Exhibit 4.9
[EXECUTION COPY]
U.S. BORROWER PLEDGE AGREEMENT
This U.S. BORROWER PLEDGE AGREEMENT (as amended, supplemented,
amended and restated or otherwise modified from time to time, this "PLEDGE
AGREEMENT"), dated as of June 30, 1997, made by XXXXXX HEALTH PRODUCTS INC.,
a Delaware corporation (the "PLEDGOR"), in favor of the Agents (as defined
below) for each of the Secured Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of the date hereof
(as amended, supplemented, amended and restated or otherwise modified from
time to time, the "CREDIT AGREEMENT"), among Xxxxxx Health Products Group
Inc., a Delaware corporation ("LHPG" or the "U.S. BORROWER" (prior to the
Assumption)), Vita Health Company (1985) Ltd., a Manitoba corporation (the
"CANADIAN BORROWER", and together with the Pledgor, the "BORROWERS"), the
various financial institutions as are or may become parties thereto which
extend a Commitment under the U.S. Facility (collectively, the "U.S.
LENDERS"), the various financial institutions as are or may become parties
thereto which extend a Commitment under the Canadian Facility (collectively,
the "CANADIAN LENDERS", and together with the U.S. Lenders, the "LENDERS"),
The Bank of Nova Scotia ("SCOTIABANK"), as agent for the U.S. Lenders under
the U.S. Facility (in such capacity, the "U.S. AGENT"), and Scotiabank, as
agent for the Canadian Lenders under the Canadian Facility (in such capacity,
the "CANADIAN AGENT", and together with the U.S. Agent, collectively, the
"AGENTS"), the Lenders and the Issuers have extended Commitments to make
Credit Extensions to the Borrowers;
WHEREAS, as contemplated by the Credit Agreement, immediately
following the making of the initial Credit Extensions, the Pledgor and LHPG
have delivered the Assumption Agreement, pursuant to which the Pledgor has
assumed (the "ASSUMPTION") the rights and obligations of LHPG as (and has
become) the "U.S. Borrower" under the Credit Agreement;
WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extension) and the execution and
delivery of the Assumption Agreement under the Credit Agreement, the Pledgor
is required to execute and deliver this Pledge Agreement; and
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the
Lenders and the Issuers to make Credit Extensions (including the initial
Credit Extensions) to the Borrowers pursuant to the Credit Agreement, and to
induce Secured Parties to enter into Rate Protection Agreements, if any, the
Pledgor agrees, for the benefit of each Secured Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"AGENTS" is defined in the FIRST RECITAL.
"BORROWERS" is defined in the FIRST RECITAL.
"CANADIAN AGENT" is defined in the FIRST RECITAL.
"CANADIAN BORROWER" is defined in the FIRST RECITAL.
"CANADIAN LENDERS" is defined in the FIRST RECITAL.
"COLLATERAL" is defined in SECTION 2.1.
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"CREDIT AGREEMENT" is defined in the FIRST RECITAL.
"DISTRIBUTIONS" means all stock dividends, liquidating dividends,
shares of stock resulting from (or in connection with the exercise of) stock
splits, reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
Capital Stock constituting Collateral, but shall not include Dividends.
"DIVIDENDS" means cash dividends and cash distributions with respect
to any Pledged Shares or other Pledged Property.
"LENDERS" are defined in the FIRST RECITAL.
"PLEDGE AGREEMENT" is defined in the PREAMBLE.
"PLEDGED NOTE ISSUER" means each Person identified in ITEM A of
ATTACHMENT 1 hereto (as supplemented) as the issuer of the Pledged Note
identified opposite the name of such Person.
"PLEDGED NOTES" means all promissory notes of any Pledged Note
Issuer in the form or substantially the form of EXHIBIT A hereto (unless
otherwise consented to by the Agents, which consent will not be unreasonably
withheld) which are delivered or required to be delivered from time to time
by the Pledgor to the Agents as Pledged Property hereunder, as such
promissory notes, in accordance with SECTION 4.5, are amended, modified or
supplemented from time to time, together with any promissory note of any
Pledged Note Issuer taken in extension or renewal thereof or substitution
therefor.
"PLEDGED PROPERTY" means all Pledged Shares, all Pledged Notes, and
all other pledged shares of Capital Stock or promissory notes, all other
securities, all assignments of any amounts due or to become due, all other
instruments which are now being delivered by the Pledgor to the Agents or may
from time to time hereafter be delivered by the Pledgor to the Agents for the
purpose of pledge under this
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Pledge Agreement or any other Loan Document, and all proceeds of any of the
foregoing.
"PLEDGED SHARE ISSUER" means each Person identified in ITEM B of
ATTACHMENT 1 hereto as the issuer of the Pledged Shares identified opposite
the name of such Person, and each Person whose Capital Stock is required to
be pledged hereunder and under the Credit Agreement from time to time.
"PLEDGED SHARES" means all shares of Capital Stock of any Pledged
Share Issuer which are delivered or required to be delivered from time to
time by the Pledgor to the Agents as Pledged Property hereunder.
"PLEDGOR" is defined in the PREAMBLE.
"SCOTIABANK" is defined in the FIRST RECITAL.
"SECURED PARTY" means, as the context may require, the Lenders, the
Issuers, the Agents, each counterparty to a Rate Protection Agreement that is
(or at the time such Rate Protection Agreement is entered into, was) a Lender
or an Affiliate thereof and (in each case), each of their respective
successors, permitted transferees and permitted assigns.
"SECURITIES ACT" is defined in CLAUSE (a) of SECTION 6.2.
"U.C.C." means the Uniform Commercial Code, as in effect in the
State of New York or, as the context may require, in any other jurisdiction
the laws of which may apply to all or a portion of the Collateral in which a
security interest is granted hereunder.
"U.S. AGENT" is defined in the FIRST RECITAL.
"U.S. LENDERS" is defined in the FIRST RECITAL.
SECTION 1.2. CREDIT AGREEMENT DEFINITIONS. Unless otherwise
defined herein or the context otherwise requires, terms used in this Pledge
Agreement, including its preamble and recitals, have the meanings provided in
the Credit Agreement.
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SECTION 1.3. U.C.C. DEFINITIONS. Unless otherwise defined herein
or the Credit Agreement or the context otherwise requires, terms for which
meanings are provided in the U.C.C. are used in this Pledge Agreement,
including its preamble and recitals, with such meanings.
ARTICLE II
PLEDGE
SECTION 2.1. GRANT OF SECURITY INTEREST. The Pledgor hereby
pledges, hypothecates, assigns, charges, mortgages, delivers, and transfers
to the Agents, for their benefit and the ratable benefit of each of the
Secured Parties, and hereby grants to the Agents, for their benefit and the
ratable benefit of the Secured Parties, a continuing security interest in,
all of the following property (the "COLLATERAL"):
(a) all promissory notes of each Pledged Note Issuer identified in
ITEM A of ATTACHMENT 1 hereto;
(b) all other Pledged Notes issued from time to time that are required
to be pledged pursuant to the terms of the Credit Agreement;
(c) all issued and outstanding shares of Capital Stock of each Pledged
Share Issuer identified in ITEM B of ATTACHMENT 1 hereto; PROVIDED, that,
subject to clause (a) of Section 7.1.8 of the Credit Agreement, not more
than 65% of the Capital Stock of each Pledged Share Issuer that is a
non-U.S. Subsidiary shall be so pledged;
(d) all other Pledged Shares issued from time to time that are
required to be pledged pursuant to the terms of the Credit Agreement;
(e) all other Pledged Property hereafter delivered to the Agents in
connection with this Pledge Agreement;
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(f) all Dividends, Distributions, interest, and other payments and
rights with respect to any Pledged Property; and
(g) all proceeds of any of the foregoing.
SECTION 2.2. SECURITY FOR OBLIGATIONS. This Pledge Agreement secures
the payment in full of all Obligations.
SECTION 2.3. DELIVERY OF PLEDGED PROPERTY. All certificates or
instruments representing or evidencing any Collateral, including all Pledged
Shares and all Pledged Notes, shall be delivered to and held by or on behalf
of (and, in the case of the Pledged Notes, endorsed to the order of) the
Agents pursuant hereto, shall be in suitable form for transfer by delivery,
and shall be accompanied by all necessary instruments of transfer or
assignment, duly executed in blank.
The Pledgor shall deliver or shall cause to be delivered promptly,
but in any event within five Business Days following issuance, in pledge
hereunder to the Agents, for their benefit and the ratable benefit of each of
the other Secured Parties, any and all additional shares of Capital Stock of
a Pledged Share Issuer issued to the Pledgor and all other Pledged Property
issued, distributed or otherwise delivered to or acquired by the Pledgor in
respect of such Pledged Share Issuer's Pledged Shares; PROVIDED, HOWEVER,
that in the case of a non-U.S. Subsidiary of the Pledgor, unless otherwise
required by the terms of the Credit Agreement, not more than 65% of the
Capital Stock of such non-U.S. Subsidiary shall be pledged by the Pledgor to
the Agent.
SECTION 2.4. DIVIDENDS ON PLEDGED SHARES AND PAYMENTS ON PLEDGED
NOTES. In the event that any Dividend or liquidating dividend is to be paid
on any Pledged Share or any payment of principal or interest is to be made on
any Pledged Note at a time when no Default of the nature set forth in Section
10.1.9 of the Credit Agreement or Event of Default has occurred and is
continuing or would result therefrom, such Dividend, liquidating dividend or
payment may be paid directly to the Pledgor. If any such Default or Event of
Default has occurred and is continuing, then any
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such Dividend, liquidating dividend or payment shall be paid directly to the
Agents.
SECTION 2.5. CONTINUING SECURITY INTEREST; TRANSFER OF NOTE. This
Pledge Agreement shall create a continuing security interest in the
Collateral and shall
(a) remain in full force and effect until payment in full in cash of
or cash collateralization in full of all Obligations, the termination or
expiration or cash collateralization of all Letters of Credit, the
termination of all Rate Protection Agreements and the termination of all
Commitments,
(b) be binding upon the Pledgor and its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the Agents
hereunder, to the benefit of the Agents and each other Secured Party.
Without limiting the foregoing CLAUSE (c), any Lender may assign or otherwise
transfer (in whole or in part) any Note or Loan held by it to any other
Person or entity, and such other Person or entity shall thereupon become
vested with all the rights and benefits in respect thereof granted to such
Lender under any Loan Document (including this Pledge Agreement) or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 12.11 and Article XI of the Credit
Agreement. Upon (i) the sale, transfer or other disposition of Collateral in
accordance with the Credit Agreement or (ii) the payment in full in cash of
all Obligations, the termination or expiration of all Letters of Credit, the
termination of all Rate Protection Agreements entered into pursuant to the
Credit Agreement and the termination of all Commitments, the security
interest granted herein shall automatically terminate with respect to (x)
such Collateral (in the case of CLAUSE (i)) and all rights to such Collateral
shall revert to the Pledgor or (y) all Collateral (in the case of CLAUSE
(ii)) and all rights to the Collateral shall revert to the Pledgor. Upon any
such termination, the Agents will, at the Pledgor's sole expense, deliver to
the Pledgor, without any representations, warranties or recourse of any kind
whatsoever, all
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certificates and instruments representing or evidencing all Pledged Shares
and all Pledged Notes, together with all other Collateral held by the Agents
hereunder, and execute and deliver to the Pledgor such documents as the
Pledgor shall reasonably request to evidence such termination.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES, ETC. The Pledgor
represents and warrants for itself unto each Secured Party, as at the date of
each pledge and delivery hereunder (including each pledge and delivery of
Pledged Shares and each pledge and delivery of a Pledged Note) by the Pledgor
to the Agents of any Collateral, as set forth in this Article, and except as
set forth or may be otherwise provided in the applicable Foreign Pledge
Agreement with respect to a non-U.S. Pledged Share Issuer or Pledged Note
Issuer.
SECTION 3.1.1. OWNERSHIP, NO LIENS, ETC. The Pledgor is the legal
and beneficial owner of, and has good and marketable title to (and has full
right and authority to pledge and assign) such Collateral, free and clear of
all liens, security interests, options, or other charges or encumbrances,
except any lien or security interest granted pursuant hereto in favor of the
Agents and except as permitted under the Credit Agreement.
SECTION 3.1.2. VALID SECURITY INTEREST. The execution and delivery
of this Pledge Agreement, together with the delivery by the Pledgor of such
Collateral to the Agents, is effective to create a valid, perfected, first
priority security interest in such Collateral and all proceeds thereof,
securing the Obligations. No filing or other action will be necessary to
perfect or protect such security interest.
SECTION 3.1.3. AS TO PLEDGED SHARES. In the case of any Pledged
Shares constituting such Collateral, all of such Pledged Shares are duly
authorized and validly issued, fully paid, and non-assessable, and constitute
all of the issued and outstanding shares of Capital Stock of each
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Pledged Share Issuer set forth in ITEM B of ATTACHMENT I hereto (except in
the case of Pledged Shares of non-U.S. Subsidiaries in which case, unless
otherwise required pursuant to the terms of the Credit Agreement, 65% of the
Capital Stock has been so pledged. The Pledgor has no Subsidiaries other
than the Pledged Share Issuers, except as set forth in ITEM C of ATTACHMENT 1.
SECTION 3.1.4. AS TO PLEDGED NOTES. In the case of each Pledged
Note, all of such Pledged Notes have been duly authorized, executed,
endorsed, issued and delivered, and are the legal, valid and binding
obligation of the issuers thereof, and are not in default.
SECTION 3.1.5. AUTHORIZATION, APPROVAL, ETC. No authorization,
approval, or other action by, and no notice to or filing with, any
governmental authority, regulatory body or any other Person is required either
(a) for the pledge by the Pledgor of any Collateral pursuant to this
Pledge Agreement or for the execution, delivery, and performance of this
Pledge Agreement by the Pledgor, or
(b) for the exercise by the Agents of the voting or other rights
provided for in this Pledge Agreement, or, except with respect to any
Pledged Shares, as may be required in connection with a disposition of such
Pledged Shares by laws affecting the offering and sale of securities
generally, the remedies in respect of the Collateral pursuant to this
Pledge Agreement.
SECTION 3.1.6. COMPLIANCE WITH LAWS. The Pledgor is in compliance
with the requirements of all applicable laws (including the provisions of the
Fair Labor Standards Act), rules, regulations and orders of every
governmental authority, the non-compliance with which would reasonably be
expected to have a Material Adverse Effect or which might materially
adversely affect the aggregate value of the Collateral under all Pledge
Agreements or the aggregate worth of the Collateral under all Pledge
Agreements as collateral security.
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ARTICLE IV
COVENANTS
SECTION 4.1. PROTECT COLLATERAL; FURTHER ASSURANCES, ETC. The
Pledgor will not sell, assign, transfer, pledge, or encumber in any other
manner the Collateral (except in favor of the Agents hereunder). The Pledgor
will warrant and defend the right and title herein granted unto the Agents in
and to the Collateral (and all right, title, and interest represented by the
Collateral) against the claims and demands of all Persons whomsoever. The
Pledgor agrees that at any time, and from time to time, at the expense of the
Pledgor, the Pledgor will promptly execute and deliver all further
instruments, and take all further action, that may be necessary or desirable,
or that the Agents may reasonably request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable
the Agents to exercise and enforce their rights and remedies hereunder with
respect to any Collateral.
SECTION 4.2. STOCK POWERS, ETC. The Pledgor agrees that all
Pledged Shares (and all other shares of Capital Stock constituting
Collateral) delivered by the Pledgor pursuant to this Pledge Agreement will
be accompanied by duly executed undated blank stock powers, or other
equivalent instruments of transfer acceptable to the Agents. The Pledgor
will, from time to time upon the request of the Agents, promptly deliver to
the Agents such stock powers, instruments, and similar documents,
satisfactory in form and substance to the Agents, with respect to the
Collateral as the Agents may reasonably request and will, from time to time
upon the request of the Agents after the occurrence of any Event of Default,
promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the Agents.
SECTION 4.3. CONTINUOUS PLEDGE. Subject to SECTION 2.4, the Pledgor
will, at all times, keep pledged to the Agents pursuant hereto all Pledged
Shares and all other shares of Capital Stock constituting Collateral, all
Dividends and Distributions with respect thereto, all Pledged Notes, all
interest, principal and other proceeds
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received by the Agents with respect to the Pledged Notes, and all other
Collateral and other securities, instruments, proceeds, and rights from time
to time received by or distributable to the Pledgor in respect of any
Collateral; PROVIDED, HOWEVER, that, in the event of any sale of Collateral
permitted by Section 9.2.11 of the Credit Agreement, such Collateral shall be
deemed automatically released from the pledge and security interest hereunder
without any consent or other action of the Agents or any other Person and the
Agents will, at the request of the Pledgor and at the Pledgor's sole cost and
expense, execute and deliver such documents (without recourse and without
representation or warranty) as the Pledgor may reasonably request to evidence
such release. The Pledgor will not permit any Pledged Share Issuer to issue
any Capital Stock which shall not have been immediately duly pledged
hereunder on a first priority perfected basis except as permitted under the
Credit Agreement and PROVIDED that, subject to the last sentence of SECTION
9.1.7 of the Credit Agreement, not more than 65% of the Capital Stock of each
Pledged Share Issuer that is a non-U.S. Subsidiary shall be so pledged.
SECTION 4.4. VOTING RIGHTS; DIVIDENDS, ETC. The Pledgor agrees:
(a) after any Default of the nature referred to in Section 10.1.9 of
the Credit Agreement or any Event of Default shall have occurred and be
continuing, promptly upon receipt of notice thereof by the Pledgor and
without any request therefor by the Agents, to deliver (properly endorsed
where required hereby or requested by the Agents) to the Agents all
Dividends, Distributions, all interest, all principal, all other cash
payments, and all proceeds of the Collateral, all of which shall be held by
the Agents as additional Collateral for use in accordance with SECTION 6.4;
and
(b) after any Event of Default shall have occurred and be continuing
and the Agents have notified the Pledgor of the Agents' intention to
exercise their voting power under this CLAUSE (b) of this SECTION 4.4
(i) the Agents may exercise (to the exclusion of the Pledgor) the
voting power and all other incidental rights of ownership with respect
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to any Pledged Shares or other shares of Capital Stock constituting
Collateral and the Pledgor hereby grants the Agents an irrevocable
proxy, exercisable under such circumstances, to vote the Pledged
Shares and such other Collateral; and
(ii) promptly to deliver to the Agents such additional proxies
and other documents as may be necessary to allow the Agents to
exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and
proceeds which may at any time and from time to time be held by the Pledgor
but which the Pledgor is then obligated to deliver to the Agents, shall,
until delivery to the Agents, be held by the Pledgor separate and apart from
its other property in trust for the Agents. The Agents agree that unless an
Event of Default shall have occurred and be continuing and the Agents shall
have given the notice referred to in CLAUSE (b) of this SECTION 4.4, the
Pledgor shall have the exclusive voting power with respect to any shares of
Capital Stock (including any of the Pledged Shares) constituting Collateral
and the Agents shall, upon the written request of the Pledgor, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by the Pledgor which are necessary to allow the Pledgor to exercise
voting power with respect to any such share of Capital Stock (including any
of the Pledged Shares) constituting Collateral; PROVIDED, HOWEVER, that no
vote shall be cast, or consent, waiver, or ratification given, or action
taken by the Pledgor that would impair any Collateral or be inconsistent with
or violate any provision of the Credit Agreement or any other Loan Document
(including this Pledge Agreement).
SECTION 4.5. ADDITIONAL UNDERTAKINGS. The Pledgor will not,
without the prior written consent of the Agents (such consent not to be
unreasonably withheld):
(a) enter into any agreement amending, supplementing, or waiving any
provision of any Pledged Note (including any underlying instrument pursuant
to which such Pledged Note is issued) or compromising or releasing or
extending the time for payment of any obligation of the maker thereof; or
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(b) take or omit to take any action the taking or the omission of
which would result in any impairment or alteration of any obligation of the
maker of any Pledged Note or other instrument constituting Collateral.
ARTICLE V
THE AGENTS
SECTION 5.1. AGENTS APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby
irrevocably appoints each Agent the Pledgor's attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the
Pledgor or otherwise, from time to time in such Agent's discretion, to take
any action and to execute any instrument which such Agent may deem necessary
or advisable to accomplish the purposes of this Pledge Agreement, including,
after the occurrence and during the continuance of a Default of the nature
set forth in Section 10.1.9 of the Credit Agreement or an Event of Default:
(a) to ask, demand, collect, xxx for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with CLAUSE (a) above; and
(c) to file any claims or take any action or institute any proceedings
which such Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of such Agent with
respect to any of the Collateral.
The Pledgor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.
SECTION 5.2. AGENTS MAY PERFORM. If the Pledgor fails to perform
any agreement contained herein, the Agents may themselves perform, or cause
performance of, such
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agreement, and the expenses of the Agents incurred in connection therewith
shall be payable by the Pledgor pursuant to SECTION 6.5.
SECTION 5.3. AGENTS HAVE NO DUTY. The powers conferred on the
Agents hereunder are solely to protect their interests (on behalf of the
Secured Parties) in the Collateral and shall not impose any duty on them to
exercise any such powers. Except for reasonable care of any Collateral in
their possession and the accounting for moneys actually received by it
hereunder, the Agents shall have no duty as to any Collateral or
responsibility for
(a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Property, whether or not the Agents have or are deemed to have knowledge of
such matters, or
(b) taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
SECTION 5.4. REASONABLE CARE. The Agents are required to exercise
reasonable care in the custody and preservation of any of the Collateral in
their possession; PROVIDED, HOWEVER, the Agents shall be deemed to have
exercised reasonable care in the custody and preservation of any of the
Collateral, if they take such action for that purpose as the Pledgor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the Agents to
comply with any such request at any time shall not in itself be deemed a
failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. CERTAIN REMEDIES. If any Event of Default shall have
occurred and be continuing:
(a) The Agents may exercise in respect of the Collateral, in addition
to other rights and remedies
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provided for herein or otherwise available to them, all the rights and
remedies of a secured party on default under the U.C.C. (whether or not
the U.C.C. applies to the affected Collateral) and also may, without
notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Agents' offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Agents may deem commercially
reasonable. The Agents or any of the other Secured Parties may, to the
extent permitted by Section 9-504 of the U.C.C., be the purchaser of any
of the Collateral so sold and the obligations of the Pledgor of such
Collateral to such Secured Party may be applied as a credit against the
purchase price. The Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten days' prior notice to the Pledgor
of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification.
The Agents shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Agents may adjourn
any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Upon any such
sale the Agents shall have the right to deliver, assign and transfer to
the purchaser thereof the Collateral so sold. Each purchaser (including
the Agents or any of the other Secured Parties) at any such sale shall
hold the Collateral so sold absolutely free from any claim or right of
whatsoever kind, including any equity or right of redemption of the
Pledgor, and the Pledgor hereby specifically waives, to the extent it
may lawfully do so, all rights of redemption, stay or appraisal which it
has or may have under any rule of law or statute now existing or
hereafter adopted.
(b) The Agents may
(i) transfer all or any part of the Collateral into the name of
the Agents or their nominee, with or without disclosing that such
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Collateral is subject to the lien and security interest hereunder,
(ii) notify the parties obligated on any of the Collateral to
make payment to the Agents of any amount due or to become due
thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part thereof,
or compromise or extend or renew for any period (whether or not longer
than the original period) any obligations of any nature of any party
with respect thereto,
(iv) endorse any checks, drafts, or other writings in the
Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of the Pledgor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
SECTION 6.2. SECURITIES LAWS. If the Agents shall determine to
exercise their right to sell all or any of the Collateral pursuant to SECTION
6.1, the Pledgor agrees that, upon request of the Agents, the Pledgor will,
at its own expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and do or cause to be done
all such other acts and things, as may be necessary or, in the opinion of
the Agents, advisable to register such Collateral under the provisions of
the Securities Act of 1933, as from time to time amended (the "SECURITIES
ACT"), and to use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for such
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period as prospectuses are required by law to be furnished, and to make
all amendments and supplements thereto and to the related prospectus
which, in the opinion of the Agents, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the Agents;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earnings statement that will satisfy the
provisions of Section 11(a) of the Securities Act; and
(d) do or use its best efforts to cause to be done all such other acts
and things as may be necessary to make such sale of the Collateral or any
part thereof valid and binding and in compliance with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Agents or the Secured Parties by
reason of the failure by the Pledgor to perform any of the covenants
contained in this Section and, consequently, agrees that, if the Pledgor
shall fail to perform any of such covenants, it shall pay, as liquidated
damages and not as a penalty, an amount equal to the value (as determined by
the Agents) of the Collateral on the date the Agents shall demand compliance
with this Section and the full amount of any such payments shall be applied
in accordance with SECTION 6.4.
SECTION 6.3. COMPLIANCE WITH RESTRICTIONS. The Pledgor agrees that
in any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Agents are hereby authorized to comply with
any limitation or restriction in connection with such sale as they may be
advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
17
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are
purchasing for their own account for investment and not with a view to the
distribution or resale of such Collateral), or in order to obtain any
required approval of the sale or of the purchaser by any governmental
regulatory authority or official, and the Pledgor further agrees that such
compliance shall not result in such sale being considered or deemed not to
have been made in a commercially reasonable manner, nor shall the Agents be
liable nor accountable to the Pledgor for any discount allowed by the reason
of the fact that such Collateral is sold in compliance with any such
limitation or restriction.
SECTION 6.4. APPLICATION OF PROCEEDS. If any Event of Default
shall have occurred and be continuing, all cash proceeds received by the
Agents in respect of any sale of, collection from, or other realization upon,
all or any part of the Collateral may, in the discretion of the Agents, be
held by the Agents as additional collateral security for, or at any time
thereafter be applied (after payment of any amounts payable to the Agents
pursuant to SECTION 6.5) in whole or in part by the Agents against, all or
any part of the Obligations.
Any surplus of such cash or cash proceeds held by the Agents and
remaining after payment in full in cash of or cash collateralization in full
of all the Obligations, the termination, expiration or cash collateralization
of all Letters of Credit, the termination of all Rate Protection Agreements
and the termination of all Commitments, shall be paid over to the Pledgor or
to whomsoever may be lawfully entitled to receive such surplus.
SECTION 6.5. INDEMNITY AND EXPENSES. The Pledgor hereby
indemnifies and holds harmless the Agents from and against any and all
claims, losses, and liabilities arising out of or resulting from this Pledge
Agreement (including enforcement of this Pledge Agreement), except claims,
losses, or liabilities resulting from the Agents' gross negligence or wilful
misconduct. Upon demand, the Pledgor will pay to the Agents the amount of
any and all reasonable expenses, including the reasonable fees and
disbursements of
18
their counsel and of any experts and agents, which the Agents (in their
capacities as Agents and not as Lenders) may incur in connection with:
(a) the administration of this Pledge Agreement, the Credit Agreement
and each other Loan Document;
(b) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the Agents
hereunder; or
(d) the failure by the Pledgor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. LOAN DOCUMENT. This Pledge Agreement is a Loan
Document executed pursuant to the Credit Agreement and shall (unless
otherwise expressly indicated herein) be construed, administered and applied
in accordance with the terms and provisions thereof.
SECTION 7.2. AMENDMENTS, ETC. No amendment to or waiver of any
provision of this Pledge Agreement nor consent to any departure by the
Pledgor herefrom shall in any event be effective unless the same shall be in
writing and signed by the Pledgor and the Agents (on behalf of the Lenders or
the Required Lenders, as the case may be), and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it is given.
SECTION 7.3. PROTECTION OF COLLATERAL. The Agents may from time to
time, at their option, perform any act which the Pledgor agrees hereunder to
perform and which the Pledgor shall fail to perform after being requested in
writing so to perform (it being understood that no such request need be given
after the occurrence and during the continuance of an Event of Default) and
the Agents may from time to time take any other action which the Agents
19
reasonably deem necessary for the maintenance, preservation or protection of
any of the Collateral or of their security interest therein, it being
understood and agreed that in each such case all costs and expenses incurred
by the Agents in connection therewith shall be payable by the Pledgor
pursuant to SECTION 6.5.
SECTION 7.4. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing or facsimile and,
if to the Pledgor, mailed or telecopied or delivered to it at the address or
facsimile number specified in the Credit Agreement and, if to the Agents,
mailed or telecopied or delivered to them at the addresses or facsimile
numbers specified in the Credit Agreement or, with respect to the Pledgor or
the Agents, at such other address or facsimile number as shall be designated
by such party in a written notice to each other party complying as to
delivery with the terms of this Section. All such notices and other
communications, when mailed and properly addressed with postage prepaid or if
properly addressed and sent by pre-paid courier service, shall be deemed
given when received; any such notice or communication, if transmitted by
telecopier, shall be deemed given when transmitted and electronically
confirmed.
SECTION 7.5. SECTION CAPTIONS. Section captions used in this
Pledge Agreement are for convenience of reference only, and shall not affect
the construction of this Pledge Agreement.
SECTION 7.6. SEVERABILITY. Wherever possible each provision of
this Pledge Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Pledge Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Pledge Agreement.
SECTION 7.7. COUNTERPARTS. This Pledge Agreement may be executed
by the parties hereto in several counterparts, each of which shall be deemed
to be an original and all of which shall constitute together but one and the
same agreement.
20
SECTION 7.8. GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS PLEDGE
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS
5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK),
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
21
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
XXXXXX HEALTH PRODUCTS INC.
By /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice
President-Finances
THE BANK OF NOVA SCOTIA,
as Agent
By /s/ Xxxx XxXxxxxxx
----------------------------
Name: Xxxx XxXxxxxxx
Title:
22
EXHIBIT A
to U.S. Borrower
Pledge Agreement
PROMISSORY NOTE
$____________ _________, ____
FOR VALUE RECEIVED, the undersigned, ______________, a _______________
corporation (the "MAKER"), promises to pay to the order of XXXXXX HEALTH
PRODUCTS INC., a Delaware corporation (the "PAYEE"), on demand, the principal
sum of ______________ DOLLARS ($________) or, if less, the aggregate unpaid
principal amount, as reflected on the books and records of the Payee, of all
intercompany loans made from time to time by the Payee to the Maker.
The unpaid principal amount of this promissory note (this "NOTE")
from time to time outstanding shall bear interest at a rate of interest as
reflected in the books and records of the Payee, which the Maker represents
to be a lawful and commercially reasonable rate, payable from time to time on
demand of Payee, and all payments of principal of and interest on this Note
shall be payable in lawful currency of the United States of America. All
such payments shall be made by the Maker to an account established by the
Payee at _______________. Upon notice from the U.S. Agent that a Default (as
defined in the Credit Agreement, hereinafter defined) of the nature referred
to in Section 10.1.9 of the Credit Agreement or an Event of Default (as
defined in the Credit Agreement) has occurred and is continuing under the
Credit Agreement, the Maker shall make such payments, in same day funds, to
such other account as the U.S. Agent shall direct in such notice.
This Note is one of the Pledged Notes referred to in, and evidences
Indebtedness incurred pursuant to, clause (e) of Section 9.2.2 of the Credit
Agreement, dated as of June 30, 1997 (as amended, supplemented, amended and
restated or otherwise modified from time to time, the "CREDIT AGREEMENT"),
among the Payee, as the U.S. Borrower (following the Assumption), Vita Health
Company (1985) Ltd., as the Canadian Borrower, The Bank of Nova Scotia, as
the U.S. agent (the "U.S. AGENT") and the Canadian Agent, and various
financial institutions as are, or may from time to time become, parties
thereto. Upon the occurrence and continuance of an Event of Default under
the Credit Agreement, and notice thereof by the U.S. Agent to the Maker, the
U.S. Agent shall have all rights of the Payee to collect and accelerate, and
enforce all rights with respect
to, the Indebtedness evidenced by this Note. Unless otherwise defined herein
or the context otherwise requires, terms used herein have the meanings
provided in the Credit Agreement.
Reference is made to the Credit Agreement for a description of the
Pledge Agreement pursuant to which this Note has been pledged to the U.S.
Agent as security for the Obligations outstanding from time to time under the
Credit Agreement and each other Loan Document.
In addition to, but not in limitation of, the foregoing, the Maker
further agrees to pay all expenses, including reasonable attorneys' fees and
legal expenses, incurred by the holder (including the U.S. Agent as pledgee)
of this Note endeavoring to collect any amounts payable hereunder which are
not paid when due, whether by acceleration or otherwise.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS
5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).
THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON
THIS NOTE. THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS
2
PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.
[NAME OF MAKER]
By
----------------------
Name:
Title:
Pay to the order of THE
BANK OF NOVA SCOTIA, as
U.S. Agent
By
----------------------
Name:
Title:
3
ATTACHMENT 1
to U.S. Borrower
Pledge Agreement
Item A. PLEDGED NOTES
-------------
PLEDGED NOTE ISSUER DESCRIPTION
------------------- -----------
None.
Item B. PLEDGED SHARES
--------------
PLEDGED SHARE ISSUER COMMON STOCK
-------------------- ---------------------------------------
AUTHORIZED OUTSTANDING % OF SHARES
SHARES SHARES PLEDGED
---------- ----------- -----------
VH HOLDINGS INC. Unlimited 100 65%
Item C. ADDITIONAL SUBSIDIARIES
-----------------------
None.
