Exhibit 10.8
PLEDGE AND SECURITY AGREEMENT dated as of June 11, 1999, made by
Xxxxxx, Inc., a Colorado corporation (the "Pledgor"), in favor of Xxxxx
Fargo Bank, National Association (the "Secured Party").
Reference is hereby made to the Credit Agreement dated as of June
11, 1999 (as amended, supplemented or modified from time to time, the
"Credit Agreement") among the Pledgor, Zuellig Botanical Extracts, Inc.,
ZetaPharm, Inc., Xxxxxx Drug Company, Inc., Xxxxxxx Laboratories, Inc. and
the Secured Party. Terms used herein as defined terms and not otherwise
defined herein shall have the meanings given thereto in the Credit
Agreement.
The Secured Party has agreed to make Loans to the Borrowers upon
the terms and subject to the conditions specified in the Credit Agreement.
The obligation of the Secured Party to make Loans is conditioned on, among
other things, the execution and delivery by the Pledgor of an agreement in
the form hereof.
NOW, THEREFORE, the parties agree as follows:
Definitions. In addition to the terms defined above, the following words
and terms shall have the respective meanings as follows:
"Agreement" shall mean this Pledge and Security Agreement, as it
shall be amended, supplemented or otherwise modified from time to time.
"Obligations" shall mean, collectively, (a) the due and punctual
payment of (i) the principal of, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans when and as due, whether at maturity, by
acceleration, upon one or more dates set for repayment or prepayment or
otherwise, (ii) each payment required to be made by the Borrowers under the
Credit Agreement in respect of any Letter of Credit when and as due,
including payments in respect of reimbursement of disbursements, interest
thereon and obligations to provide cash collateral and (iii) all other
monetary obligations, including fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), of the
Borrowers under the Credit Agreement or any other Loan Documents (including
obligations of the Pledgor under this Agreement), and (b) the due and
punctual performance of all covenants, agreements, obligations and
liabilities of the Borrowers under or pursuant to the Credit Agreement and
of the Borrowers under the other Loan Documents (including, in the case of
the Pledgor, this Agreement).
Terms Generally. The definitions in Section 1.01 shall apply equally to
both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation." All
references herein to Articles, Sections, Exhibits, and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules
to, this Agreement unless the context shall otherwise require. References
to provisions of statutes, rules, regulations, and other documents shall be
deemed to include successor provisions thereto. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature
shall be construed in accordance with GAAP, as in effect from time to time.
Pledge and Grant of Security Interest. (a) As security for the payment and
performance in full of the Obligations, the Pledgor hereby transfers,
grants, bargains, sells, conveys, hypothecates, pledges, sets over and
delivers unto the Secured Party, a first priority security interest in the
shares of capital stock listed on Schedule I and any shares of stock of any
Subsidiary obtained in the future by the Pledgor, and the certificates
representing all such shares (the "Pledged Stock"), (ii) all other property
that may be delivered to and held by the Secured Party pursuant to the
terms hereof, (iii) subject to Section 2.05, all payments of dividends and
distributions, including all cash, instruments and other property, from
time to time received, receivable or otherwise paid or distributed, in
respect of, or in exchange for or upon the conversion of the securities and
other property referred to in clause (i) or (ii) above, (iv) subject to
Section 2.05, all rights and privileges of the Pledgor with respect to the
securities and other property referred to in clauses (i), (ii) and (iii)
above, (v) any and all custodial accounts or other safekeeping accounts in
which any of the foregoing property (and any property described in the
following clause (vi)) may be deposited, and any security entitlements or
other rights relating thereto, and (vi) all proceeds of any of the
foregoing (the items referred to in clauses (i) through (vi) above being
collectively referred to as the "Collateral").
(b) Upon delivery to the Secured Party, any stock certificates, notes
or other securities now or hereafter included in the Collateral (the
"Pledged Securities") shall be accompanied by undated stock powers duly
executed in blank or other instruments of transfer satisfactory to the
Secured Party and by such other instruments and documents as the Secured
Party may request. All other property comprising part of the Collateral
shall be accompanied by proper instruments of assignment duly executed by
the Pledgor and such other instruments or documents as the Secured Party
may request. Each delivery of Pledged Securities shall be accompanied by a
schedule describing the securities theretofore and then being pledged
hereunder, which schedule shall be attached hereto as Schedule I, and made
a part hereof (provided that the failure to deliver any such schedule shall
not impair the security interest hereunder of the Secured Party in any
Pledged Securities). Each schedule so delivered (except to the extent in
error) shall supersede any prior schedules so delivered.
Deliveries. The Pledgor agrees promptly to deliver or cause to be
delivered to the Secured Party any and all Pledged Securities, and any and
all certificates or other instruments or documents representing Collateral,
and any other instruments referred to in Section 2.01(b).
Representations; Warranties; Covenants. The Pledgor hereby represents,
warrants and covenants to and with the Secured Party that:
the Pledged Stock has been delivered to the Secured Party in pledge
hereunder, and represents that percentage as set forth in Schedule I of the
issued and outstanding shares of each class of the capital stock of the
issuer with respect thereto;
the Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Collateral indicated on Schedule I, (ii)
holds the same free and clear of all Liens, except for the security
interest granted hereunder, (iii) will make no assignment, pledge,
hypothecation or transfer of or create or suffer to exist any security
interest in or other Lien on, the Collateral, other than pursuant hereto,
and (iv) subject to Section 2.05, will cause any and all Collateral to be
forthwith deposited with the Secured Party and pledged or otherwise subject
to the security interest created hereunder;
the Pledgor (i) has the power and authority to pledge and grant a security
interest in the Collateral in the manner hereby done or contemplated and
(ii) will defend its title or interest thereto or therein and the Lien of
the Secured Party against any and all other Liens, however arising, of all
persons whomsoever;
no consent or approval (i) of any Governmental Authority or any securities
exchange or (ii) of any other Person except any such Person whose consent
has been obtained in writing and delivered to the Secured Party, was or is
necessary to the validity of the pledge or grant of a Security Interest
effected hereby;
when the Pledged Securities, certificates, instruments or other documents
representing or evidencing the Collateral are delivered to the Secured
Party in accordance with this Agreement, the Secured Party will have a
valid and perfected first Lien upon and security interest in such Pledged
Securities as security for the payment and performance of the Obligations;
and
the pledge and the grant of a security interest effected hereby are
effective to vest in the Secured Party the rights of the Secured Party in
the Collateral as set forth herein.
Registration in Nominee Name, Denominations; Further Assurances. (a) The
Secured Party shall have the right (in its sole and absolute discretion) to
hold the Pledged Securities in its own name, the name of its nominee or the
name of the Pledgor, endorsed or assigned in blank or in favor of the
Secured Party. The Pledgor will promptly give to the Secured Party copies
of any notices or other communications received by it with respect to
Pledged Securities. The Secured Party shall at all times have the right to
exchange the certificates representing Pledged Securities for certificates
of smaller or larger denominations for any purpose consistent with this
Agreement (and the surrender of any certificates to the issuer or any agent
thereof for such purpose shall not constitute a release of the security
interest of the Secured Party in any such Pledged Securities represented
thereby).
(b) The Pledgor agrees, at its expense, to execute, acknowledge,
deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Secured Party may from time to
time reasonably request to better assure, preserve, protect and perfect the
pledge and the security interest and the rights and remedies created
hereby, including the payment of any fees and taxes required in connection
with the execution and delivery of this Agreement, the pledge and the
granting of the security interest hereunder and the filing of any financing
statements or other documents in connection herewith.
Voting Rights; Dividends. (a) Unless and until an Event of Default shall
have occurred and be continuing;
(i) The Pledgor shall be entitled to exercise any and
all voting and/or other consensual rights and powers accruing to it as
owner of the Pledged Securities for any purpose consistent with the terms
of this Agreement, the Credit Agreement and the other Loan Documents;
provided, however, that such action would not adversely affect the rights
inuring to a holder of the Pledged Securities or the rights and remedies of
the Secured Party under this Agreement or any other Loan Document or the
ability of the Secured Party to exercise the same.
(ii) The Pledgor shall be entitled to receive and
retain any and all cash dividends and distributions paid on the Pledged
Securities to the extent and only to the extent that such cash dividends
are permitted by, and otherwise paid in accordance with, the terms and
conditions of the Credit Agreement, the other Loan Documents and applicable
laws. All noncash dividends and distributions, and all dividends and
distributions (whether in cash or otherwise) in connection with a partial
or total liquidation or dissolution, return of capital, capital surplus or
paid-in surplus, and all other payments, dividends, and distributions made
on or in respect of the Pledged Securities, whether paid or payable in cash
or otherwise, whether resulting from a subdivision, combination or
reclassification of the outstanding capital stock of the issuer of any
Pledged Securities or received in exchange for Pledged Securities or any
part thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such issuer
may be a party or otherwise, shall be and become part of the Collateral,
and, if received by the Pledgor, shall not be commingled by the Pledgor
with any of its other funds or property but shall be held separate and
apart therefrom, shall be held in trust for the benefit of the Secured
Party and shall be forthwith delivered to the Secured Party in the same
form as so received (with any necessary endorsement) (any such cash to be
applied in accordance with Section 2.07).
(b) Upon the occurrence and during the continuation of an
Event of Default, all rights of the Pledgor to exercise the voting and
consensual rights and powers it is entitled to exercise pursuant to
paragraph (a)(i) of this Section 2.05, shall cease, and all such rights
shall thereupon become vested in the Secured Party, which shall have the
sole and exclusive right and authority to exercise such voting and
consensual rights and powers.
(c) Upon the occurrence and during the continuation of an
Event of Default, all rights of the Pledgor to dividends and other
distributions that the Pledgor is authorized to receive pursuant to the
first sentence of paragraph (a)(ii) above shall cease, and all such rights
shall thereupon become vested in the Secured Party, which shall have the
sole and exclusive right and authority to receive and retain such dividends
and other distributions. All dividends and other distributions received by
the Pledgor contrary to the provisions of this Section 2.05 shall be held
in trust for the benefit of the Secured Party, shall be segregated from
other property or funds of the Pledgor and shall be forthwith delivered to
the Secured Party upon demand in the same form as so received (with any
necessary endorsement) and shall be applied in accordance with the
provisions of Section 2.07.
Possession, Sale of Collateral, Etc.
Upon the occurrence and during the continuation of an Event of Default, the
Secured Party may sell or cause to be sold, whenever it shall decide, in
one or more sales or parcels, at such prices as it may deem best, and for
cash, on credit or for future delivery, without assumption of any credit
risk, all or any portion of the Collateral, at any broker's board or at
public or private sale, without demand of performance or notice of
intention to sell or of time or place of sale (except ten (10) days'
written notice to the Pledgor of the time and place of such sale, which the
Pledgor hereby agrees to be commercially reasonable, and such other notices
as may be required by applicable statute and cannot be waived), and any
Person may be the purchaser of all or any portion of the Collateral so sold
and thereafter hold the same absolutely, free from any claim or right of
whatever kind, including any equity of redemption, of the Pledgor, any such
demand, notice, claim, right or equity being hereby expressly waived and
released. The Secured Party shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders or
purchasers to persons who will represent and agree that they are purchasing
the Collateral for their own account for investment and not with a view to
the distribution or sale thereof. At any sale or sales made pursuant to
this Agreement, the Secured Party may bid for or purchase, free from any
claim or right of whatever kind, including any equity of redemption of the
Pledgor, any such demand, notice, claim, right or equity being hereby
expressly waived and released, all or any portion of the Collateral offered
for sale, and may make any payment on account thereof by using any claim
for money then due and payable to the Secured Party by the Pledgor as a
credit against the purchase price. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Secured Party may (in its sole and absolute
discretion) determine. The Secured Party shall not be obligated to make
any sale of any Collateral if it shall determine not to do so, regardless
of the fact that notice of sale of such Collateral shall have been given.
The Secured Party may, without notice or publication, except as may be
required by applicable statute and cannot be waived, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was
so adjourned. In case any sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be
retained by the Secured Party until the sale price is paid in full by the
purchaser or purchasers thereof, but the Secured Party shall not incur any
liability in case any such purchaser or purchasers shall fail to take up
and pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. For purposes hereof, (a) a
written agreement to purchase the Collateral or any portion thereof shall
be treated as a sale thereof, (b) the Secured Party shall be free to carry
out such sale pursuant to such agreement and (c) the Pledgor shall not be
entitled to the return of the Collateral or any portion thereof subject
thereof, notwithstanding the fact that after the Secured Party shall have
entered into such an agreement all Events of Default shall have been
remedied and the Obligations paid in full. The Secured Party shall in any
such sale make no representations or warranties with respect to the
Collateral or any part thereof, and shall not be chargeable with any of the
obligations or liabilities of the Pledgor. As an alternative to exercising
the power of sale herein conferred upon it, the Secured Party may proceed
by a suit or suits at law or in equity to foreclose upon the Collateral and
to sell the Collateral or any portion thereof pursuant to a judgment or
decree of a court or courts having competent jurisdiction or pursuant to a
proceeding by a court-appointed receiver. Any sale pursuant to the
provisions of this Section shall be deemed to conform to the commercially
reasonable standards as provided in Section 9-504(3) of the Uniform
Commercial Code as in effect in the State of California or its equivalent
in other jurisdictions.
The Pledgor hereby agrees that it will indemnify and hold the Secured
Party, and its officers, directors, employees, agents and representatives
harmless (except for its or his own wilful misconduct or gross negligence)
from and against any and all claims with respect to the Collateral asserted
both before and after the taking of actual possession or control of the
Collateral by the Secured Party pursuant to this Agreement, or arising out
of any act or omission of any party other than the Secured Party prior to
such taking of actual possession or control by the Secured Party, or
arising out of any act or omission of the Pledgor, or any agents thereof,
before or after the commencement of such actual possession or control by
the Secured Party. In any action hereunder the Secured Party shall be
entitled to the appointment, without notice, of a receiver to take
possession of all or any portion of the Collateral and to exercise such
powers as the court shall confer upon such receiver. Notwithstanding the
foregoing, upon the occurrence of an Event of Default, and during the
continuation of such Event of Default, the Secured Party shall be entitled
to apply, without prior notice to the Pledgor, any cash or cash items
constituting Collateral in the possession of the Secured Party to payment
of the Obligations.
Application of Proceeds.
The Pledgor hereby agrees that it shall, upon the occurrence and during the
continuation of an Event of Default, (i) immediately turn over to the
Secured Party any instruments (with appropriate endorsements) or other
items constituting Collateral not then in the possession of the Secured
Party, the possession of which is required for the perfection of the
Secured Party's security interest, all of which shall be held in trust for
the benefit of the Secured Party and not commingled prior to its coming
into the Secured Party's possession, and (ii) take all steps necessary to
cause all sums, monies, royalties, fees, commissions, charges, payments,
advances, income, profits and other amounts constituting proceeds of any
Collateral to be deposited directly in an account of the Pledgor with the
Secured Party and to cause the same to be applied to the satisfaction of
the Obligations.
All proceeds from any collection or sale of the Collateral pursuant hereto,
all Collateral consisting of cash, and all deposits in accounts of the
Pledgor with the Secured Party shall be applied (i) first, to the payment
of the fees and expenses of the Secured Party incurred pursuant to this
Agreement or any other Loan Document, including costs and expenses of
collection or sale, reimbursement of any advances, and any other costs or
expenses in connection with the exercise of any rights or remedies
hereunder or thereunder (including reasonable fees and disbursements of
counsel, including counsel employed in-house by the Secured Party), (ii)
second, to the payment in full of the Obligations owed to the Secured Party
in respect of the Loans and LC Disbursements, and (iii) third, to the
payment of the Obligations (other than those referred to above). Any
amounts remaining after such applications shall be remitted to the Pledgor
or as a court of competent jurisdiction may otherwise direct. The Secured
Party shall have absolute discretion as to the time of application of any
such proceeds, cash or balances in accordance with this Agreement.
Power of Attorney.
The Pledgor does hereby irrevocably make, constitute and appoint the
Secured Party or any officer or designee thereof its true and lawful
attorney-in-fact with full power in the name of the Secured Party, and of
the Pledgor, with power of substitution, to, upon the occurrence and during
the continuation of an Event of Default, communicate with any issuer of
Pledged Securities; to commence or prosecute any suits, actions or
proceedings to collect or otherwise realize upon any Collateral or enforce
any rights in respect thereof; to settle, compromise, adjust or defend any
claims in respect of the Collateral; to notify any issuer of Pledged
Securities or otherwise require it to make payment directly to the Secured
Party; to use, sell, assign, transfer, pledge, make any agreement with
respect to or otherwise deal with all or any of the Collateral, and to do
any and all other acts necessary or proper to carry out the intent of this
Agreement and each other Loan Document and the grant, confirmation and
continuation of the security interests hereunder and thereunder. Such
power of attorney is coupled with an interest and is irrevocable, and shall
survive the bankruptcy, insolvency or dissolution of the Pledgor. Nothing
herein contained shall be construed as requiring or obligating the Secured
Party to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Secured Party, or to present or
file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in
respect thereof or any property covered thereby. The Secured Party shall
be accountable only for amounts actually received as a result of the
exercise of the powers granted to it herein, and neither it nor its
officers, directors, employees or agents shall be responsible to the
Pledgor for any act or failure to act hereunder, except for its own gross
negligence or willful misconduct. The provisions of this Section shall in
no event relieve the Pledgor of any of its obligations hereunder or under
the other Loan Documents with respect to the Collateral or any part thereof
or impose any obligation on the Secured Party to proceed in any particular
manner with respect to the Collateral or any part thereof, or in any way
limit the exercise by any Secured Party of any other or further right that
it may have on the date of this Agreement or hereafter, whether hereunder,
under any other Loan Document, by law or otherwise. Any sale of Collateral
pursuant to the provisions of this Section shall be deemed to conform to
the commercially reasonable standards as provided in Section 9-504(3) of
the Uniform Commercial Code as in effect in the State of California or its
equivalent in other jurisdictions.
Without limiting the preceding paragraph, the Pledgor does hereby further
irrevocably make, constitute and appoint the Secured Party or any officer
or designee thereof its true and lawful attorney-in-fact with full power in
the name of the Secured Party, and of the Pledgor, with power of
substitution, (i) to enforce all of the Pledgor's rights under and pursuant
to all agreements with respect to the Collateral, all for the sole benefit
of the Secured Party, (ii) to enter into and perform such agreements as may
be reasonably necessary in order to carry out the terms, covenants and
conditions of this Agreement that are required to be observed or performed
by the Pledgor, (iii) to execute such other and further mortgages, pledges
and assignments of the Collateral and filings or recordations in respect
thereof as the Secured Party may require for the purpose of protecting,
maintaining or enforcing the security interest of the Secured Party
hereunder, (iv) to act as authorized in the following Section, and (v) to
do any and all other things reasonably necessary or proper to carry out the
intention of this Agreement and the grant, confirmation, continuation and
perfection of the security interests hereunder. Such power of attorney is
coupled with an interest and is irrevocable, and shall survive the
insolvency, bankruptcy, or dissolution of the Pledgor.
Financing Statements, Direct Payments, Confirmation. The Pledgor hereby
authorizes the Secured Party to file Uniform Commercial Code financing
statements (and any other filings) required in connection with the
perfection or preservation of the security interest hereunder in respect of
all or any part of the Collateral, and amendments thereto and continuations
thereof with regard to such Collateral, without the Pledgor's signature,
or, in the alternative, to execute such items on behalf of the Pledgor
pursuant to the powers of attorney granted in the preceding Section. The
Pledgor further authorizes the Secured Party to confirm with any issuer of
Pledged Securities the amounts payable to the Pledgor with regard to the
Collateral. The Pledgor hereby further authorizes the Secured Party upon
the occurrence and during the continuation of an Event of Default to notify
any issuer of Pledged Securities that all sums payable to the Pledgor
relating to the Collateral shall be paid directly to the Secured Party.
Termination. The security interest granted hereunder shall terminate when
all the Obligations have been fully, finally and indefeasibly paid and
performed, the Total Exposure of the Secured Party shall be zero, and when
the Commitments of the Secured Party shall have terminated. Thereupon, the
Secured Party will return to the Pledgor the Pledged Securities and execute
and deliver, at the Pledgor's expense, Uniform Commercial Code termination
statements reasonably requested by the Pledgor evidencing the release of
the security interest hereunder, all without recourse to or warranty by the
Secured Party.
Remedies Not Exclusive. The remedies conferred upon or reserved to the
Secured Party in this Article and elsewhere in this Agreement are intended
to be in addition to, and not in limitation of, any other remedy available
to the Secured Party.
Securities Laws, etc. In view of the position of the Pledgor in relation
to the Pledged Securities, or because of other current or future
circumstances, issues may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statue as from time to
time in effect being called the "Federal Securities Laws") with respect to
any disposition of the Pledged Securities permitted hereunder. The Pledgor
understands that compliance with the Federal Securities Laws might very
strictly limit the course of conduct of the Secured Party if the Secured
Party were to attempt to dispose of all or any part of the Pledged
Securities, and might also limit the extent to which or the manner in which
any subsequent transferee of any Pledged Securities could dispose of the
same. Similarly, there may be other legal restrictions or limitations
affecting the Secured Party in any attempt to dispose of all or part of the
Pledged Securities under applicable Blue Sky or other state securities laws
or similar laws analogous in purpose or effect. The Pledgor recognizes
that in light of the foregoing restrictions and limitations the Secured
Party may, with respect to any sale of the Pledged Securities, limit the
purchasers to those who will agree, among other things, to acquire such
Pledged Securities for their own account, for investment, and not with a
view to the distribution or resale thereof. The Pledgor acknowledges and
agrees that in light of the foregoing restrictions and limitations, the
Secured Party, in its sole and absolute discretion, (a) may proceed to make
such a sale whether or not a registration statement for the purpose of
registering such Pledged Securities or part thereof shall have been filed
under the Federal Securities Laws and (b) may approach and negotiate with a
single potential purchaser to effect such sale. The Pledgor acknowledges
and agrees that any such sale might result in prices and other terms less
favorable to the seller than if such sale were a public sale without such
restrictions. In the event of any such sale, the Secured Party shall incur
no responsibility or liability for selling all or any part of the Pledged
Securities at a price that the Secured Party, in its sole and absolute
discretion, may in good xxxxx xxxx reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might
have been realized if the sale were deferred until after registration as
aforesaid or if more than a single purchaser were approached. The
provisions of this Section will apply notwithstanding the existence of a
public or private market upon which the quotations or sales prices may
exceed substantially the price at which the Secured Party sells.
No Assumption of Liability. The pledge and security interest hereunder is
granted as security only and shall not subject the Secured Party to, or in
any way alter or modify, any obligation or liability of the Pledgor with
respect to or arising out of any of the Collateral. The Pledgor shall
remain liable to, at its own cost and expense, duly and punctually observe
and perform all the conditions and obligations to be observed and performed
by it under each contract, agreement or instrument relating to the
Collateral, all in accordance with the terms and conditions thereof, and
the Pledgor agrees to indemnify and hold harmless the Secured Party from
and against any and all liability for such performance.
MISCELLANEOUS
No Discharge. All rights of the Secured Party hereunder, the security
interest granted hereunder, and the obligations of the Pledgor under this
Agreement shall be absolute and unconditional and shall remain in full
force and effect without regard to, and shall not be released, discharged
or in any way diminished by (i) any lack of validity or enforceability of
the Credit Agreement, any other Loan Document (including this Agreement),
any agreement with respect to any of the Obligations or any other agreement
or instrument relating to any of the foregoing, (ii) any change in the
time, manner or place of payment of, or in any other term of, all or any of
the Obligations or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Loan Document or any other
agreement or instrument relating to the foregoing, (iii) any exchange,
release or nonperfection of any other collateral, or any release or
amendment or waiver of or consent to or departure from any guarantee, for
all or any of the Obligations, (iv) any exercise or nonexercise by the
Secured Party of any right, remedy, power or privilege under or in respect
of this Agreement, any other Loan Document or applicable law, including,
without limitation, any failure by the Secured Party to setoff or release
in whole or in part any balance of any deposit account or credit on its
books in favor of any Borrower or any waiver, consent, extension,
indulgence or other action or inaction in respect of any thereof, or (v)
any other act or thing or omission or delay to do any other act or thing
which may or might in any manner or to any extent vary the risk of any
Borrower or would otherwise, but for this specific provision to the
contrary, operate as a discharge of or exonerate the Pledgor as a matter of
law.
Amendment; Waiver. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by the Pledgor therefrom, shall in
any event be effective unless the same shall be in writing and signed by
the Secured Party. Any such waiver, consent or approval shall be effective
only in the specific instance and for the purpose for which given. No
notice to or demand on the Pledgor in any case shall entitle the Pledgor to
any other or further notice or demand in the same, similar or other
circumstances. No waiver by the Secured Party of any breach or default of
or by the Pledgor under this Agreement shall be deemed a waiver of any
other previous breach or default or any thereafter occurring.
Section 3.03. Survival; Severability.
All covenants, agreements, representations and warranties made by the
Pledgor herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or by the
Pledgor or any other Borrower in or pursuant to any other Loan Document
shall be considered to have been relied upon by the Secured Party and shall
survive the making by the Secured Party of the Loans, and the execution and
delivery to the Secured Party of any Notes evidencing such Loans,
regardless of any investigation made by the Secured Party or on its behalf,
and shall continue in full force and effect as long as the principal of or
any accrued interest on any Loan or any other fee or amount payable under
this Agreement or any other Loan Document is outstanding and unpaid or the
LC Exposure does not equal zero and as long as the Commitments have not
been terminated.
Any provision of this Agreement that is illegal, invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such illegality, invalidity or unenforceability without
invalidating the remaining provisions hereof or affecting the legality,
validity or enforceability of such provisions in any other jurisdiction.
The parties hereto agree to negotiate in good faith to replace any illegal,
invalid or unenforceable provision of this Agreement with a legal, valid
and enforceable provision that, to the extent possible, will preserve the
economic bargain of this Agreement, or to otherwise amend this Agreement to
achieve such result.
Successors and Assigns. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of the Pledgor or the Secured Party that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns. The Pledgor may not assign or transfer
any of its rights or obligations hereunder or any interest herein or in the
Collateral except as expressly contemplated by this Agreement or the other
Loan Documents (and any such attempted assignment shall be void).
Arbitration. (a) Agreement. Upon the demand of either the Secured Party
or the Pledgor, any Dispute shall be resolved by binding arbitration
(except as set forth in paragraph (e) below) in accordance with the terms
of this Agreement. A "Dispute" shall mean any action, dispute, claim or
controversy of any kind, whether in contract or tort, statutory or common
law, legal or equitable, now existing or hereafter arising under or in
connection with, or in any way pertaining to, this Agreement or any of the
other Loan Documents, or any past, present or future extensions of credit
and other activities, transactions or obligations of any kind related
directly or indirectly to this Agreement or any of the other Loan
Documents, including without limitation, any of the foregoing arising in
connection with the exercise of any self-help, ancillary or other remedies
pursuant to this Agreement or any of the other Loan Documents. Either
party may by summary proceedings bring an action in court to compel
arbitration of a Dispute. A party who fails or refuses to submit to
arbitration following a lawful demand by the other party shall bear all
costs and expenses incurred by such other party in compelling arbitration
of any Dispute.
Governing Rules. Arbitration proceedings shall be administered by the
American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved
in accordance with the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice of law provision in
this Agreement or any of the other Loan Documents. The arbitration shall
be conducted at a location in California selected by the AAA or other
administrator. If there is any inconsistency between the terms hereof and
any such rules, the terms and procedures set forth herein shall control.
All statutes of limitation applicable to any Dispute shall apply to any
arbitration proceeding. All discovery activities shall be expressly
limited to matters directly relevant to the Dispute being arbitrated.
Judgment upon any award rendered in an arbitration may be entered in any
court having jurisdiction; provided however, that nothing contained herein
shall be deemed to be a waiver by the Secured Party of the protections
afforded to it under 12 U.S.C. Paragraph 91 or any similar applicable state
law.
No Waiver; Provisional Remedies, Self-Help and Foreclosure. No provision
hereof shall limit the right of the Secured Party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or
personal property Collateral or security, or to obtain provisional or
ancillary remedies, including without limitation injunctive relief,
sequestration, attachment, garnishment or the appointment of a receiver,
from a court of competent jurisdiction before, after or during the pendency
of any arbitration or other proceeding. The exercise of any such remedy
shall not waive the right of any party to compel arbitration or reference
hereunder.
Arbitrator Qualifications and Powers; Awards. Arbitrators must be active
members of the California State Bar or retired judges of the state or
federal judiciary of California, with expertise in the substantive laws
applicable to the subject matter of the Dispute. Arbitrators are empowered
to resolve Disputes by summary rulings in response to motions filed prior
to the final arbitration hearing. Arbitrators (i) shall resolve all
Disputes in accordance with the substantive law of the State of California,
(ii) may grant any remedy or relief that a court of the State of California
could order or grant within the scope hereof and such ancillary relief as
is necessary to make effective any award, and (iii) shall have the power to
award recovery of all costs and fees, to impose sanctions and to take such
other actions as they deem necessary to the same extent a judge could
pursuant to the Federal Rules of Civil Procedure, the California Rules of
Civil Procedure or other applicable law. Any Dispute in which the amount
in controversy is $5,000,000 or less shall be decided by a single
arbitrator who shall not render an award of greater than $5,000,000
(including damages, costs, fees and expenses). By submission to a single
arbitrator, each party expressly waives any right or claim to recover more
than $5,000,000. Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations.
Judicial Review. Notwithstanding anything herein to the contrary, in any
arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact
and conclusions of law. In such arbitrations (i) the arbitrators shall not
have the power to make any award which is not supported by substantial
evidence or which is based on legal error, (ii) an award shall not be
binding upon the parties unless the findings of fact are supported by
substantial evidence and the conclusions of law are not erroneous under the
substantive law of the State of California, and (iii) the parties shall
have in addition to the grounds referred to in the Federal Arbitration Act
for vacating, modifying or correcting an award the right to judicial review
of (A) whether the findings of fact rendered by the arbitrators are
supported by substantial evidence, and (B) whether the conclusions of law
are erroneous under the substantive law of the State of California.
Judgment confirming an award in such a proceeding may be entered only if a
court determines the award is supported by substantial evidence and not
based on legal error under the substantive law of the State of California.
(f) Real Property Collateral; Judicial Reference. Notwithstanding
anything herein to the contrary, no Dispute shall be submitted to
arbitration if the Dispute concerns Collateral comprised of real property
or interests therein unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or
benefits that might accrue to them by virtue of the single action rule
statute of California, thereby agreeing that all indebtedness and
obligations of the parties, and all mortgages, liens and security interests
securing such indebtedness and obligations, shall remain fully valid and
enforceable. If any such Dispute is not submitted to arbitration, the
Dispute shall be referred to a referee in accordance with California Code
of Civil Procedure Section 638 et seq., and this general reference
agreement is intended to be specifically enforceable in accordance with
said Section 638. A referee with the qualifications required herein for
arbitrators shall be selected pursuant to the AAA's selection procedures.
Judgment upon the decision rendered by a referee shall be entered in the
court in which such proceeding was commenced in accordance with California
Code of Civil Procedure Sections 644 and 645.
(g) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within one hundred eighty (180) days of the filing
of the Dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results
thereof, except for disclosures of information by a party required in the
ordinary course of its business, by applicable law or regulation, or to the
extent necessary to exercise any judicial review rights set forth herein.
If more than one agreement for arbitration by or between the parties
potentially applies to a Dispute, the arbitration provision most directly
related to this Agreement or the relevant Loan Documents or the subject
matter of the Dispute shall control. This arbitration provision shall
survive termination, amendment or expiration of this Agreement and any of
the other Loan Documents or any relationship between the parties.
GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE STATE OF CALIFORNIA.
The Pledgor hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the Superior Court of the
State of California sitting in Los Angeles County and of the United States
District Court for the Central District of California, and any appellate
court from any thereof, in any action or proceeding arising out of or
relating to this Agreement not subject to arbitration under Section 3.05,
or for recognition or enforcement of any judgment or arbitral award, and
each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard
and determined in such California State or, to the extent permitted by law,
such Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement (other than Section
3.05, if applicable) shall affect any right that the Secured Party may
otherwise have to bring any action or proceeding relating to this Agreement
against any Debtor or its properties in the courts of any jurisdiction.
The Pledgor hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now
or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
the preceding paragraph. Each of the parties hereto irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum
to the maintenance of such action or proceeding in any such court.
Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 3.08. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in
any other manner permitted by law.
Headings. The Article and Section headings in this Agreement are for
convenience only and shall not affect the construction hereof.
Notices. Notices, consents and other communications provided for herein
shall (except as otherwise expressly permitted herein) be in writing and
given as provided in Section 8.01 of the Credit Agreement. Communications
and notices to the Pledgor shall be given to it at its address set forth in
Schedule 3.08 hereto.
Reimbursement of the Secured Party.
The Pledgor agrees to pay upon demand to the Secured Party the amount of
any and all reasonable and documented expenses, including the reasonable
and documented fees and expenses of its counsel (including counsel employed
in-house by the Secured Party) and of any experts or agents, that the
Secured Party may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of the Secured Party hereunder, or (iv)
the failure by the Pledgor to perform or observe any of the provisions
hereof. If the Pledgor shall fail to do any act or thing that it has
covenanted to do hereunder or any representation or warranty of the Pledgor
hereunder shall be breached, the Secured Party may (but shall not be
obligated to) do the same or cause it to be done or remedy any such breach
and there shall be added to the Obligations the cost or expense incurred by
the Secured Party in so doing.
Without limitation of its indemnification obligations under the other Loan
Documents, the Pledgor agrees to indemnify the Secured Party and its
officers, directors, employees, agents, attorneys, and representatives
("Indemnitees") against, and hold each of them harmless from, any and all
losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees and expenses, incurred by or asserted against any
of them arising out of, in any way connected with, or as a result of, the
execution, delivery or performance of this Agreement or any claim,
litigation, investigation or proceeding relating hereto or to the
Collateral, whether or not any Indemnitee is a party thereto, provided that
such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses have
resulted from the gross negligence or willful misconduct of such
Indemnitee.
Any amounts payable as provided hereunder shall be additional Obligations
secured hereby and by the other Security Documents. The provisions of this
Section shall remain operative and in full force and effect regardless of
the termination of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement
or any other Loan Document or any investigation made by or on behalf of the
Secured Party. All amounts due under this Section shall be payable on
written demand therefor and shall bear interest at the default rate (as
provided in the Credit Agreement).
Counterparts. This Agreement may be executed in separate counterparts
(telecopy of any executed counterpart having the same effect as manual
delivery thereof), each of which shall constitute an original, but all of
which, when taken together, shall constitute but one Agreement.
Entire Agreement. Except as expressly herein provided, this Agreement and
the other Loan Documents constitute the entire agreement among the parties
relating to the subject matter hereof. Any previous agreement among the
parties with respect to the transactions contemplated hereunder is
superseded by this Agreement and the other Loan Documents. Except as
expressly provided herein or in the other Loan Documents, nothing in this
Agreement or in any other Loan Document, expressed or implied, is intended
to confer upon any party, other than the parties hereto, any rights,
remedies, obligations or liabilities under or by reason of this Agreement
or such other Loan Documents.
WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers or
representatives as of the day and year first above written.
XXXXX FARGO BANK, XXXXXX, INC.
NATIONAL ASSOCIATION
By: By:
Name: Name:
Title: Title:
Schedule I
to
Pledge and Security Agreement
Pledged Stock
Pledgor Issuer Number of Shares Percentage
Schedule 3.08
to
Pledge and Security Agreement
Addresses for Notice
Party Mailing Address County
