1
Exhibit 10.25
EXECUTION COPY
PLEDGE AGREEMENT dated as of January 11, 2000, among
KANSAS CITY SOUTHERN INDUSTRIES, INC., a Delaware corporation
("Holdings"), THE KANSAS CITY SOUTHERN RAILWAY COMPANY, INC., a
--------
Missouri corporation (the "Borrower"), each other Subsidiary of
--------
Holdings listed on Schedule I hereto or becoming a party hereto
as provided in Section 24 (collectively, the "Subsidiary
----------
Pledgors"; Holdings, the Borrower and the Subsidiary Pledgors
--------
being referred to collectively as the "Pledgors") and THE CHASE
--------
MANHATTAN BANK, ("Chase"), as collateral agent (in such capacity,
-----
the "Collateral Agent"), for the Secured Parties (as defined in
----------------
the Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of January 11, 2000
(as amended, supplemented or otherwise modified from time to time, the "Credit
------
Agreement"), among Holdings, the Borrower, the lenders from time to time party
---------
thereto (the "Lenders") and Chase, as administrative agent (in such capacity,
-------
the "Administrative Agent"), collateral agent (in such capacity, the "Collateral
-------------------- ----------
Agent") and issuing bank (in such capacity, the "Issuing Bank"), and (b) the
----- ------------
Guarantee Agreement and the other Loan Documents referred to in the Credit
Agreement. Capitalized terms used and not otherwise defined herein shall have
meanings assigned to them in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrower, pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. The obligations of the Lenders to make Loans and of the Issuing Bank
to issue Letters of Credit are conditioned upon, among other things, the
execution and delivery by the Pledgors of a Pledge Agreement in the form hereof
to secure (a) the due and punctual payment by the Borrowers or the applicable
Loan Parties of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrowers under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Loan Parties to the Secured Parties under this Agreement and the other Loan
Documents, (b) the due and punctual payment and performance of all covenants,
agreements, obligations and liabilities of the Loan Parties, monetary or
otherwise, under or pursuant to this Agreement and the other Loan Documents and
(c) unless otherwise agreed to in writing by the applicable Lender thereto, the
due and punctual payment of all obligations of the Borrower under each Hedging
Agreement entered into (i) prior to the date hereof with any counterparty that
is a Lender (or an Affiliate thereof) on the date hereof or (ii) on or after the
date
2
hereof with any counterparty that is a Lender (or an Affiliate thereof) at the
time such Hedging Agreement is entered into, in either case to provide
protection against interest rate fluctuations in either case to provide
protection against interest rate fluctuations (all the obligations referred to
in the preceding clauses (a) through (c) being collectively called the
"Obligations"). Each Pledgor agrees that the Obligations may be extended or
-----------
renewed, in whole or in part, without notice to or further assent from it, and
that the security interest granted hereunder and the obligations of each Pledgor
will survive any extension or renewal of any Obligation.
Accordingly, the Pledgors and the Collateral Agent, on behalf of itself and
each Secured Party (and each of their respective successors and assigns), hereby
agree as follows:
SECTION 1. Pledge. As security for the payment in full of all the
-------
Obligations, each Pledgor does hereby pledge, transfer, grant, bargain, sell,
convey, hypothecate, set over and deliver and create a security interest in
(collectively, "Pledge") unto the Collateral Agent, its successors and assigns,
------
for the benefit of the Secured Parties, all such Pledgor's right, title and
interest in, to and under (i) all the outstanding Equity Interests owned by it
on the date hereof or at any time hereafter in Subsidiaries or other Persons
(but limited to 65% of the outstanding voting Equity Interests and 100% of the
outstanding non-voting Equity Interests in each such Subsidiary that is a
Foreign Subsidiary), including the Equity Interests listed on Schedule II
hereto, (ii) (A) all Indebtedness of Holdings, the Borrower, any other
Subsidiary or any other Person now owned or hereafter acquired by it, including
the Indebtedness listed on Schedule II hereto, and (B) the promissory notes and
other instruments evidencing such Indebtedness, (iii) all payments, whether of
dividends or other distributions, principal or interest or otherwise, and
whether of cash or other assets, from time to time received, receivable or
otherwise distributed, in respect of, in exchange for or upon the conversion of
the Equity Interests or Indebtedness pledged pursuant to clauses (i) and (ii)
above; (iv) subject to Section 5, all rights and privileges of such Pledgor with
respect to the Equity Interests, Indebtedness and other property pledged
pursuant to clauses (i), (ii) and (iii) above; and (v) all proceeds of any of
the foregoing (the collateral referred to in the preceding clauses (i) through
(v) being collectively called the "Collateral").
----------
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the ratable benefit
of the Secured Parties, forever; subject, however, to the terms, covenants and
------- -------
conditions hereinafter set forth.
SECTION 2. Delivery of the Collateral; Perfection. (a) Each Pledgor
---------------------------------------
agrees promptly to deliver or cause to be delivered to the Collateral Agent any
and all certificates or instruments representing any Equity Interests,
Indebtedness or other assets now or hereafter included in the Collateral
(collectively, the "Pledged Securities"). Upon delivery to the Collateral
------------------
Agent, all Pledged Securities shall be accompanied by stock or note powers duly
executed in blank or other instruments of transfer satisfactory to the
Collateral Agent and by such other instruments and documents as the Collateral
Agent may reasonably request.
(b) Each Pledgor agrees to take from time to time all such other actions
as shall be required under applicable law or reasonably requested by the
Collateral Agent to perfect and maintain the perfection of the Lien created by
this Agreement, including, in the case of any Collateral in which such Lien
cannot be perfected by the possession of certificates or instruments, the filing
of all such financing statements and similar documents, and the obtaining of all
such
3
acknowledgments of clearing corporations, brokers and other intermediaries,
as shall be required for such perfection under the Uniform Commercial Code or
other law of any applicable jurisdiction.
(c) The Equity Interests and Indebtedness initially included in the
Collateral are set forth in Schedule II hereto. At the time any additional
Equity Interests or Indebtedness shall become part of the Collateral, the
Borrower shall deliver to the Collateral Agent a revised Schedule II, which
shall supersede all Schedules previously delivered pursuant to the requirements
of this paragraph.
(d) Each Pledgor will cause any Indebtedness owed to such Pledgor that is
evidenced by a duly executed promissory note to be pledged and delivered to the
Collateral Agent pursuant to the terms hereof. Each Pledgor agrees, without
limiting its obligations under paragraph (a) or (b) above, that to the extent it
is required to pledge any limited liability or limited partnership interest in
any Domestic Subsidiary hereunder, it will (i) make or cause to be made all
filings and take all other actions required under paragraph (b) above for the
perfection of the Collateral Agent's Lien in the limited liability company or
limited partnership interests of such Subsidiary under Article 9 of the Uniform
Commercial Code as in effect in each applicable jurisdiction and (ii) deliver to
the Collateral Agent any certificates issued to such Pledgor representing Equity
Interests of any Domestic Subsidiary that is a limited liability company or
limited partnership if such Subsidiary's limited liability company or limited
partnership agreement, as the case may be, provides that the Equity Interests of
such Subsidiary are to be represented by certificates. Each Pledgor represents
and warrants to the Collateral Agent that as of the date hereof none of the
Equity Interests of any of its Domestic Subsidiaries which are limited liability
companies or limited partnerships are represented by certificates.
SECTION 3. Representations, Warranties and Covenants. Each Pledgor
-----------------------------------------
hereby represents, warrants and covenants, as to itself and the Collateral
pledged by it hereunder, to and with the Collateral Agent that:
(a) the Equity Interests pledged hereunder represent the percentages
set forth on Schedule II of the issued and outstanding Equity Interests of
each class of the issuers thereof;
(b) except for the security interest granted hereunder and except for
Permitted Encumbrances, such Pledgor (i) is and will at all times continue
to be the direct owner, beneficially and of record, of the Collateral
listed in Schedule II as being owned by it, except to the extent permitted
by Section 6.02 of the Credit Agreement, (ii) holds the same free and clear
of all Liens, (iii) will make no assignment, pledge, hypothecation or
transfer of, or create or permit to exist any security interest in or other
Lien on, the Collateral, other than pursuant hereto, and (iv) subject to
Section 5, will cause any and all Collateral, whether for value paid by
such Pledgor or otherwise, to be forthwith deposited with the Collateral
Agent and pledged or assigned hereunder;
(c) such Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will defend
its title or interest thereto or therein against any and all Liens (other
than the Lien created by this Agreement), however arising, of all Persons
whomsoever;
4
(d) no consent of any other Person (including equity holders or
creditors of any Pledgor) and no consent or approval of any Governmental
Authority or any securities exchange was or is necessary to the validity of
the pledge effected hereby other than such as have been obtained;
(e) by virtue of the execution and delivery by the Pledgors of this
Agreement and the other actions that have been taken pursuant to this
Agreement, the Collateral Agent will obtain a valid and perfected first
Lien upon and security interest in the Collateral as security for the
payment and performance of the Obligations;
(f) the pledge effected hereby is effective to vest in the Collateral
Agent, on behalf of the Secured Parties, the rights of the Collateral Agent
in the Collateral as set forth herein;
(g) all of the Equity Interests pledged hereunder have been duly
authorized and validly issued and are fully paid and nonassessable; and
(h) all information set forth herein relating to the Collateral is
accurate and complete in all material respects as of the date hereof.
SECTION 4. Registration in Nominee Name; Denominations. The
-------------------------------------------
Collateral Agent, on behalf of the Secured Parties, shall have the right (in its
sole and absolute discretion) to hold the Equity Interests pledged hereunder in
its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or
the name of the Pledgors, endorsed or assigned in blank or in favor of the
Collateral Agent. Each Pledgor will promptly give to the Collateral Agent
copies of any notices or other communications received by it with respect to
pledged Equity Interests registered in the name of such Pledgor. The Collateral
Agent shall at all times have the right to exchange any certificates
representing pledged Equity Interests for certificates of smaller or larger
denominations for any purpose consistent with this Agreement.
SECTION 5. Voting Rights; Dividends and Interest, etc. (a) Unless
------------------------------------------
and until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of pledged
Equity Interests or any part thereof for any purpose consistent with the
terms of this Agreement, the Credit Agreement and the other Loan Documents;
provided such Pledgor will not be entitled to exercise any such right if
--------
the result thereof would be prohibited by the Credit Agreement or would
reasonably be expected to materially and adversely affect the rights or the
rights and remedies of any of the Secured Parties under this Agreement or
the Credit Agreement or any other Loan Document or the ability of the
Secured Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each Pledgor,
or cause to be executed and delivered to each Pledgor, all such proxies,
powers of attorney and other instruments as such Pledgor may reasonably
request for the purpose of enabling such Pledgor to exercise the voting
and/or consensual rights and powers it is entitled to
5
exercise pursuant to subparagraph (i) above and to receive the cash
dividends it is entitled to receive pursuant to subparagraph (iii) below.
(iii) Each Pledgor shall be entitled to receive and retain any and all
cash dividends, interest and principal paid on the Equity Interests or
Indebtedness pledged hereunder to the extent and only to the extent that
such cash dividends, interest and principal are permitted by, and otherwise
paid in accordance with, the terms and conditions of the Credit Agreement,
the other Loan Documents and applicable laws. All noncash dividends,
interest and principal, and all dividends, interest and principal paid or
payable in cash or otherwise in connection with a partial or total
liquidation or dissolution, return of capital, capital surplus or paid-in
surplus, and all other distributions (other than distributions referred to
in the preceding sentence) made on or in respect of the pledged Equity
Interests and Indebtedness, whether paid or payable in cash or otherwise,
whether resulting from a subdivision, combination or reclassification of
the outstanding Equity Interests of the issuer of any thereof or received
in exchange for such Equity Interests or Indebtedness or any part thereof,
or in redemption thereof, or as a result of any merger, consolidation,
acquisition or other exchange of assets to which such issuer may be a party
or otherwise, shall be and become part of the Collateral, and, if received
by any Pledgor, shall not be commingled by such Pledgor with any of its
other funds or property but shall be held separate and apart therefrom,
shall be held in trust for the benefit of the Collateral Agent and shall be
forthwith delivered to the Collateral Agent in the same form as so received
(with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of Default,
all rights of any Pledgor to dividends, interest or principal that such Pledgor
is authorized to receive pursuant to paragraph (a)(iii) above shall cease, and
all such rights shall thereupon become vested in the Collateral Agent, which
shall have the sole and exclusive right and authority to receive and retain such
dividends, interest or principal. All dividends, interest or principal received
by the Pledgor contrary to the provisions of this Section 5 shall be held in
trust for the benefit of the Collateral Agent, shall be segregated from other
property or funds of such Pledgor and shall be forthwith delivered to the
Collateral Agent upon demand in the same form as so received (with any necessary
endorsement). Any and all money and other property paid over to or received by
the Collateral Agent pursuant to the provisions of this paragraph (b) shall be
retained by the Collateral Agent in an account to be established by the
Collateral Agent upon receipt of such money or other property and shall be
applied in accordance with the provisions of Section 7. After all Events of
Default have been cured or waived, the Collateral Agent shall, within five
Business Days after all such Events of Default have been cured or waived, repay
to each Pledgor all cash dividends, interest or principal (without interest),
that such Pledgor would otherwise be permitted to retain pursuant to the terms
of paragraph (a)(iii) above and which remain in such account.
(c) Upon the occurrence and during the continuance of an Event of Default
and upon notice to the applicable Pledgor as set forth in Section 15, all rights
of any Pledgor to exercise the voting and consensual rights and powers it is
entitled to exercise pursuant to paragraph (a)(i) of this Section 5, and the
obligations of the Collateral Agent under paragraph (a)(ii) of this Section 5,
shall cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to exercise
such voting and consensual rights and powers. Unless otherwise directed by the
Required Lenders, the Collateral Agent shall have
6
the right from time to time following and during the continuance of an Event of
Default to permit the Pledgors to exercise such rights. After all Events of
Default have been cured or waived, such Pledgor will have the right to exercise
the voting and consensual rights and powers that it would otherwise be entitled
to exercise pursuant to the terms of paragraph (a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and during the
---------------------
continuance of an Event of Default, subject to applicable regulatory and legal
requirements, the Collateral Agent may sell the Collateral, or any part thereof,
at public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate. The Collateral Agent shall be authorized at any such
sale (if it deems it advisable to do so) to restrict the prospective bidders or
purchasers to Persons who will represent and agree that they are purchasing the
Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale the
Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of any Pledgor, and, to the extent permitted by applicable
law, the Pledgors hereby waive all rights of redemption, stay, valuation and
approval any Pledgor now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give a Pledgor 10 days' prior written
notice (which each Pledgor agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of such Pledgor's Collateral. Such notice, in the
case of a public sale, shall state the time and place for such sale and, in the
case of a sale at a broker's board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent may
fix and state in the notice of such sale. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the sale price is paid in
full by the purchaser or purchasers thereof, but the Collateral Agent shall not
incur any liability in case any such purchaser or purchasers shall fail to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. At any public (or, to the extent
permitted by applicable law, private) sale made pursuant to this Section 6, any
Secured Party may bid for or purchase, free from any right of redemption, stay
or appraisal on the part of any Pledgor (all said rights being also hereby
waived and released), the Collateral or any part thereof offered for sale and
may make payment on account thereof by using any claim then due and payable to
it from such Pledgor as a credit against the purchase price, and it may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to such Pledgor therefor.
7
For purposes hereof, (a) a written agreement to purchase the Collateral or any
portion thereof shall be treated as a sale thereof, (b) the Collateral Agent
shall be free to carry out such sale pursuant to such agreement and (c) such
Pledgor shall not be entitled to the return of the Collateral or any portion
thereof subject thereto (other than any proceeds remaining after the Obligations
have been paid in full), notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Obligations paid in full. As an alternative to exercising
the power of sale herein conferred upon it, the Collateral Agent may proceed by
a suit or suits at law or in equity to foreclose upon the Collateral and to sell
the Collateral or any portion thereof pursuant to a judgment or decree of a
court or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
SECTION 7. Application of Proceeds of Sale. The proceeds of any sale
-------------------------------
of Collateral pursuant to Section 6, as well as any Collateral consisting of
cash, shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses incurred by the
Collateral Agent in connection with such sale or otherwise in
connection with this Agreement, any other Loan Document or any of the
Obligations, including all court costs and the reasonable fees and
expenses of its agents and legal counsel, the repayment of all
advances made by the Collateral Agent hereunder or under any other
Loan Document on behalf of any Pledgor and any other costs or
expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the applicable Secured Parties pro
rata in accordance with the amounts of such Obligations owed to them
on the date of any such distribution); and
THIRD, to the Pledgors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of 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 Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 8. Reimbursement of Collateral Agent. (a) Each Pledgor
---------------------------------
agrees to pay upon demand to the Collateral Agent the amount of any and all
reasonable expenses, including the reasonable fees, other charges and
disbursements of its counsel and of any experts or agents, that the Collateral
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Collateral Agent hereunder or (iv) the failure by such
Pledgor to perform or observe any of the provisions hereof.
8
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Pledgor jointly and severally agrees to indemnify the
Collateral Agent and the other Indemnitees against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees, other charges and disbursements,
incurred by or asserted against any Indemnitee arising out of, in any way
connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their respective
obligations thereunder or the consummation of the Transactions and the other
transactions contemplated thereby or (ii) any claim, litigation, investigation
or proceeding relating to any of the foregoing, whether or not any Indemnitee is
a party thereto, provided that such indemnity shall not, as to any Indemnitee,
--------
be available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a final, non-appealable judgment of a court
of competent jurisdiction to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) Any amounts payable under this Section shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 8 shall remain operative and in full force and effect regardless
of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Agreement or any other Loan Document or any investigation made by or on
behalf of the Collateral Agent or any other Secured Party. All amounts due
under this Section 8 shall be payable on written demand therefor and shall bear
interest at the rate specified in clause (c)(ii) of Section 2.13 of the Credit
Agreement.
SECTION 9. Collateral Agent Appointed Attorney-in-Fact. Upon the
-------------------------------------------
occurrence of and during the existence of an Event of Default each Pledgor
hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may deem necessary
or advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
the Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent's name or in the name of such Pledgor, to ask for, demand,
xxx for, collect, receive and give acquittance for any and all moneys due or to
become due under and by virtue of any Collateral, to endorse checks, drafts,
orders and other instruments for the payment of money payable to the Pledgor
representing any interest or dividend or other distribution payable in respect
of the Collateral or any part thereof or on account thereof and to give full
discharge for the same, to settle, compromise, prosecute or defend any action,
claim or proceeding with respect thereto, and to sell, assign, endorse, pledge,
transfer and to make any agreement respecting, or otherwise deal with, the same;
provided, however, that nothing herein contained shall be construed as requiring
-------- -------
or obligating the Collateral Agent to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received by the Collateral Agent,
or to present or file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein, and neither they
nor their officers,
9
directors, employees or agents shall be responsible to any Pledgor for any act
or failure to act hereunder, except for their own gross negligence or wilful
misconduct.
SECTION 10. Waivers; Amendment. (a) No failure or delay of the
------------------
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such Pledgor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Collateral Agent and the Pledgor or Pledgors with respect to which such
waiver, amendment or modification is to apply, subject to any consent required
in accordance with Section 9.02 of the Credit Agreement. Each Pledgor
acknowledges that the rights and responsibilities of the Collateral Agent under
this Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Collateral Agent and the Secured
Parties, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Collateral Agent and such Pledgor, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and no Pledgor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
SECTION 11. Securities Act, etc. In view of the position of the
-------------------
Pledgors in relation to the Pledged Securities, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "Federal Securities Laws") with respect to any
-----------------------
disposition of the Collateral permitted hereunder. Each Pledgor understands
that compliance with the Federal Securities Laws might very strictly limit the
course of conduct of the Collateral Agent if the Collateral Agent were to
attempt to dispose of all or any part of the Collateral, and might also limit
the extent to which or the manner in which any subsequent transferee of any
Collateral could dispose of the same. Similarly, there may be other legal
restrictions or limitations affecting the Collateral Agent in any attempt to
dispose of all or part of the Collateral under applicable Blue Sky or other
state securities laws or similar laws analogous in purpose or effect. Each
Pledgor recognizes that in light of such restrictions and limitations the
Collateral Agent may, with respect to any sale of the Collateral, limit the
purchasers to those who will agree, among other things, to acquire such
Collateral for their own account, for investment, and not with a view to the
distribution or resale thereof. Each Pledgor acknowledges and agrees that in
light of such restrictions and limitations, the Collateral Agent, in its sole
and absolute discretion, (a) may
10
proceed to make such a sale whether or not a registration statement for the
purpose of registering such Collateral or part thereof shall have been filed
under the Federal Securities Laws and (b) may approach and negotiate with a
single potential purchaser to effect such sale. Each Pledgor acknowledges and
agrees that any such sale might result in prices and other terms less favorable
to the seller than if such sale were a public sale without such restrictions. In
the event of any such sale, the Collateral Agent shall incur no responsibility
or liability for selling all or any part of the Collateral at a price that the
Collateral Agent, in its sole and absolute discretion, may in good xxxxx xxxx
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might have been realized if the sale were deferred
until after registration as aforesaid or if more than a single purchaser were
approached. The provisions of this Section 11 will apply notwithstanding the
existence of a public or private market upon which the quotations or sales
prices may exceed substantially the price at which the Collateral Agent sells.
SECTION 12. Security Interest Absolute. All rights of the Collateral
--------------------------
Agent hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of the Obligations or in respect of this Agreement (other than the
indefeasible payment in full of all the Obligations).
SECTION 13. Releases and Termination. This Agreement and the security
------------------------
interest granted hereby shall terminate when all the Obligations have been
indefeasibly paid in full, the Lenders have no further commitment to lend, the
LC Exposure has been reduced to zero and the Issuing Bank has no further
commitment to issue Letters of Credit under the Credit Agreement. Upon such
Termination, the Collateral Agent shall execute and deliver to the Pledgors, at
the Pledgors' expense, all Uniform Commercial Code termination statements and
similar documents which the Pledgors shall reasonably request to evidence such
termination. Any execution and delivery of termination statements or documents
pursuant to this Section 13 shall be without recourse to or warranty by the
Collateral Agent. A Subsidiary Pledgor shall automatically be released from its
obligations hereunder and the security interest in the Collateral of such
Subsidiary Pledgor shall be automatically released in the event that all the
Equity Interests of such Subsidiary Pledgor shall be sold, transferred or
otherwise disposed of to a person other than Holdings, the Borrower or an
Affiliate of Holdings in a transaction permitted under the terms of the Credit
Agreement. Any Collateral granted hereunder shall be released (automatically
and without further action on the part of the Collateral Agent) upon the sale,
transfer or other disposition of such Collateral to a transferee other than
Holdings, the Borrower or an Affiliate of Holdings, to the extent that such
sale, transfer or other disposition is permitted under the Credit Agreement.
SECTION 14. Notices. All communications and notices hereunder shall
-------
be in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Pledgor shall be given to
it in care of the Borrower.
11
15. SECTION Further Assurances. Each Pledgor agrees to do such further
------------------
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Collateral Agent its rights and remedies
hereunder.
16. SECTION Successors and Assigns; Binding Effect; Several Agreement;
---------------------------------------------------------
Assignments. Whenever in this Agreement any of the parties hereto is referred
-----------
to, such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of any Pledgor
that are contained in this Agreement shall bind and inure to the benefit of its
successors and assigns. This Agreement shall become effective as to any Pledgor
when a counterpart hereof executed on behalf of such Pledgor shall have been
delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent, and thereafter shall be binding upon
such Pledgor and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of such Pledgor, the Collateral Agent
and the other Secured Parties, and their respective successors and assigns,
except that no Pledgor shall have the right to assign its rights hereunder or
any interest herein or in the Collateral (and any such attempted assignment
shall be void), except as expressly contemplated by this Agreement or the other
Loan Documents. This Agreement shall be construed as a separate agreement with
respect to each Pledgor and may be amended, modified, supplemented, waived or
released with respect to any Pledgor without the approval of any other Pledgor
and without affecting the obligations of any other Pledgor hereunder.
17. SECTION Survival of Agreement; Severability. (a) All covenants,
-----------------------------------
agreements, representations and warranties made by each Pledgor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank, regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect until this Agreement shall terminate.
(b) Any provision of this Agreement held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability without
affecting the validity, legality and enforceability of the remaining provisions
hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction. The
parties to this Agreement shall endeavor in good-faith negotiations to replace
any invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
18. SECTION GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
12
19. SECTION Counterparts. This Agreement may be executed in counterparts
------------
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which, when taken together, shall constitute
a single contract, and shall become effective as provided in Section 16.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopy shall be as effective as delivery of a manually executed counterpart of
this Agreement.
20. SECTION Rules of Interpretation. The rules of interpretation
-----------------------
specified in Sections 1.03 of the Credit Agreement shall be applicable to this
Agreement. Section headings used herein are for convenience of reference only,
are not part of this Agreement and shall not to affect the construction of, or
be taken into consideration in interpreting this Agreement.
21. SECTION Jurisdiction; Consent to Service of Process. (a) Each
-------------------------------------------
Pledgor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of
New York sitting in New York County or the United States District Court of the
Southern District of New York, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that, to the
extent permitted by applicable law, all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against any Pledgor or its properties in the courts of any jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any court referred to in paragraph (a) of this Section. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
22. SECTION WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
--------------------
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
13
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
23. SECTION Additional Pledgors. Pursuant to Section 5.12 of the Credit
-------------------
Agreement, certain additional Significant Subsidiaries may be required under the
terms of the Credit Agreement from time to time to enter into this Agreement as
Subsidiary Pledgors. Upon execution and delivery by the Collateral Agent and a
Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall become
a Subsidiary Pledgor hereunder with the same force and effect as if originally
named as a Subsidiary Pledgor herein. The execution and delivery of such
instrument shall not require the consent of any Pledgor hereunder. The rights
and obligations of each Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Pledgor as a party to this
Agreement.
14
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
KANSAS CITY SOUTHERN INDUSTRIES, INC.,
by /s/ Xxxxxxx X. XxXxxxxx
------------------------------
Name: Xxxxxxx X. XxXxxxxx
Title: VP & Treasurer
THE KANSAS CITY SOUTHERN RAILWAY COMPANY,
by /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: Sr. VP & CFO
CAYMEX TRANSPORTATION, INC.,
by /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: VP & Secretary
GATEWAY WESTERN RAILWAY COMPANY,
by /s/ Xxxxxxx X. XxXxxxxx
------------------------------
Name: Xxxxxxx X. XxXxxxxx
Title: Designated Person
GLOBAL TERMINALING SERVICES, INC.
by /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: VP & Treasurer
15
KCS TRANSPORTATION COMPANY,
by /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: VP & Secretary
KANSAS CITY SOUTHERN LINES, INC.,
by /s/ Xxxxxxx X. XxXxxxxx
------------------------------
Name: Xxxxxxx X. XxXxxxxx
Title: Designated Person
SCC HOLDINGS, INC.,
by /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: VP & Treasurer
XXXX-XXXXXX CORPORATION,
by /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: VP & Secretary
SOUTHERN INDUSTRIAL SERVICES, INC.,
by /s/ Xxxxxxx X. XxXxxxxx
------------------------------
Name: Xxxxxxx X. XxXxxxxx
Title: Designated Person
THE CHASE MANHATTAN BANK, as Collateral
Agent,
by /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: VP
Annex 1 to the
Pledge Agreement
SUPPLEMENT NO. dated as of [ ], to the PLEDGE
AGREEMENT dated as of January 11, 2000 (the "Pledge Agreement"),
----------------
among KANSAS CITY SOUTHERN INDUSTRIES, INC., a Delaware
corporation ("Holdings"), THE KANSAS CITY SOUTHERN RAILWAY
--------
COMPANY, INC., a Missouri corporation (the "Borrower"), each
--------
other Subsidiary of Holdings listed on Schedule I thereto or
becoming a party thereto as provided in Section 24 thereof
(collectively, the "Subsidiary Pledgors"; Holdings, the Borrower
-------------------
and the Subsidiary Pledgors being referred to collectively as the
"Pledgors") and THE CHASE MANHATTAN BANK, ("Chase"), as
-------- -----
collateral agent (in such capacity, the "Collateral Agent"), for
----------------
the Secured Parties (as defined in the Credit Agreement referred
to below).
A. Reference is made to the Credit Agreement dated as of January 11,
2000 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Holdings, the Borrower, the lenders from time to time
----------------
party thereto (the "Lenders"), and Chase, as administrative agent (in such
-------
capacity, the "Administrative Agent"), collateral agent (in such capacity, the
--------------------
"Collateral Agent") and issuing bank (in such capacity, the "Issuing Bank").
---------------- ------------
B. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
C. The Pledgors have entered into the Pledge Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Pursuant to Section 5.12 of the Credit Agreement, certain additional
Subsidiaries may be required to enter into the Pledge Agreement as Subsidiary
Pledgors. The undersigned Subsidiary (the "New Pledgor") is executing this
-----------
Supplement in accordance with the requirements of the Credit Agreement and the
Pledge Agreement to become a Subsidiary Pledgor under the Pledge Agreement in
order to induce the Lenders to make additional Loans and the Issuing Bank to
issue additional Letters of Credit and as consideration for Loans previously
made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Pledgor agree as follows:
SECTION 1. In accordance with Section 24 of the Pledge Agreement, the
New Pledgor by its signature below becomes a Pledgor under the Pledge Agreement
with the same force and effect as if originally named therein as a Pledgor and
the New Pledgor hereby agrees (a) to all the terms and provisions of the Pledge
Agreement applicable to it as a Pledgor thereunder and (b) represents and
warrants that the representations and warranties made by it as a Pledgor
thereunder are true and correct on and as of the date hereof. In furtherance of
the foregoing, the New Pledgor, as security for the payment and performance in
full of the Obligations (as defined in the Pledge Agreement), does hereby create
and grant to the Collateral Agent, its successors and assigns, for the benefit
of the Secured Parties, their successors and assigns, a security interest in and
lien on all of the New Pledgor's right, title and interest in and to the
Collateral (as defined in
the Pledge Agreement) of the New Pledgor. Each reference to a "Subsidiary
Pledgor" or a "Pledgor" in the Pledge Agreement shall be deemed to include the
New Pledgor. The Pledge Agreement is hereby incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Pledgor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by telecopy shall be
as effective as delivery of a manually signed counterpart of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants that
Schedule II attached hereto includes a true and correct listing of all the
Equity Interests and intercompany Indebtedness owned by it (and such Schedule
shall be substituted for Schedule II to the Pledge Agreement as heretofore in
effect).
SECTION 5. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. Any provision of this Supplement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality, or unenforceability
without affecting the validity, legality, and enforceability of the remaining
provisions hereof and the Pledge Agreement; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction. The Parties shall endeavor in good-faith negotiations
to replace any invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be in
writing and given as provided in Section 15 of the Pledge Agreement. All
communications and notices hereunder to the New Pledgor shall be given to it in
care of the Borrower.
SECTION 9. The New Pledgor agrees to reimburse the Collateral Agent
for its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly
executed this Supplement to the Pledge Agreement as of the day and year first
above written.
[Name of New Pledgor],
by
------------------------------
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
------------------------------
Name:
Title:
