EXHIBIT 4.2
================================================================================
PLEDGE AND SECURITY AGREEMENT
by and among
AMSC ACQUISITION COMPANY, INC.,
STATE STREET BANK AND TRUST COMPANY,
as Trustee
and
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
March 31, 1998
================================================================================
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of March 31, 1998 (the "PLEDGE
AGREEMENT") by and among AMSC Acquisition Company, Inc., a Delaware corporation
(the "PLEDGOR"), the Trustee (as defined below) and State Street Bank and Trust
Company, as collateral agent (the "COLLATERAL AGENT"), for the Trustee on behalf
of the Holders of the Notes (as defined herein). Capitalized terms used but not
otherwise defined herein shall have the meanings given to such terms in the
Indenture (as defined below).
W I T N E S S E T H:
WHEREAS, the Pledgor, the Guarantors (as defined in the Indenture) and
State Street Bank and Trust Company, as Trustee (the "TRUSTEE") have entered
into that certain Indenture dated as of March 31, 1998 (as amended, restated,
supplemented or otherwise modified from time to time, the "INDENTURE"), pursuant
to which the Pledgor and American Mobile Satellite Corporation, a Delaware
corporation ("HOLDINGS" and, together with the Pledgor, the "ISSUERS") issued
335,000 Units consisting of $335,000,000 in aggregate principal amount of
12 1/4% Senior Notes due 2008 (the "NOTES") of the Pledgor and warrants to
purchase an aggregate of 1,258,759 shares of common stock, $.01 par value, of
Holdings (the "WARRANTS"). Each Unit consists of $1,000 principal amount of
Notes and one Warrant to purchase 3.75749 shares of common stock of Holdings;
WHEREAS, the Pledgor has agreed, pursuant to a Purchase Agreement
dated March 26, 1998 by and among the Pledgor, Bear, Xxxxxxx & Co. Inc., X.X.
Xxxxxx Securities, Inc., TD Securities (USA) Inc. and BancAmerica Xxxxxxxxx
Xxxxxxxx, to (i) purchase a portfolio of securities consisting of Government
Securities (as defined) (collectively, the "PLEDGED SECURITIES") in an amount
sufficient, upon receipt of the scheduled interest and principal payments in
respect of the Pledged Securities, in the opinion of a nationally recognized
firm of independent certified public accountants selected by the Pledgor, to
provide for payment of the first six scheduled interest payments due on the
Notes, and (ii) place such Pledged Securities in the Pledge Account (as defined
herein) held by the Collateral Agent for the benefit of the Holders of the
Notes;
WHEREAS, the Pledgor is the sole legal and beneficial owner of the
Pledged Securities; and
WHEREAS, to secure the payment and performance by the Pledgor of its
obligations under the Indenture and the Notes (collectively, the "OBLIGATIONS"),
the Pledgor has agreed to (i) pledge to the Collateral Agent for the benefit of
the Trustee and the ratable benefit of the Holders of the Notes a security
interest in the Pledged Securities and the Pledge Account, and (ii) execute and
deliver this Pledge Agreement.
NOW, THEREFORE, in order to induce the Holders of Notes to purchase
the Notes, and for good and valuable consideration, the receipt of which is
hereby acknowledged, the Pledgor hereby agrees with the Collateral Agent for the
benefit of the Trustee and for the ratable benefit of the Holders of Notes as
follows:
1. DEFINED TERMS. All capitalized terms used but not defined herein
-------------
shall have the meanings ascribed to them in the Indenture. In addition to any
other defined terms used herein, the following terms shall constitute defined
terms for purposes of this Pledge Agreement and shall have the meanings set
forth below:
1
"COLLATERAL" has the meaning given in Section 2 hereof.
"GOVERNMENT SECURITIES" means securities that are direct obligations
of, or obligations fully guaranteed by, the United States of America for the
payment of which guarantee or obligations the full faith and credit of the
United States is pledged.
"UCC" means, with respect to the validity and perfection and the
effect of perfection or non-perfection of the security interest, the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
2. PLEDGE AND GRANT OF SECURITY INTEREST. (a) The Pledgor hereby
-------------------------------------
pledges and grants to the Collateral Agent as agent of and securities
intermediary for the Trustee, for the ratable benefit of the Holders of the
Notes, a continuing first priority security interest in and to (i) all of the
Pledgor's right, title and interest in the Pledged Securities and the Pledge
Account, (ii) all certificates or other evidence of ownership representing the
Pledged Securities and the Pledge Account, and (iii) all products and proceeds
of any of the Pledged Securities, including, without limitation, all dividends,
interest, principal payments, cash, options, warrants, rights, instruments,
subscriptions and other property or proceeds from time to time received,
receivable or otherwise distributed or distributable in respect of or in
exchange for any or all of the Pledged Securities (collectively, the
"COLLATERAL").
(b) The Pledgor shall have no right to remove or withdraw from the
Pledge Account any financial asset, cash or other property now or hereafter
credited to the Pledge Account without the prior written consent of the Trustee.
If at any time the Collateral Agent shall receive any entitlement order from the
Trustee (including, without limitation, any order directing the sale, transfer
or redemption of any financial asset relating to, or cash or other item credited
to, the Pledge Account), the Collateral Agent shall comply with such entitlement
order, without further consent by the Pledgor or any other Person.
(c) The Trustee appoints State Street Bank and Trust Company as its
agent and securities intermediary hereunder, and the Collateral Agent accepts
such appointment and agrees to act as agent and securities intermediary for the
Trustee with respect to the Pledged Securities, without cost or expense to the
Trustee. The Collateral Agent will, no later than the business day immediately
following the date hereof, completely and accurately identify on its books and
records the Pledged Securities being held in the Pledge Account. In addition,
the collateral Agent will, upon the Trustee's written request given at any time
to the Collateral Agent, either (a) deliver to the Trustee possession of duly
issued certificates evidencing the Pledged Securities registered in the name of
the Trustee or its nominee or designee, or (b) transfer the Pledged Securities
to an account at the Collateral Agent or to another financial intermediary
designated by the Trustee in the name of the Trustee. In the event that the
Pledgor shall be entitled to receive or acquire any distribution, in any form
whatsoever, including, without limitation, cash and non-cash dividends and
interest, in respect of the Pledged Securities, the Collateral Agent agrees that
it shall hold the same as agent and securities intermediary for the Trustee
subject to the terms hereof and the written instructions of the Trustee.
3. SECURITY FOR OBLIGATIONS. This Pledge Agreement and the
------------------------
Collateral secure the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of all of the
Obligations.
2
4. DELIVERY OF COLLATERAL; PLEDGE ACCOUNT; INTEREST; SUBSTITUTION OF
-----------------------------------------------------------------
COLLATERAL.
----------
(a) If and to the extent the Pledged Securities comprise "certificated
securities," as defined in Section 8-102 of the UCC, such securities shall be
registered in the name of the Collateral Agent or its nominee for the benefit of
the Holders of the Notes and delivered to the Collateral Agent or its custodian
in the State of New York, and possession thereof shall be maintained by the
Collateral Agent within the State of New York.
(b) All Government Securities included in the Collateral shall be
registered in the name of the Collateral Agent or its nominee for the benefit of
the Holders of the Notes on the records of the Federal Reserve Bank of New York
and credited in the books and records of the Collateral Agent to the Pledge
Account. All other uncertificated securities, if any, included in the
Collateral shall be registered on the books of the issuer of such uncertificated
securities in the name of the Collateral Agent or its nominee for the benefit of
the Holders of the Notes, and credited in the books and records of the
Collateral Agent to the Pledge Account.
(c) Concurrently with the execution and delivery of this Pledge
Agreement, the Collateral Agent shall establish an account entitled the "STATE
STREET BANK AND TRUST COMPANY PLEDGE ACCOUNT FOR THE BENEFIT OF HOLDERS OF
12 1/4% SENIOR NOTES DUE 2008 OF AMSC ACQUISITION COMPANY, INC." for the deposit
of the Pledged Securities (the "PLEDGE ACCOUNT") at its office at Xxxxxxx
Square, 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx, 00000. The Pledge Account is
and shall be maintained as a "securities account" within the meaning of Article
8 of the UCC, and the Collateral Agent will treat all property held by it in the
Pledge Account as "financial assets" under Article 8-501(a) of the UCC. Subject
to the other terms and conditions of this Pledge Agreement, all funds or other
property accepted by the Collateral Agent pursuant to this Pledge Agreement
shall be held in the Pledge Account for the ratable benefit of the Holders of
the Notes. All proceeds of the Pledged Securities shall remain on deposit in the
Pledge Account until withdrawn in accordance with this Pledge Agreement.
(d) All proceeds of, interest earned on and other distributions or
amounts paid with respect to, any Collateral shall be credited to and retained
in the Pledge Account, and the Collateral Agent shall invest and reinvest the
same as directed from time to time in writing by the Pledgor; provided, however,
that such proceeds and other amounts must be invested in Government Securities
except as otherwise provided in this Section 4(d). Prior to the Collateral
Agent's receipt of written instructions from the Pledgor, the Collateral Agent
shall invest any such proceeds and other amounts in Federated Investors Treasury
Cash Service Fund. In all events, any monies so invested or reinvested and any
securities acquired thereby shall be (i) held as Collateral in the Pledge
Account, (ii) subject in all respects to the security interest created hereby
and shall be and remain under the control of the Collateral Agent, and (iii)
otherwise subject to the terms hereof.
5. DISBURSEMENTS.
-------------
(a) Unless notified at least one Business Day in advance of an
Interest Payment Date of the Pledgor's election pursuant to Section 5(b), on the
date when each of the first six scheduled interest payments is due on the Notes
and without notice from the Pledgor, the Collateral Agent shall transfer from
the Pledge Account to the Paying Agent under the Indenture, funds necessary to
provide for payment in full or of any portion of the next scheduled interest
payment on the Notes and the Paying Agent shall apply the proceeds to such
interest payment.
(b) If the Pledgor elects to pay any of the first six scheduled
interest payments (or portion thereof) on the Notes from a source of funds other
than the Pledge Account (the "PLEDGOR'S FUNDS"), then the Pledgor may, after
payment in full of such interest payment, deliver to the Collateral
3
Agent written acknowledgment from the Paying Agent of its receipt of such funds,
together with a written request for release of a portion of Collateral not in
excess of the Pledgor's Funds so paid, whereupon the Collateral Agent is hereby
authorized and directed to release to the Pledgor an amount of funds from the
Pledge Account less than or equal to the amount of Pledgor Funds so expended.
Upon receipt of such written direction from the Pledgor, together with the
certificate described in the following sentence, the Collateral Agent shall take
such action as is necessary to provide for the payment to the Pledgor of the
amount requested from the Pledge Account. Prior to any release of funds to the
Pledgor from the Pledge Account pursuant to this Section 5(b), the Pledgor shall
deliver to the Collateral Agent an Officer's Certificate stating that such use
of Pledgor's Funds has been duly authorized by all necessary corporate action
and does not contravene or constitute a default under any provision of
applicable law, regulation or the certificate of incorporation of the Pledgor,
or of any material agreement, judgment, injunction, order, decree or other
instrument binding upon the Pledgor, and does not result in the creation or
imposition of any Lien on any asset of the Pledgor.
(c) If at any time the amount of Collateral exceeds the amount
sufficient, in the opinion of a nationally recognized firm of independent
certified public accountants selected by the Pledgor, to provide for payment in
full of the first six scheduled interest payments due on the Notes (or, in the
event any interest payments have been made on the Notes, an amount sufficient to
provide for payment in full of all interest payments then remaining up to and
including the sixth scheduled interest payment), the Pledgor may direct the
Collateral Agent in writing to release to the Pledgor or as it directs, an
amount less than or equal to such excess. Upon receipt of such written direction
from the Pledgor, together with the opinion of a nationally recognized firm of
independent certified public accountants with respect to the value of the
Pledged Securities, the Collateral Agent shall take such action as is necessary
to provide for the payment to the Pledgor of the amount requested from the
Pledge Account.
(d) Upon payment in full of the first six scheduled interest payments
on the Notes, the security interest in the Collateral evidenced by this Pledge
Agreement shall terminate and be of no further force and effect, and any and all
Collateral in the Pledge Account shall be released and transferred by the
Collateral Agent to the Pledgor in accordance with the Pledgor's instructions.
Furthermore, upon release of any Collateral from the Pledge Account in
accordance with the terms of this Pledge Agreement, whether upon release of
Collateral to the Paying Agent, to the Pledgor or otherwise, the security
interest evidenced by this Pledge Agreement in the Collateral so released shall
terminate and be of no further force and effect.
6. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby represents and
------------------------------
warrants that:
(a) The execution, delivery and performance by the Pledgor of this
Pledge Agreement has been duly authorized by all necessary corporate action and
does not contravene or constitute a default under any provision of applicable
law, regulation or the certificate of incorporation or the bylaws of the
Pledgor, or of any judgment, injunction, order, decree or any material agreement
or instrument binding upon the Pledgor, and does not result in the creation or
imposition of any Lien on any asset of the Pledgor, except for the security
interests granted under this Pledge Agreement.
(b) The Pledgor is the record and beneficial owner of the Collateral,
free and clear of any Lien or claims of any Person (except for the security
interest granted under this Pledge Agreement). No financing statement covering
the Pledged Securities is on file in any public office, other than financing
statements filed pursuant to this Pledge Agreement. This Pledge Agreement has
been duly executed and delivered by the Pledgor and constitutes a valid and
binding obligation of the Pledgor, enforceable against the Pledgor in accordance
with its terms, except as such enforceability may be
4
limited by the effect of any applicable bankruptcy, insolvency, reorganization,
fraudulent conveyances, moratorium or other similar laws affecting creditors'
rights generally or general principles of equity.
(c) Upon the delivery to the Collateral Agent of the certificates, if
any, representing the Pledged Securities, any filing of financing statements
required by the UCC and notation on the records of the Collateral Agent that it
holds the Pledged Securities as pledgee, the pledge of the Collateral pursuant
to this Pledge Agreement creates a valid and perfected first priority security
interest in and to the Collateral, securing the payment and performance of the
Obligations for the ratable benefit of the Holders of the Notes, enforceable as
such against all creditors of the Pledgor and any Persons purporting to purchase
any of the Collateral from the Pledgor.
(d) No consent of any other Person and no consent, authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body, is required either (i) for the pledge by the
Pledgor of the Collateral pursuant to this Pledge Agreement or for the
execution, delivery or performance of this Pledge Agreement by the Pledgor
(except for any filings and notations necessary to perfect the security interest
created hereby in the Collateral) or (ii) for the exercise by the Collateral
Agent of the rights provided for in this Pledge Agreement or the remedies in
respect of the Collateral pursuant to this Pledge Agreement. No litigation,
proceeding or investigation of or before any arbitrator or governmental
authority is pending or, to the knowledge of the Pledgor, threatened by or
against the Pledgor with respect to this Pledge Agreement or any of the
transactions contemplated hereby.
(e) The pledge of the Collateral pursuant to this Pledge Agreement is
not prohibited by any applicable law or government regulation, release,
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation, Regulations G,
T, U and X of the Board of Governors of the Federal Reserve System).
7. FURTHER ASSURANCES. The Pledgor agrees promptly to take such
------------------
actions and to execute and deliver or cause to be executed and delivered, or use
its best efforts to procure, such stock or bond powers, proxies, assignments,
instruments and such other or different writings as the Collateral Agent may
reasonably request, all in form and substance satisfactory to the Collateral
Agent, deliver any instruments to the Collateral Agent and take any other
actions that are necessary or, in the opinion of the Collateral Agent,
desirable, to perfect, continue the perfection of, confirm and assure the first
priority of the Collateral Agent's security interest in the Collateral, to
protect the Collateral against the rights, claims or interests of third persons,
or to otherwise effect the purposes of this Pledge Agreement. The Pledgor also
hereby authorizes the Collateral Agent to file any financing or continuation
statements with respect to the Collateral without the signature of the Pledgor
(to the extent permitted by applicable law). The Pledgor will pay all costs
incurred by the Collateral Agent in connection with any of the foregoing.
8. COVENANTS. The Pledgor covenants and agrees with the Collateral
---------
Agent and the Holders of the Notes from and after the date of this Pledge
Agreement until the earlier of payment in full in cash of (A) each of the first
six scheduled interest payments due on the Notes under the terms of the
Indenture or (B) all Obligations due and owing under the Indenture and the Notes
in the event such Obligations become due and payable prior to the payment of the
first six scheduled interest payments on the Notes, as follows:
(a) The Pledgor agrees that it (i) will not sell or otherwise dispose
of, or grant any option or other interest with respect to, any of the
Collateral, (ii) will not create or permit to exist any Lien upon or with
respect to any of the Collateral, except for the Liens created pursuant to this
Pledge Agreement, and (iii) will at all times be the sole beneficial owner of
the Collateral.
5
(b) The Pledgor agrees that it will not (i) enter into any agreement
or understanding that purports to or may restrict or inhibit the Collateral
Agent's rights or remedies hereunder, including, without limitation, the
Collateral Agent's right to sell or otherwise dispose of the Collateral, or (ii)
with regard to the Collateral, fail to pay or discharge any tax, assessment or
levy of any nature due with respect thereto later than five days prior to the
date of any proposed sale under any judgment, writ or warrant of attachment.
9. POWER OF ATTORNEY.
-----------------
(a) The Pledgor hereby appoints and constitutes the Collateral Agent
as the Pledgor's attorney-in-fact with full power of substitution to exercise to
the fullest extent permitted by law all of the following powers upon and at any
time after the occurrence and during the continuance of an Event of Default:
(i) collection of proceeds of any Collateral;
(ii) conveyance of any item of Collateral to any purchaser thereof as
specified herein;
(iii) giving of any notices or recording of any Liens pursuant to
Section 7 hereof;
(iv) making any payments or taking any acts pursuant to Section 10
hereof;
(v) paying or discharging taxes or Liens levied or placed upon the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Collateral Agent in its sole
discretion, and any such payments made by the Collateral Agent shall become
Obligations of the Pledgor to the Collateral Agent, due and payable immediately
upon demand; and
(vi) taking any acts pursuant to Section 13 hereof.
(b) The Collateral Agent's authority under this Section 9 shall
include, without limitation, the authority to endorse and negotiate any checks
or instruments representing proceeds of Collateral in the name of the Pledgor,
execute and give receipt for any certificate of ownership or any document
constituting Collateral, transfer title to any item of Collateral, to the extent
permitted by applicable law, sign the Pledgor's names on all financing
statements or any other documents deemed necessary or appropriate by the
Collateral Agent to preserve, process or perfect the security interest in the
Collateral, and to file the same, and to prepare, sign the Pledgor's name and
file any notice of Lien, and to take any other actions arising from or incident
to the powers granted to the Collateral Agent in this Pledge Agreement. This
power of attorney is coupled with an interest and shall be irrevocable by the
Pledgor.
(c) The Pledgor acknowledges that the rights and responsibilities of
the Collateral Agent under this Pledge 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 Pledge Agreement shall, as
between the Collateral Agent and the Holders of the Notes, be governed by this
Pledge Agreement, but, as between the Collateral Agent and the Pledgor, the
Collateral Agent shall be conclusively presumed to be acting as agent for the
Holders of the Notes with full and valid authority so to act or refrain from
acting, and the Pledgor shall not be obligated or entitled to make any inquiry
respecting such authority.
6
(d) The Collateral Agent undertakes to perform such duties and only
such duties as are specifically set forth in this Pledge Agreement and no
implied covenants or obligations shall be read into this Pledge Agreement
against the Collateral Agent. The Collateral Agent shall not be deemed to have
knowledge of an Event of Default under the Indenture unless informed in writing
by the Pledgor or the Holder of any Note.
(e) The Collateral Agent shall not be required to exercise any
remedies hereunder unless requested in writing to do so by the Holders of a
majority in principal amount of the outstanding Notes and only if furnished with
indemnity reasonably satisfactory to the Collateral Agent. The Collateral Agent
may consult with counsel and shall not be liable for any action taken in good
faith in reliance upon advice of counsel except for gross negligence or willful
misconduct. The Collateral Agent makes no representation or warranty and shall
have not responsibility concerning the value or validity of the Collateral or
the validity or perfection of the pledge thereof or any security interest
therein. The provisions of Section 7.02(a)-(f) of the Indenture are
incorporated herein mutatis mutandi.
(f) The Collateral Agent may at any time on 30 days notice to the
Pledgor and the Holders of the Notes resign hereunder. Upon any such
resignation the Pledgor shall promptly appoint another financial institution
reasonably satisfactory to the Holders of a majority in principal amount or the
outstanding Notes to act as Collateral Agent hereunder and such resignation
shall become effective upon the acceptance of the appointment by the successor.
(g) The Collateral Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which a prudent
financial institution similarly situated would accord its own property, it being
understood that neither the Collateral Agent nor the Holders of the Notes shall
have responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not any such Person has or is deemed to have knowledge of
such matters, or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Collateral.
10. COLLATERAL AGENT MAY PERFORM. If the Pledgor fails to perform
----------------------------
any agreement contained herein, the Collateral Agent may, but shall not be
obligated to, itself perform or cause performance of such agreement, and the
expenses incurred by or on behalf of the Collateral Agent in connection
therewith shall be payable by the Pledgor under Section 14 hereof.
11. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and powers
----------------------------------------
granted to the Collateral Agent hereunder are being granted in order to preserve
and protect the security interest of the Collateral Agent and the Holders of
Notes in and to the Collateral granted hereby and shall not be interpreted to,
and shall not, impose any duties on the Collateral Agent in connection therewith
other than those imposed under applicable law.
12. INDEMNITY. The Pledgor shall indemnify, defend and hold harmless
---------
the Collateral Agent and its directors, officers, agents and employees from and
against all claims, actions, obligations, losses, liabilities and expenses,
including costs, fees and disbursements of counsel, the costs of investigations,
and claims for damages, arising from the Collateral Agent's performance under
this Pledge Agreement, except insofar as the same may have been caused by the
bad faith, gross negligence or willful misconduct of such indemnified Person.
The obligations of the Pledgor under this Section 12 shall survive the
resignation or removal of the Collateral Agent or the termination of this Pledge
Agreement.
7
13. REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall
------------------------------
have occurred:
(a) Upon the acceleration of the Notes in accordance with the terms of
the Indenture, the Collateral Agent shall have and may exercise with reference
to the Collateral any or all of the rights and remedies of a secured party under
the UCC, and as otherwise granted herein or under any other applicable law or
under any other agreement executed by Pledgor, including, without limitation,
the right and power to sell, at public or private sale or sales, or otherwise
dispose of, or otherwise utilize the Collateral and any part or parts thereof,
in any manner authorized or permitted under the UCC after default by a debtor,
and to apply the proceeds thereof toward payment of any costs and expenses and
attorneys' fees and expenses thereby incurred by the Collateral Agent and toward
payment of the Obligations in such order or manner as the Collateral Agent may
elect. The purchaser of any or all Collateral so sold shall thereafter hold the
same absolutely, free from any claim, encumbrance or right of any kind
whatsoever created by or through the Pledgor. Unless any of the Collateral
threatens, in the reasonable judgment of the Collateral Agent, to decline
speedily in value or is or becomes of a type sold on a recognized market, the
Collateral Agent shall give the Pledgor reasonable notice of the time and place
of any public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Collateral conducted in
conformity with reasonable commercial practices of banks, insurance companies,
commercial finance companies, or other financial institutions disposing of
property similar to the Collateral shall be deemed to be commercially
reasonable. Any requirements of reasonable notice shall be met if such notice
is mailed to the Pledgor as provided in Section 17 herein, at least fifteen (15)
days before the time of the sale or disposition. The Collateral Agent or any
Holder of Notes may, in its own name or in the name of a designee or nominee,
buy any of the Collateral at any public sale and, if permitted by applicable
law, at any private sale. All expenses (including court costs and reasonable
attorneys' fees, expenses and disbursements) of, or incident to, the enforcement
of any of the provisions hereof shall be recoverable from the proceeds of the
sale or other disposition of the Collateral.
(b) The Pledgor further agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Collateral pursuant to this Section 13 valid and
binding and in compliance with any and all other applicable requirements of law.
The Pledgor further agrees that a breach of any of the covenants contained in
this Section 13 will cause irreparable injury to the Collateral Agent and the
Holders of Notes, that the Collateral Agent and the Holders of Notes have no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 13 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants, except for a defense that no Event of Default has occurred.
(c) All rights to marshaling of assets of the Pledgor, including any
such right with respect to the Collateral, are hereby waived by the Pledgor.
The Pledgor shall not contest or support any other Person in contesting the
validity or priority of the security interests created under this Pledge
Agreement.
14. FEES AND EXPENSES. The Pledgor shall, upon demand, pay to the
-----------------
Collateral Agent the amount of its fees (which shall be in an amount previously
agreed by the Pledgor and the Collateral Agent) and any and all expenses
(including, without limitation, the reasonable fees, expenses and disbursements
of counsel, experts and agents retained by the Collateral Agent) that the
Collateral Agent may incur in connection with (i) the administration of this
Pledge Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
8
exercise or enforcement of any of the rights of the Collateral Agent and the
Holders of the Notes hereunder, or (iv) the failure by the Pledgor to perform or
observe any of the provisions hereof.
15. SECURITY INTEREST ABSOLUTE. All rights of the Collateral Agent
--------------------------
and the Holders of the Notes, and the security interests created hereunder, and
all obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(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 Indenture;
(c) any exchange, surrender, release or non-perfection of any Liens on
any other Collateral for all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Pledgor in respect of the Obligations or of
this Pledge Agreement.
16. AUTHORITY OF THE COLLATERAL AGENT. The Collateral Agent shall
---------------------------------
have and be entitled to exercise all powers hereunder that are specifically
granted to the Collateral Agent by the terms hereof, together with such powers
as are incident thereto. The Collateral Agent may perform any of its duties
hereunder or in connection with the Collateral by or through agents or employees
and shall be entitled to retain counsel and to act in reliance upon the advice
of counsel concerning all such matters. None of the Collateral Agent, any
director, officer, employee, attorney or agent of the Collateral Agent nor the
Holders of the Notes shall be liable to the Pledgor for any action taken or
omitted to be taken by it or them hereunder, except for its own bad faith, gross
negligence or willful misconduct, nor shall the Collateral Agent be responsible
for the validity, effectiveness or sufficiency hereof or of any document or
security furnished pursuant hereto. The Collateral Agent and its directors,
officers, employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document believed by it or them to be genuine and
correct and to have been signed or sent by the proper Person or Persons. The
Collateral Agent and its directors, officers, employees, attorneys and agents
shall be entitled to rely on the opinion of a nationally recognized firm of
independent certified public accountants with respect to the dollar amount of
the Pledged Securities.
17. NOTICES. Any communication, notice or demand to be given
-------
hereunder shall be duly given hereunder if given in the form and manner, and
delivered to the address set forth in the Indenture, or in such other form and
manner or to such other address as shall be designated by any party hereto to
each other party hereto in a written notice delivered in accordance with the
terms of the Indenture.
18. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of the
----------------------------
Collateral Agent to exercise, and no delay in exercising, any right, remedy or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise by the Collateral Agent of any right, remedy or power hereunder
preclude any other or future exercise of any other right, remedy or power. Each
and every right, remedy and power hereby granted to the Collateral Agent or
allowed it by law or other agreement shall be cumulative and not exclusive the
one of any other, and may be exercised by the Collateral Agent from time to
time.
9
19. BENEFITS OF PLEDGE AGREEMENT. Nothing in this Pledge Agreement,
----------------------------
whether express or implied, shall give to any Person other than the parties
hereto and their successors hereunder, and the Holders of the Notes, any benefit
or any legal or equitable right, remedy or claim under this Pledge Agreement.
20. APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
-------------------------------------------------------------
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK. TO INDUCE THE ESCROW AGENT TO ENTER INTO THIS PLEDGE
AGREEMENT, THE PLEDGOR HEREBY IRREVOCABLY AGREES THAT, SUBJECT TO THE ESCROW
AGENT'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS THAT IN ANY
MANNER ARISE OUT OF OR IN CONNECTION WITH OR ARE IN ANY WAY RELATED TO THIS
PLEDGE AGREEMENT SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE COUNTY OF
NEW YORK, STATE OF NEW YORK. THE PLEDGOR HEREBY CONSENTS TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW
YORK. THE PLEDGOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL TO THE PLEDGOR'S NOTICE ADDRESS
AS SPECIFIED HEREIN. THE PLEDGOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO
TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BETWEEN THE PLEDGOR AND THE
ESCROW AGENT IN ACCORDANCE WITH THIS PARAGRAPH. EACH OF THE PLEDGOR AND THE
ESCROW AGENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING THAT IN ANY MANNER ARISES OUT OF OR IN
CONNECTION WITH OR IS IN ANY WAY RELATED TO THIS PLEDGE AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN.
(b) THE PROVISIONS OF THIS SECTION 20 ARE A MATERIAL INDUCEMENT FOR
THE ESCROW AGENT ENTERING INTO THIS PLEDGE AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY. THE PLEDGOR HEREBY ACKNOWLEDGES THAT IT HAS REVIEWED THE
PROVISIONS OF THIS SECTION 20 WITH INDEPENDENT COUNSEL.
21. CALCULATION OF INTEREST. For purposes of this Pledge Agreement,
-----------------------
all calculations of the first six scheduled interest payments on the Notes shall
be calculated on the basis that interest will accrue on the Notes at the rate of
12 1/4% per annum and will be payable semi-annually in arrears on October 1,
1998, April 1, 1999, October 1, 1999, April 1, 2000, October 1, 2000 and April
1, 2001. Interest on the Notes will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
22. EXECUTION IN COUNTERPARTS. This Pledge Agreement may be executed
-------------------------
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute one and the same instrument.
23. SETTLEMENT. Amounts, if any, held in the Pledge Account pending
----------
settlement of purchase of the Pledged Securities shall constitute Collateral
hereunder, shall be held by the Collateral Agent for the benefit of the Holders
of the Notes and a portion thereof equal to the aggregate price paid for such
Pledged Securities shall be released by the Collateral Agent (without further
direction or instruction required from any other party hereto) against delivery
of such Pledged Securities, and any
10
excess funds remaining in the Pledge Account after giving effect to such
settlement shall be promptly forwarded pursuant to written instructions of the
Company.
[Signature page(s) follow]
11
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Pledge and Collateral Agreement as of the day first written above.
AMSC ACQUISITION COMPANY, INC.,
as Pledgor
By:
---------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
---------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
By:
---------------------------
Name:
Title:
Pledge and Security Agreement signature page(s)
