests (as defined in the
Pledge Agreement) and (3) Limited Liability Company Interests (as defined in the
Pledge Agreement), in each case issued from time to time by the Issuer, whether
now existing or hereafter from time to time acquired by such Pledgor (with all
of such Uncertificated Securities, Partnership Interests and Limited Liability
Company Interests being herein collectively called the "Issuer Pledged
Interests"); and
WHEREAS, each Pledgor desires the Issuer to enter into this
Agreement in order to perfect the security interest of the Pledgee under the
Pledge Agreement in the Issuer Pledged Interests, to vest in the Pledgee control
of the Issuer Pledge Interests and to provide for the rights of the parties
under this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Each Pledgor hereby irrevocably authorizes and directs the
Issuer, and the Issuer hereby agrees, to comply with any and all instructions
and orders originated by the Pledgee (and its successors and assigns) regarding
any and all of the Issuer Pledged Interests without the further consent by the
registered owner (including the respective Pledgor), and not to comply with any
instructions or orders regarding any or all of the Issuer Pledged Interests
ANNEX G
Page 2
originated by any person or entity other than the Pledgee (and its successors
and assigns) or a court of competent jurisdiction.
2. The Issuer hereby certifies that (i) no notice of any
security interest, lien or other encumbrance or claim affecting the Issuer
Pledged Interests (other than the security interest of the Pledgee) has been
received by it, and (ii) the security interest of the Pledgee in the Issuer
Pledged Interests has been registered in the books and records of the Issuer.
3. The Issuer hereby represents and warrants that (i) the pledge
by the Pledgors of, and the granting by the Pledgors of a security interest in,
the Issuer Pledged Interests to the Pledgee, for the benefit of the Secured
Creditors, does not violate the charter, by-laws, partnership agreement,
membership agreement or any other agreement governing the Issuer or the Issuer
Pledged Interests, and (ii) the Issuer Pledged Interests are fully paid and
nonassessable.
4. All notices, statements of accounts, reports, prospectuses,
financial statements and other communications to be sent to any Pledgor by the
Issuer in respect of the Issuer will also be sent to the Pledgee at the
following address:
The Chase Manhattan Bank
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: _____________
Tel: (212) _____________
Fax: (212) _____________
5. Until the Pledgee shall have delivered written notice to the
Issuer that all of the Obligations have been paid in full and this Agreement is
terminated, the Issuer will send any and all redemptions, distributions,
interest or other payments in respect of the Issuer Pledged Interests from the
Issuer for the account of the Pledgor only by wire transfers to the following
address:
_____________________
_____________________
_____________________
_____________________
[Account Information]
ABA No.: _____________________
Account in the Name of: ___________
Account No.: ______________________
6. Except as expressly provided otherwise in Sections 4 and 5,
all notices, instructions, orders and communications hereunder shall be sent or
delivered by mail, telex, telecopy or overnight courier service and all such
notices and communications shall, when mailed, telexed, telecopied or sent by
overnight courier, be effective when deposited in the mails or delivered to the
overnight courier, prepaid and properly addressed for delivery on such or the
next Business Day, or sent by telex or telecopier, except that notices and
communications to the
ANNEX G
Page 3
Pledgee shall not be effective until received by the Pledgee. All notices
and other communications shall be in writing and addressed as follows:
(a) if to any Pledgor, at:
__________________________
__________________________
Attention: ______________
Tel.: (___) _____________
Fax: (___) ______________
(b) if to the Pledgee, at:
The Chase Manhattan Bank
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: _____________
Tel: (212) _____________
Fax: (212) _____________
(c) if to the Issuer, at:
_________________________
_________________________
_________________________
Attention: _____________
Telephone No.:___________
Telecopier No.:__________
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. As used in this
Section 6, "Business Day" means any day other than a Saturday, Sunday, or other
day in which banks in New York are authorized to remain closed.
7. This Agreement shall be binding upon the successors and
assigns of each Pledgor and the Issuer and shall inure to the benefit of and be
enforceable by the Pledgee and its successors and assigns. This Agreement may
be executed in any number of counterparts, each of which shall be an original,
but all of which shall constitute one instrument. In the event that any
provision of this Agreement shall prove to be invalid or unenforceable, such
provision shall be deemed to be severable from the other provisions of this
Agreement which shall remain binding on all parties hereto. None of the terms
and conditions of this Agreement may be changed, waived, modified or varied in
any manner whatsoever except in writing signed by the Pledgee, the Issuer and
any Pledgor which at such time owns any Issuer Pledged Interests.
8. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its
principles of conflict of laws.
ANNEX G
Page 4
IN WITNESS WHEREOF, each Pledgor, the Pledgee and the Issuer have
caused this Agreement to be executed by their duly elected officers duly
authorized as of the date first above written.
[ ],
as a Pledgor
By
-----------------------------
Name:
Title:
[ ],
as a Pledgor
By
-----------------------------
Name:
Title:
[ ],
as a Pledgor
By
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
not in its individual capacity but
solely as Collateral Agent and Pledgee
By
-----------------------------
Name:
Title:
ANNEX G
Page 5
[ ],
the Issuer
By
-----------------------------
Name:
Title:
