PLEDGE AND SECURITY INTEREST AGREEMENT
PLEDGE AND SECURITY INTEREST AGREEMENT ("Agreement") dated as of the 12th
day of August, 1996, by and between Gabelli Funds, Inc., a New York corporation
("Lender"), and Xxxxx Corporation, an Indiana corporation ("LC"), Xxxxx
Telecommunications Corporation, a Delaware corporation ("LTC") and Xxxxx PCS
Corporation F ("PCSF").
WITNESSETH
WHEREAS, LC owns 51 shares of common stock of Xxxxx Entertainment
Corporation ("LET") and 1 share of capital stock of Xxxxx Entertainment
Corporation II ("LETT"), constituting all the capital stock of such
corporations, and LTC owns 80,100 shares of common stock of Xxxxx Telephone
Corporation ("LT"), constituting approximately 80.1% of the outstanding common
stock of said corporation (all such shares, plus any additional shares of LET,
LETT or LT which LC or LTC may acquire, being referred to herein as the
"Shares").
WHEREAS, PCSF owns a 49.9% limited partnership interest (the "LP
Interest") in Aer Force Communications B, L.P. ("AER") and a Note from AER dated
August 12, 1996, in the principal amount of up to $11,800,000 (the "Note").
WHEREAS, to induce Lender to make an $11,800,000 loan (the "Loan") to LC
pursuant to a Loan Agreement and a Promissory Note each dated August 12, 1996
(the "Loan Agreement" and "Promissory Note", respectively), LC and LTC have
agreed to pledge the Shares to the Lender and PCSF has agreed to pledge the Note
and grant a first security interest in the LP Interest to Lender, all as
security for the repayment of all amount dues to Lender under the Loan Agreement
and Promissory Note.
NOW THEREFORE, in consideration of the promises and the mutual
representations, warranties and covenants herein contained, the parties hereto
agree as follows:
1. PLEDGE AND SECURITY INTEREST.
A. In consideration of the Loan from the Lender to LC and other good
and valuable consideration accruing to each of the parties pledging
or granting a security interest hereunder, each of LC, LTC, and
PCSF, as to the collateral owned by it, hereby grants a security
interest to Lender in (i) the Shares, (ii) the Note and (iii) the
LP Interest and herewith delivers to Lender the Shares and the Note
(as listed on Schedule A hereto) as collateral, together with a
stock or note power duly endorsed in blank. The Lender shall hold
the Shares, the Note and the LP Interest as security for the
payment of all amounts due under the Loan Agreement and Promissory
Note, and shall not register the Shares, the Note or the LP
Interest in any other name, encumber, give up possession or control
of, assign, transfer, dispose of or take any other action with
respect to the Shares, the Note or the LP Interest, except in
accordance with the provisions of Section 5 of this Agreement.
PCSF shall file such financing statements under the Uniform
Commercial Code of Delaware and Connecticut as Lender may request
to perfect Lender's security interest in the Shares, the Note or LP
Interest.
B. If any person, entity or agency should claim that any pledge, or
grant of a security interest, under this Agreement (i) would
violate any law or require the consent (which is not received) of
any governmental agency, (ii) would violate any provision,
including any restriction on transfer or similar provisions, or
cause a default under, any existing agreement to which the parties
hereto or any of their subsidiaries or any entities in which the
parties hereto or their subsidiaries have an interest are parties
or by which any of their assets are bound or (iii) would give any
other person, entity or agency a right to acquire under an existing
agreement any assets owned by the parties hereto, their
subsidiaries or any entities which the parties hereto or their
subsidiaries have an interest in, LC shall use its best efforts (a)
to determine the validity of such claim and, if it believes the
claim might be valid, (b) to remedy or seek a waiver or other
relief with respect thereto; provided, however, that if the claim
is legally valid, the pledge or grant of the security interest
under this Agreement shall be deemed void ab initio and not to have
been made, but only to the extent necessary to make the claim not
legally valid, and Lender will confirm that it has no pledge or
security interest to such extent. If any pledge or grant of
securities shall be deemed void and not to have been made under
this Section 1, Xxxxx Corporation shall use its best efforts to
grant or cause to be granted to Lender pledges or securities
interests in other assets to collateralize appropriately the Loan.
C. Certain of the Shares of LT pledged to Lender are subject to
Warrant Agreements dated as of October 19, 1989, as amended, with
Xxxxx Xxxxxxx, Xxxx X. Xxxx, Xxxx X. Xxxx and Xxxxx Xxxx, Xxxxxxx
X. Xxxxxx and Xxxx Xxxx Xxxxxx, Xxxx Clag Keen and Xxxxxx Xxxx, and
Xx. Xxxxx X. Xxxxxx, respectively. Lender agrees to release from
the pledge and security interest any such Shares of LT if and to
the extent necessary for LTC to honor any exercises of warrants
granted pursuant to said Warrant Agreements.
2. DISTRIBUTIONS.
During the term of this pledge and security interest, and so long as LC
is not in default under the Loan Agreement or Promissory Note, all cash
dividends, interest, distributions and other cash amounts received by LC,
LTC or PCSF as a result of their respective record ownership of the
Shares, the Note and the LP Interest shall belong to LC, LTC or PCSF, as
the case may be.
3. VOTING RIGHTS.
During the term of this pledge and security interest, and so long as LC
is not in default under the Loan Agreement or the Promissory Note, LC and
LTC shall have the right to vote the Shares and PCSF shall have the right
to vote the LP Interest (including the giving of written consents) on all
corporate or partnership questions or actions requiring shareholder or
partner approval; provided that (A) LC, LTC and PCSF shall not, without
the prior written consent of Lender, vote the Shares or the LP Interest
(i) in a manner which would cause LC to be in breach of the terms of this
Agreement, the Loan Agreement or the Promissory Note, or (ii) in favor of
any amendment to the Certificates of Incorporation of LT, LET, or LETT,
the liquidation or dissolution of LT, LET, or LETT, any merger,
consolidation, reorganization of LT, LET, or LETT, or any sale of
substantially all of the assets of LT, LET, or LETT, and (B) PCSF shall
not, without the prior written consent of Lender, vote its LP Interest in
favor of any merger, consolidation, reorganization or dissolution of AER
or sale of all or substantially all the assets of AER. In addition, LC
and LTC agree that they will cause LT, LET, or LETT not, without the prior
written consent of Lender, to vote to issue any additional shares or
equity securities or rights to acquire shares or equity securities, or
redeem any of its outstanding equity securities of LT, LET, or LETT.
4. ADJUSTMENTS.
In the event that, during the term of this pledge and security interest,
any stock dividend, reclassification, readjustment, or other change is
declared or made in the capital structure of LT, LET, or LETT, or AER, all
new, substituted, or additional shares, or other securities, issued by
reason of any such change shall be delivered to Lender by LC, LTC or PCSF
and held by the Lender under the terms of this Agreement in the same
manner as the Shares or the LP Interest.
5. DEFAULT.
In the event that LC defaults in the performance of any of its obligations
under the Loan Agreement or the Promissory Note, and such default is not
cured within twenty (20) business days after receipt by LC of a written
notice advising of same, the Lender shall have the rights and remedies
available to the Lender as a secured lender under the Loan Agreement,
Promissory Note, this Agreement and applicable law.
6. TERMINATION.
The security interest granted under this Agreement in the Shares, the Note
and the LP Interest shall terminate upon the full payment by LC of all of
its obligations under the Loan Agreement and the Promissory Note (other
than its obligation under Section 2.01(d) of the Loan Agreement), and the
Lender shall immediately redeliver the Shares and the Note to LC, LTC or
PCSF, as the case may be, and execute such instruments as PCSF shall
request to acknowledge termination of its security interest in the LP
Interest.
7. CERTIFICATES.
The Certificate for the Shares and the Note shall bear a legend as
follows: "This Certificate has been delivered to, and is being held by,
Gabelli Funds, Inc., a New York corporation ("GFI"), as security for a
loan, pursuant to, and subject to the terms of, a Pledge and Security
Interest Agreement dated as of August 12, 1996 between GFI and Xxxxx
Corporation, an Indiana corporation, Xxxxx Telephone Corporation, a
Delaware corporation, and Xxxxx PCS Corporation F, a Delaware
corporation."
8. NOTICES.
All notice, requests, demands or other communication hereunder shall be
in writing, and shall be delivered to the parties at the addresses set
forth below (or to such other person or entity or address as either party
may specify by due notice to the other party) and shall be deemed to have
been duly given if delivered or mailed, first class postage prepaid:
(a) If to Lender:
Gabelli Funds, Inc.
000 Xxxxxxxx Xxxxx Xxxxxx
Xxxxx X-000
Xxx, XX 00000-0000
Attn:
Copy to: General Counsel at the same address
(b) If to LC, LTC or PCSF:
c/x Xxxxx Corporation
0 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Copy to: General Counsel at the same address
9. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, including without limitation Article 9 of
the New York Uniform Commercial Code.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year hereinabove set forth.
ATTEST: GABELLI FUNDS, INC.
By:
ATTEST: XXXXX CORPORATION
By:
Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxx
Secretary Chief Financial Officer
ATTEST: XXXXX TELECOMMUNICATIONS CORPORATION
By:
Xxxxxx X. Xxxxx
Controller
ATTEST: XXXXX PCS CORPORATION F
By:
Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxx
Secretary President
PLEDGE AND SECURITY INTEREST AGREEMENT
SCHEDULE A
Pledge Shares Certificate No. Date
1. 51 Shares of Common Stock
Xxxxx Entertainment Corp. 2 March 6, 1987vc
2. 1 Share of Common Stock
Xxxxx Entertainment
Corp. II 1 June 11, 1992
3. 1,000 Shares of Common Stock 1 May 26, 1989
79,100 Shares of Common Stock 2 October 19, 1989
4. $11,800,000 Note - August 12, 1996
Aer Force Communications B,
L.P.
