EXHIBIT [ ]
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT (the "Guarantee"), dated as of
, 1996, executed and delivered by X.X. Xxxxxx & Co.
Incorporated, a Delaware corporation ("X.X. Xxxxxx"),
for the benefit of the Holders (as defined below) from
time to time of the Preferred Securities (as defined
below) of X.X. Xxxxxx Index Funding Company, LLC, a
Delaware limited liability company (the "Company").
WHEREAS, the Company intends to issue its common limited
liability company interests (the "Common Securities") to and receive
related capital contributions from X.X. Xxxxxx and X.X. Xxxxxx Ventures
Corporation ("JPM Ventures"), and to issue and sell from time to time, in
one or more series, preferred limited liability company interests (the
"Preferred Securities") with such rights, preferences, privileges,
limitations and restrictions as are set forth in a written resolution or
resolutions (a "Written Action") by the Managing Members (as defined below)
providing for the issue of such series;
WHEREAS, the Company will purchase Related Notes (as defined
below) from Xxxxxx Guaranty Trust Company of New York, a trust company with
full banking powers organized under the laws of the State of New York
("Xxxxxx Guaranty") with the proceeds from the issuance and sale of each
series of Preferred Securities and, at the option of the Company, related
Common Securities; and
WHEREAS, X.X. Xxxxxx desires hereby to irrevocably and
unconditionally agree to the extent set forth herein to pay to the Holders
the Guarantee Payments (as defined below) and to make certain other
payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder
of the Preferred Securities, which purchase X.X. Xxxxxx hereby agrees shall
benefit X.X. Xxxxxx and which purchase X.X. Xxxxxx acknowledges will be
made in reliance upon the execution and delivery of this guarantee, X.X.
Xxxxxx executes and delivers this Guarantee for the benefit of the Holders.
ARTICLE I
As used in this Guarantee, the terms set forth below shall have
the following meanings:
"Guarantee Payments" shall mean, with respect to any series of
Preferred Securities, the following payments, without duplication, to the
extent not paid by the Company: (i) any accumulated and unpaid
distributions which have been theretofore declared on the Preferred
Securities of such series, to the extent Xxxxxx Guaranty has made a
corresponding payment on the relevant Related Note, out of funds legally
available therefor, (ii) the Preferred Redemption Price (including all
accumulated and unpaid distributions), to the extent Xxxxxx Guaranty has
made a corresponding payment on the relevant Related Note, payable out of
funds legally available therefor with respect to any Preferred Securities
of such series called for redemption upon redemption thereof and (iii) upon
the liquidation of the Company, the lesser of (a) the Liquidation
Distribution (as defined below) with respect to such series and (b) the
amount of assets of the Company legally available for distribution to
Holders of Preferred Securities of such series in liquidation.
"Holder" shall mean any member of the Company from time to time
holding any Preferred Securities of any series in such capacity; provided,
however, that in determining whether the Holders of the requisite
percentage of Preferred Securities have given any request, notice, consent
or waiver hereunder, "Holder" shall not include X.X. Xxxxxx or any entity
owned 50% or more by X.X. Xxxxxx, either directly or indirectly.
"Liquidation Distribution" shall mean, with respect to any series
of Preferred Securities, the aggregate Principal Amount of such series of
Preferred Securities and all accumulated and unpaid distributions (whether
or not declared) with respect to such series to but excluding the date of
payment.
"LLC Agreement" shall mean the Company's Limited Liability
Company Agreement dated as of January , 1996, as amended from time to time.
"Managing Members" shall mean X.X. Xxxxxx and JPM Ventures, in
their capacity as the members of the Company
that hold all of the Company's outstanding Common Securities.
"Preferred Redemption Price" shall mean, with respect to any
series of Preferred Securities, the aggregate Principal Amount of all
Preferred Securities of such series plus accumulated and unpaid
distributions (whether or not declared) with respect to such series to but
excluding the date of redemption.
"Principal Amount" shall mean, at any time with respect to any
Preferred Security of any series, the Redemption Value, the applicable
Early Redemption Value or the stated liquidation preference thereof, as
applicable, as determined in accordance with the Written Action creating
such series of Preferred Securities.
"Related Note" shall mean any obligation or obligations of Xxxxxx
Guaranty in which the proceeds from the issuance of any series of Preferred
Securities and, at the option of the Company, related Common Securities are
invested.
ARTICLE II
SECTION 2.01. X.X. Xxxxxx irrevocably and unconditionally agrees,
to the extent set forth herein, to pay in full to the Holders of each
series of Preferred Securities the Guarantee Payments with respect to such
series of Preferred Securities, as and when due (except to the extent paid
by the Company), regardless of any defense, right of set-off or
counterclaim which the Company may have or assert. This Guarantee is
continuing, irrevocable, unconditional and absolute.
SECTION 2.02. X.X. Xxxxxx hereby waives notice of acceptance of
this Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 2.03. The obligations, covenants, agreements and duties
of X.X. Xxxxxx under this Guarantee shall in no way be affected or impaired
by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Company of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Company;
(b) the extension of time for the payment by the Company of all
or any portion of the distributions, Preferred Redemption Price,
liquidation distributions or any other sums payable under the terms of
the Preferred Securities or the extension of time for the performance
of any other obligation under, arising out of, or in connection with,
the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the
Preferred Securities, or any action on the part of the Company
granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization, arrangement, composition
or readjustment of debt of, or other similar proceedings affecting,
the Company or any of the assets of the Company;
(e) any invalidity of, or defect or deficiency in, any of the
Preferred Securities; or
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, X.X. Xxxxxx with respect to the happening of any of the
foregoing.
SECTION 2.04. This is a guarantee of payment and not of
collection. A Holder may enforce this Guarantee directly against X.X.
Xxxxxx, and X.X. Xxxxxx waives any right or remedy to require that any
action be brought against the Company or any other person or entity before
proceeding against X.X. Xxxxxx. Subject to Section 2.05 hereof, all waivers
herein contained shall be without prejudice to the Holders' right at the
Holders' option to
proceed against the Company, whether by separate action or by joinder.
SECTION 2.05. X.X. Xxxxxx shall be subrogated to all (if any)
rights of the Holders against the Company in respect of any amounts paid to
the Holders by X.X. Xxxxxx under this Guarantee and the Company shall not
be required to make payment to the Company of any amount of Guarantee
Payments in respect of which payment has theretofore been made by X.X.
Xxxxxx pursuant to Section 2.01 hereof; provided, however, that X.X. Xxxxxx
shall not (except to the extent required by mandatory provisions of law)
exercise any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of a
payment under this Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Guarantee. If any amount shall be
paid to X.X. Xxxxxx in violation of the preceding sentence, X.X. Xxxxxx
agrees to pay over such amount to the Holders for application to the
Guarantee Payments then due hereunder, if any, or to offset payments due to
the Holders by the Company.
SECTION 2.06. X.X. Xxxxxx acknowledges that its obligations
hereunder are independent of the obligations of the Company with respect to
the Preferred Securities and that X.X. Xxxxxx shall be liable as principal
and sole debtor hereunder to make Guarantee Payments pursuant to the terms
of this Guarantee notwithstanding the occurrence of any event referred to
in subsections (a) through (f), inclusive, of Section 2.03 hereof.
ARTICLE III
SECTION 3.01. So long as any Preferred Securities of any series
remain outstanding, X.X. Xxxxxx shall: (i) not cause or permit any Common
Securities to be transferred; (ii) maintain direct or indirect 100%
ownership of all outstanding securities of the Company other than the
Preferred Securities of any series and any other securities permitted to be
issued by the Company that would not cause it to become an "investment
company" under the Investment Company Act of 1940, as amended; (iii) not
voluntarily dissolve, wind up, liquidate or terminate the Company or either
of the Managing Members; (iv) cause X.X. Xxxxxx and JPM Ventures to remain
the Managing Members of the Company and timely perform all of their
respective duties as Managing Members (including the duty to declare and
pay
dividends on the Preferred Securities); and (v) not take any actions
inconsistent with the treatment of the Company as a partnership for United
States Federal income tax purposes.
SECTION 3.02. The Guarantee will constitute an unsecured
obligation of X.X. Xxxxxx and will rank (i) subordinate and junior in right
of payment to all other liabilities of X.X. Xxxxxx, (ii) pari passu with
the most senior preferred stock outstanding as of the date hereof of X.X.
Xxxxxx and (iii) senior to X.X. Xxxxxx'x common stock.
ARTICLE IV
This Guarantee shall terminate and be of no further force and
effect as to any series of Preferred Securities upon full payment of the
Preferred Redemption Price of such series, and shall terminate completely
upon full payment of the amounts payable to Holders upon liquidation of the
Company; provided, however, that this Guarantee shall continue to be
effective or shall be reinstated, as the case may be, if at any time any
Holder must restore payment of any sums paid under the Preferred Securities
of such series or under this Guarantee for any reason whatsoever. X.X.
Xxxxxx agrees to indemnify each Holder and hold it harmless against any
loss it may suffer in such circumstances.
ARTICLE V
SECTION 5.01. All guarantees and agreements contained in this
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of X.X. Xxxxxx and shall inure to the benefit of the
Holders. X.X. Xxxxxx shall not assign its obligations hereunder without the
prior approval of Holders of not less than a majority in Principal Amount
of all Preferred Securities of all series then outstanding voting as a
single class.
SECTION 5.02. Except with respect to any changes or waivers which
do not adversely affect the rights of Holders (in which case no vote will
be required), this Guarantee may only be amended or waived by instrument in
writing signed by X.X. Xxxxxx with the prior approval of the Holders of not
less than a majority in Principal Amount of all Preferred Securities of all
series then outstanding voting as a single class. Such approval shall be
obtained in the manner set forth in Article VIII of the LLC Agreement.
SECTION 5.03. Any notice, request or other communication required
or permitted to be given hereunder to X.X. Xxxxxx shall be given in writing
by mail or by facsimile transmission (followed by mail), addressed to X.X.
Xxxxxx, as follows:
X.X. Xxxxxx & Co. Incorporated
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile No.:
Attention:
Any notice, request or other communication required or permitted
to be given hereunder to the Holders shall be given by X.X. Xxxxxx in the
same manner as notices sent by the Company to the Holders.
SECTION 5.04. This Guarantee is solely for the benefit of the
Holders and is not separately transferable from the Preferred Securities.
SECTION 5.05. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, this Guarantee is executed as of the day and
year first above written.
X.X. XXXXXX & CO.
INCORPORATED,
By
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Name:
Title:
