PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of January 21, 2000 (as same may be
amended, amended and restated, modified or supplemented from time to time, this
"Agreement"), made by each of the undersigned Pledgors (each a "Pledgor" and,
together with any other entity that becomes a party hereto pursuant to Section
28 hereof, the "Pledgors") to Deutsche Bank AG, New York Branch, not in its
individual capacity but solely as Collateral Agent (including any successor
collateral agent, the "Pledgee") for the benefit of the Secured Creditors
referred to below. Except as otherwise defined herein, terms used herein and
defined in the Credit Agreement shall be used herein as so defined.
W I T N E S S E T H:
WHEREAS, Frontier Insurance Group, Inc. (the "Borrower"), the
financial institutions from time to time party thereto (the "Banks") and
Deutsche Bank AG, New York Branch and/or Cayman Islands Branch, as
Administrative Agent (in its capacity as Administrative Agent, being herein
referred to as the "Administrative Agent") have entered into a Credit Agreement,
dated as of June 3, 1997 (as used herein, the term "Credit Agreement" means the
Credit Agreement described above in this paragraph, as the same may be amended,
amended and restated, modified or supplemented from time to time, and including
any successor agreement extending the maturity of, or restructuring of all or
any portion of the Indebtedness under such agreement or any successor
agreements), providing for the making of Loans to the Borrower (the Banks, the
Administrative Agent and the Pledgee are hereinafter called the "Bank
Creditors");
WHEREAS, Xxxxxxxx/Frontier, LLC ("Xxxxxxxx/Frontier"), the
financial institutions from time to time party thereto (the "XX Xxxxx") and
Deutsche Bank AG, New York Branch and/or Cayman Islands Branch, as
administrative agent (in its capacity as administrative agent, being herein
referred to as the "DF Administrative Agent") have entered into a Credit
Agreement, dated as of December 15, 1998 (as used herein, the term "DF Credit
Agreement" means the Credit Agreement described above in this paragraph, as the
same may be amended, amended and restated, modified or supplemented from time to
time, and including any successor agreement extending the maturity of, or
restructuring of all or any portion of the indebtedness under such agreement or
any successor agreements) providing for the making of loans to Xxxxxxxx/Frontier
(the XX Xxxxx and the DF Administrative Agent are hereinafter called the "DF
Bank Creditors");
WHEREAS, Xxxxxx Xxxxxxx Xxxxxxxx, III and Union Bank of
California, N.A. (the "RSD Bank") have entered into a Loan Agreement, dated as
of April 15, 1998 (as used herein, the term "RSD Loan Agreement" means the Loan
Agreement described above in this paragraph, as the same may be amended, amended
and restated, modified or supplemented from time to time, and including any
successor agreement extending the maturity of, or restructuring of all or any
portion of the indebtedness under such agreement or any successor agreements),
providing for the making of a loan to Xxxxxx Xxxxxxx Xxxxxxxx, III and the
guaranty of such loan by the Borrower (the RSD Bank is hereinafter also called
the "RSD Bank Creditor");
WHEREAS, various directors and officers of the Borrower, the
financial institutions from time to time party thereto (the "D&O Banks") and
Bank of America, N.A., as administrative agent (in its capacity as
administrative agent, being herein referred to as the "D&O Administrative
Agent") have entered into a Credit Agreement, dated as of June 24, 1999 (as used
herein, the term "D&O Credit Agreement" means the Credit Agreement described
above in this paragraph, as the same may be amended, amended and restated,
modified or supplemented from time to time, and including any successor
agreement extending the maturity of, or restructuring of all or any portion of
the indebtedness under such agreement or any successor agreements), providing
for the making of loans to certain directors and officers of the Borrower and
the guaranty of such loans by the Borrower (the D&O Banks and the D&O
Administrative Agent are hereinafter called the "D&O Bank Creditors");
WHEREAS, the Borrower may from time to time be party to one or
more Interest Rate Agreements with one or more Banks or any affiliate thereof
(each such Bank or affiliate, even if the respective Bank subsequently ceases to
be a Bank under the Credit Agreement for any reason, together with such Bank's
or affiliate's successors and assigns, if any, collectively, the "Interest Rate
Creditors," and together with the Bank Creditors, the DF Bank Creditors, the RSD
Bank Creditor and the D&O Bank Creditors, the "Secured Creditors");
WHEREAS, the Pledgors are required under the terms of the
Credit Agreement, the DF Credit Agreement, the RSD Loan Agreement and the D&O
Credit Agreement to execute and deliver to the Pledgee this Agreement; and
WHEREAS, the Pledgors will obtain benefits from the incurrence
of loans under each of the Credit Agreement, the DF Credit Agreement, the RSD
Loan Agreement and the D&O Credit Agreement and the Borrower's entering into
Interest Rate Agreements and, accordingly, desires to execute this Agreement in
order to satisfy the requirements described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to
each Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each
Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness (including, without limitation,
indemnities, Fees and interest thereon) owing to the Bank Creditors,
whether now existing or hereafter incurred under, arising out of, or in
connection with the Credit Agreement and the other Credit Documents,
and the due performance and compliance with all of the terms,
conditions and agreements contained in the Credit
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Agreement and such other Credit Documents (all such obligations,
liabilities and indebtedness under this clause (i) being herein
collectively called the "Credit Agreement Obligations");
(ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness (including, without limitation,
indemnities, fees and interest thereon) owing to the DF Bank Creditors,
whether now existing or hereafter incurred under, arising out of, or in
connection with the DF Credit Agreement and the other Credit Documents
(as such term is defined in the DF Credit Agreement, the "DF Credit
Documents"), and the due performance and compliance with all of the
terms, conditions and agreements contained in the DF Credit Agreement
and such other DF Credit Documents (all such obligations, liabilities
and indebtedness under this clause (ii) being herein collectively
called the "DF Credit Agreement Obligations"; provided that the
aggregate principal amount of DF Credit Agreement Obligations secured
by this Agreement shall not exceed $7,850,000);
(iii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness (including, without limitation,
indemnities, fees and interest thereon) owing to the RSD Bank Creditor,
whether now existing or hereafter incurred under, arising out of, or in
connection with the RSD Loan Agreement and the other loan documents
executed in connection therewith (such other loan documents, the "RSD
Loan Documents"), and the due performance and compliance with all of
the terms, conditions and agreements contained in the RSD Loan
Agreement and such other RSD Loan Documents (all such obligations,
liabilities and indebtedness under this clause (iii) being herein
collectively called the "RSD Loan Agreement Obligations"; provided that
the aggregate principal amount of RSD Loan Agreement Obligations
secured by this Agreement shall not exceed $1,680,000);
(iv) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness (including, without limitation,
indemnities, fees and interest thereon) owing to the D&O Bank
Creditors, whether now existing or hereafter incurred under, arising
out of, or in connection with the D&O Credit Agreement and the other
Loan Documents (as such term is defined in the D&O Credit Agreement,
the "D&O Credit Documents"), and the due performance and compliance
with all of the terms, conditions and agreements contained in the D&O
Credit Agreement and such other D&O Credit Documents (all such
obligations, liabilities and indebtedness under this clause (iv) being
herein collectively called the "D&O Credit Agreement Obligations";
provided that the aggregate principal amount of D&O Credit Agreement
Obligations secured by this Agreement shall not exceed $4,417,650);
(v) the full and prompt payment when due (whether at stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness (including, without limitation, indemnities, fees and
interest thereon) owing to the Interest Rate
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Creditors, now existing or hereafter incurred under, arising out of or
in connection with any Interest Rate Agreement, whether such Interest
Rate Agreement is now in existence or hereinafter arising, and the due
performance and compliance with the terms, conditions and agreements of
each such Interest Rate Agreement (all such obligations, liabilities
and indebtedness under this clause (v) being herein collectively called
the "Interest Rate Obligations");
(vi) any and all reasonable sums advanced by the Pledgee in
order to preserve the Collateral (as hereinafter defined) and/or
preserve its security interest therein;
(vii) in the event of any proceeding for the collection of the
Obligations (as defined below) or the enforcement of this Agreement,
after an Event of Default shall have occurred and be continuing, the
reasonable out-of-pocket expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the
Collateral, or of any exercise by the Pledgee of its rights hereunder,
together with reasonable attorneys' fees and court costs; and
(viii) all amounts paid by any Indemnitee to which such
Indemnitee has the right to reimbursement under Section 11 of this
Agreement.
all such obligations, liabilities, indebtedness, sums and expenses set forth in
clauses (i) through (viii) of this Section 1 being collectively called the
"Obligations", it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
2. DEFINITIONS; ANNEXES. (a) Unless otherwise defined herein,
all capitalized terms used herein and defined in the Credit Agreement shall be
used herein as therein defined. Reference to singular terms shall include the
plural and vice versa.
(b) The following capitalized terms used herein shall have
the definitions specified below:
"Administrative Agent" has the meaning set forth in the
Recitals hereto.
"Adverse Claim" has the meaning given such term in Section
8-102(a)(1) of the UCC.
"Agreement" has the meaning set forth in the first paragraph
hereof.
"Bank Creditors" has the meaning set forth in the first
paragraph hereof.
"Banks" has the meaning set forth in the Recitals hereto.
"Certificated Security" has the meaning given such term in
Section 8-102(a)(4) of the UCC.
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"Clearing Corporation" has the meaning given such term in
Section 8-102(a)(5) of the UCC.
"Collateral" has the meaning set forth in Section 3.1 hereof.
"Collateral Accounts" means any and all accounts established
and maintained by the Pledgee in the name of any Pledgor to which Collateral may
be credited.
"Credit Agreement" has the meaning set forth in the Recitals
hereto.
"Credit Agreement Obligations" has the meaning set forth in
Section 1 hereof.
"DF Administrative Agent" has the meaning set forth in the
Recitals hereto.
"DF Bank Creditors" has the meaning set forth in the Recitals
hereto.
"XX Xxxxx" has the meaning set forth in the Recitals hereto.
"DF Credit Agreement" has the meaning set forth in the
Recitals hereto.
"DF Credit Agreement Obligations" has the meaning set forth
in Section 1 hereof.
"DF Credit Documents" has the meaning set forth in Section 1
hereof.
"Xxxxxxxx/Frontier" has the meaning set forth in the Recitals
hereto.
"D&O Administrative Agent" has the meaning set forth in the
Recitals hereto.
"D&O Bank Creditors" has the meaning set forth in the
Recitals hereto.
"D&O Banks" has the meaning set forth in the Recitals hereto.
"D&O Credit Agreement" has the meaning set forth in the
Recitals hereto.
"D&O Credit Agreement Obligations" has the meaning set forth
in Section 1 hereof.
"D&O Credit Documents" has the meaning set forth in Section 1
hereof.
"Event of Default" means (i) any event of the type described
in Section 8.05 of the Credit Agreement and (ii) any payment default (after
expiration of any applicable grace period) on any of the Obligations.
"Financial Asset" has the meaning given such term in Section
8-102(a)(9) of the UCC.
"Indemnitees" has the meaning set forth in Section 11 hereof.
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"Instrument" has the meaning given such term in Section
9-105(1)(i) of the UCC.
"Interest Rate Agreements" has the meaning set forth in the
first paragraph hereof.
"Interest Rate Creditors" has the meaning set forth in the
Recitals hereto.
"Interest Rate Obligations" has the meaning set forth in
Section 1 hereof.
"Investment Property" has the meaning given such term in
Section 9-115(f) of the UCC.
"Limited Liability Company Assets" means all assets, whether
tangible or intangible and whether real, personal or mixed (including, without
limitation, all limited liability company capital and interest in other limited
liability companies), at any time owned or represented by any Limited Liability
Company Interest.
"Limited Liability Company Interests" means the entire
limited liability company membership interest at any time owned by any Pledgor
in any limited liability company which is Frontier Insurance Company, Western
Indemnity Insurance Company or any Non-Regulated Insurance Company.
"Obligations" has the meaning set forth in Section 1 hereof.
"Partnership Assets" means all assets, whether tangible or
intangible and whether real, personal or mixed (including, without limitation,
all partnership capital and interest in other partnerships), at any time owned
or represented by any Partnership Interest.
"Partnership Interest" means the entire general partnership
interest or limited partnership interest at any time owned by any Pledgor in any
general partnership or limited partnership, in each case which is Frontier
Insurance Company, Western Indemnity Insurance Company or any Non-Regulated
Insurance Company.
"Pledged Entity" means each of Frontier Insurance Company,
Western Indemnity Insurance Company and each Non-Regulated Insurance Company.
"Pledgee" has the meaning set forth in the first paragraph
hereof.
"Pledgor" has the meaning set forth in the first paragraph
hereof.
"Proceeds" has the meaning given such term in Section
9-306(l) of the UCC.
"Required Secured Creditors" shall mean, at any time, Secured
Creditors having outstanding Obligations which constitute at least a majority of
all outstanding Obligations at such time.
"RSD Bank" has the meaning set forth in the Recitals hereto.
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"RSD Bank Creditor" has the meaning set forth in the Recitals
hereto.
"RSD Loan Agreement" has the meaning set forth in the
Recitals hereto.
"RSD Loan Agreement Obligations" has the meaning set forth in
Section 1 hereof.
"RSD Loan Documents" has the meaning set forth in Section 1
hereof.
"Secured Creditors" has the meaning set forth in the first
paragraph hereof.
"Secured Debt Agreements" has the meaning set forth in
Section 5 hereof.
"Securities Account" has the meaning given such term in
Section 8-501(a) of the UCC.
"Securities Act" means the Securities Act of 1933, as
amended, as in effect from time to time.
"Security Entitlement" has the meaning given such term in
Section 8-102(a)(17) of the UCC.
"Stock" means all of the issued and outstanding shares of
capital stock or other ownership interests of Frontier Insurance Company,
Western Indemnity Insurance Company and each Non-Regulated Insurance Company at
any time owned by the Pledgor.
"Termination Date" has the meaning set forth in Section 19
hereof.
"UCC" means the Uniform Commercial Code as in effect in the
State of New York from time to time; provided that all references herein to
specific sections or subsections of the UCC are references to such sections or
subsections, as the case may be, of the Uniform Commercial Code as in effect in
the State of New York on the date hereof.
"Uncertificated Security" has the meaning given such term in
Section 8-102(a)(18) of the UCC.
3. PLEDGE OF SECURITY INTEREST, ETC.
3.1. Pledge. To secure the Obligations now or hereafter owed
or to be performed, each Pledgor does hereby grant, pledge and assign to the
Pledgee for the benefit of the Secured Creditors, and does hereby create a
continuing security interest (subject to those liens permitted to exist with
respect to the Collateral pursuant to the terms of all Secured Debt Agreements
then in effect) in favor of the Pledgee for the benefit of the Secured Creditors
in, all of the right, title and interest in and to the following, whether now
existing or hereafter from time to time acquired (collectively, the
"Collateral"):
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(a) each of the Collateral Accounts, including any and all
assets of whatever type or kind deposited by such Pledgor in such
Collateral Account, whether now owned or hereafter acquired, existing or
arising, including, without limitation, all Financial Assets, Investment
Property, moneys, checks, drafts, Instruments, Stock or interests
therein of any type or nature deposited or required by the Credit
Agreement or any other Secured Debt Agreement to be deposited in such
Collateral Account, and all investments and all certificates and other
Instruments (including depository receipts, if any) from time to time
representing or evidencing the same, and all dividends, interest,
distributions, cash and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any
or all of the foregoing;
(b) all Stock of such Pledgor from time to time;
(c) all Limited Liability Company Interests of such Pledgor
from time to time and all of its right, title and interest in each
limited liability company to which each such interest relates, whether
now existing or hereafter acquired, including, without limitation:
(A) all the capital thereof and its interest in all
profits, losses, Limited Liability Company Assets and other
distributions to which such Pledgor shall at any time be
entitled in respect of such Limited Liability Company
Interests;
(B) all other payments due or to become due to such
Pledgor in respect of Limited Liability Company Interests,
whether under any limited liability company agreement or
otherwise, whether as contractual obligations, damages,
insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges,
authority, options, security interests, liens and remedies, if
any, under any limited liability company agreement or
operating agreement, or at law or otherwise in respect of such
Limited Liability Company Interests;
(D) all present and future claims, if any, of such
Pledgor against any such limited liability company for moneys
loaned or advanced, for services rendered or otherwise;
(E) all of such Pledgor's rights under any limited
liability company agreement or operating agreement or at law
to exercise and enforce every right, power, remedy, authority,
option and privilege of such Pledgor relating to such Limited
Liability Company Interests, including any power to terminate,
cancel or modify any limited liability company agreement or
operating agreement, to execute any instruments and to take
any and all other action on behalf of and in the name of such
Pledgor in respect of such Limited Liability Company Interests
and any such limited liability company, to make
determinations, to exercise any election (including, but not
limited to, election of remedies) or option or to give or
receive any notice, consent, amendment, waiver or approval,
together with full power and authority to demand, receive,
enforce, collect or receipt for any of the
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foregoing or for any Limited Liability Company Asset, to
enforce or execute any checks, or other instruments or orders,
to file any claims and to take any action in connection with
any of the foregoing; and
(F) all other property hereafter delivered in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
other property and all cash, securities, interest, dividends,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all thereof;
(d) all Partnership Interests of such Pledgor from time to
time and all of its right, title and interest in each partnership to
which each such interest relates, whether now existing or hereafter
acquired, including, without limitation:
(A) all the capital thereof and its interest in all
profits, losses, Partnership Assets and other distributions to
which such Pledgor shall at any time be entitled in respect of
such Partnership Interests;
(B) all other payments due or to become due to such
Pledgor in respect of Partnership Interests, whether under any
partnership agreement or otherwise, whether as contractual
obligations, damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges,
authority, options, security interests, liens and remedies, if
any, under any partnership agreement or operating agreement,
or at law or otherwise in respect of such Partnership
Interests;
(D) all present and future claims, if any, of such
Pledgor against any such partnership for moneys loaned or
advanced, for services rendered or otherwise;
(E) all of such Pledgor's rights under any
partnership agreement or operating agreement or at law to
exercise and enforce every right, power, remedy, authority,
option and privilege of such Pledgor relating to such
Partnership Interests, including any power to terminate,
cancel or modify any partnership agreement or operating
agreement, to execute any instruments and to take any and all
other action on behalf of and in the name of such Pledgor in
respect of such Partnership Interests and any such
partnership, to make determinations, to exercise any election
(including, but not limited to, election of remedies) or
option or to give or receive any notice, consent, amendment,
waiver or approval, together with full power and authority to
demand, receive, enforce, collect or receipt for any of the
foregoing or for any Partnership Asset, to enforce or execute
any checks, or other instruments or orders, to file any claims
and to take any action in connection with any of the foregoing
(with all of the foregoing rights only to be exercisable upon
the occurrence and during the continuation of an Event of
Default); and
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(F) all other property hereafter delivered in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
other property and all cash, securities, interest, dividends,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all thereof; and
(e) all Proceeds of any and all of the foregoing.
Nothing in this Agreement is to be construed as a pledge of
any tangible or intangible asset or right of any Pledged Entity, however, this
Agreement includes the pledge of all capital stock and other equity interests
issued by each Pledged Entity.
3.2 Procedures. (a) To the extent that any Pledgor at any time
or from time to time owns, acquires or obtains any right, title or interest in
any Collateral, such Collateral shall automatically (and without the taking of
any action by the respective Pledgor) be pledged pursuant to Section 3.1 of this
Agreement and, in addition thereto, such Pledgor shall (to the extent provided
below) take the following actions as set forth below (as promptly as practicable
and, in any event, within 10 days after it obtains such Collateral) for the
benefit of the Pledgee and the Secured Creditors:
(vii) with respect to a Certificated Security (other than a
Certificated Security credited on the books of a Clearing Corporation),
the respective Pledgor shall physically deliver such Certificated
Security to the Pledgee, endorsed to the Pledgee or endorsed in blank;
(ii) with respect to an Uncertificated Security (other than an
Uncertificated Security credited on the books of a Clearing
Corporation), the respective Pledgor shall cause the issuer of such
Uncertificated Security to duly authorize and execute, and deliver to
the Pledgee, an agreement for the benefit of the Pledgee and the
Secured Creditors substantially in the form of Annex F hereto
(appropriately completed to the satisfaction of the Pledgee and with
such modifications, if any, as shall be satisfactory to the Pledgee)
pursuant to which such issuer agrees to comply with any and all
instructions originated by the Pledgee without further consent by the
registered owner and not to comply with instructions regarding such
Uncertificated Security (and any Partnership Interests and Limited
Liability Company Interests issued by such issuer) originated by any
other Person other than a court of competent jurisdiction;
(iii) with respect to a Certificated Security, Uncertificated
Security, Partnership Interest or Limited Liability Company Interest
credited on the books of a Clearing Corporation (including a Federal
Reserve Bank, Participants Trust Company or The Depository Trust
Company), the respective Pledgor shall promptly notify the Pledgee
thereof and shall promptly take all actions required (i) to comply with
the applicable rules of such Clearing Corporation and (ii) to perfect
the security interest of the Pledgee under applicable law (including,
in any event, under Sections 9-115 (4)(a) and (b), 9-115 (1)(e) and
8-106 (d) of the UCC). The respective Pledgor further agrees to take
such actions as the Pledgee deems necessary or desirable to effect the
foregoing;
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(iv) with respect to a Partnership Interest or a Limited
Liability Company Interest (other than a Partnership Interest or
Limited Liability Interest credited on the books of a Clearing
Corporation), (1) if such Partnership Interest or Limited Liability
Company Interest is represented by a certificate, the procedure set
forth in Section 3.2(a)(i), and (2) if such Partnership Interest or
Limited Liability Company Interest is not represented by a certificate,
the procedure set forth in Section 3.2(a)(ii); and
(v) with respect to cash, (i) establishment by the Pledgee of
a cash account in the name of such Pledgor over which the Pledgee shall
have exclusive and absolute control and dominion (and no withdrawals or
transfers may be made therefrom by any Person except with the prior
written consent of the Pledgee) and (ii) deposit of such cash in such
cash account.
(b) In addition to the actions required to be taken pursuant
to preceding Section 3.2(a), each Pledgor shall take the following additional
actions with respect to the Stock and Collateral (as defined below):
(i) with respect to all Collateral of such Pledgor whereby or
with respect to which the Pledgee may obtain "control" thereof within
the meaning of Section 8-106 of the UCC (or under any provision of the
UCC as same may be amended or supplemented from time to time, or under
the laws of any relevant State other than the State of New York), the
respective Pledgor shall take all reasonable actions as may be
requested from time to time by the Pledgee so that "control" of such
Collateral is obtained and at all times held by the Pledgee; and
(ii) each Pledgor shall from time to time cause appropriate
financing statements (on Form UCC-1 or other appropriate form) under
the Uniform Commercial Code as in effect in the various relevant
States, covering all Collateral hereunder (with the form of such
financing statements to be satisfactory to the Pledgee), to be filed in
the relevant filing offices so that at all times the Pledgee has a
security interest in all Collateral that is Investment Property, which
is perfected by the filing of such financing statements (in each case
to the maximum extent perfection by filing may be obtained under the
laws of the relevant States, including, without limitation, Section
9-115(4)(b) of the UCC).
3.3 Subsequently Acquired Collateral. If any Pledgor shall
acquire (by purchase, stock dividend or otherwise) any additional Collateral at
any time or from time to time after the date hereof, such Collateral shall
automatically (and without any further action being required to be taken) be
subject to the pledge and security interests created pursuant to Section 3.1
and, furthermore, such Pledgor will promptly thereafter take (or cause to be
taken) all action with respect to such Collateral in accordance with the
procedures set forth in Section 3.2, and will promptly thereafter deliver to the
Pledgee (i) a certificate executed by a principal executive officer of such
Pledgor describing such Collateral and certifying that the same has been duly
pledged in favor of the Pledgee (for the benefit of the Secured Creditors)
hereunder and (ii)
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supplements to Annexes A through E hereto as are necessary to cause such annexes
to be complete and accurate at such time.
3.4 Transfer Taxes. Each pledge of Collateral under Section
3.1 or Section 3.3 shall be accompanied by any transfer tax stamps required in
connection with the pledge of such Collateral.
3.5 Certain Representations and Warranties Regarding the
Collateral. Each Pledgor represents and warrants that on the date hereof (i)
each Subsidiary of such Pledgor, and the direct ownership thereof, is listed in
Annex A hereto; (ii) the Stock held by such Pledgor consists of the number and
type of shares of the stock of the corporations as described in Annex B hereto;
(iii) such Stock constitutes that percentage of the issued and outstanding
capital stock of the issuing corporation as is set forth in Annex B hereto; (iv)
the Limited Liability Company Interests held by such Pledgor consist of the
number and type of interests of the Persons described in Annex C hereto; (v)
each such Limited Liability Company Interest constitutes that percentage of the
issued and outstanding equity interest of the issuing Person as set forth in
Annex C hereto; (vi) the Partnership Interests held by such Pledgor consist of
the number and type of interests of the Persons described in Annex D hereto;
(vii) each such Partnership Interest constitutes that percentage or portion of
the entire partnership interest of the Partnership as set forth in Annex D
hereto; (viii) such Pledgor has complied with the respective procedure set forth
in Section 3.2(a) with respect to each item of Collateral described in Annexes A
through D hereto; and (ix) on the date hereof, such Pledgor owns no other Stock,
Limited Liability Company Interests or Partnership Interests.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Collateral, which may be held (in the
discretion of the Pledgee) in the name of the relevant Pledgor, endorsed or
assigned in blank or in favor of the Pledgee or any nominee or nominees of the
Pledgee or a sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
there shall have occurred and be continuing an Event of Default, each Pledgor
shall be entitled to exercise all voting rights attaching to any and all
Collateral owned by it, and to give consents, waivers or ratifications in
respect thereof provided that no vote shall be cast or any consent, waiver or
ratification given or any action taken which would violate, result in breach of
any covenant contained in, or be inconsistent with, any of the terms of this
Agreement, the Credit Agreement, the DF Credit Agreement, the RSD Loan
Agreement, the D&O Credit Agreement, any other Credit Document, any other DF
Credit Document, any other RSD Loan Document, any other D&O Credit Document or
any Interest Rate Agreement (collectively, the "Secured Debt Agreements"), or
which would have the effect of impairing the value of the Collateral or any part
thereof in any material respect or the position or interests of the Pledgee or
any Secured Creditor therein. All such rights of each Pledgor to vote and to
give consents, waivers and ratifications shall cease in case an Event of Default
shall occur and be continuing and Section 7 hereof shall become applicable.
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6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until an
Event of Default shall have occurred and be continuing, all cash dividends, cash
distributions, cash Proceeds and other cash amounts payable in respect of the
Collateral shall be paid to the respective Pledgor. Subject to Section 3.2
hereof, the Pledgee shall be entitled to receive directly, and to retain as part
of the Collateral:
(i) all other or additional stock, limited liability company
interests, partnership interests, instruments or other securities or
property (including, but not limited to, cash dividends other than as
set forth above) paid or distributed by way of dividend or otherwise in
respect of the Collateral;
(ii) all other or additional stock, limited liability company
interests, partnership interests, instruments or other securities or
property (including, but not limited to, cash) paid or distributed in
respect of the Collateral by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement; and
(iii) all other or additional stock, limited liability company
interests, partnership interests, instruments or other securities or
property (including, but not limited to, cash) which may be paid in
respect of the Collateral by reason of any consolidation, merger,
exchange of stock, conveyance of assets, liquidation or similar
corporate reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive the proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. All dividends, distributions or
other payments which are received by any Pledgor contrary to the provisions of
this Section 6 or Section 7 shall be received in trust for the benefit of the
Pledgee, shall be segregated from other property or funds of such Pledgor and
shall be forthwith paid over to the Pledgee as Collateral in the same form as so
received (with any necessary endorsement).
7. REMEDIES IN CASE OF AN EVENT OF DEFAULT OR CERTAIN
DEFAULTS. In case an Event of Default shall have occurred and be continuing, the
Pledgee shall be entitled to exercise all of the rights, powers and remedies
(whether vested in it by this Agreement or by any other Secured Debt Agreement
or by law) for the protection and enforcement of its rights in respect of the
Collateral, including, without limitation, all the rights and remedies of a
secured party upon default under the Uniform Commercial Code of the State of New
York, and the Pledgee shall be entitled, without limitation, to exercise any or
all of the following rights:
(i) to receive all amounts payable in respect of the
Collateral otherwise payable under Section 6 to the respective Pledgor;
(ii) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(iii) to vote all or any part of the Collateral (whether or
not transferred into the name of the Pledgee) and give all consents,
waivers and ratifications in respect of the
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Collateral and otherwise act with respect thereto as though it were the
outright owner thereof (each Pledgor hereby irrevocably constituting
and appointing the Pledgee the proxy and attorney-in-fact of such
Pledgor, with full power of substitution to do so);
(iv) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to
redeem or otherwise (all of which are hereby waived by each Pledgor),
for cash, on credit or for other property, for immediate or future
delivery without any assumption of credit risk, and for such price or
prices and on such terms as the Pledgee in its absolute discretion may
determine; provided that at least 10 days' notice of the time and place
of any such sale shall be given to the respective Pledgor. The Pledgee
shall not be obligated to make such sale of Collateral regardless of
whether any such notice of sale has theretofore been given. Each
purchaser at any such sale shall hold the property so sold absolutely
free from any claim or right on the part of the respective Pledgor, and
each Pledgor hereby waives and releases to the fullest extent permitted
by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, all rights, if any,
of marshaling the Collateral and any other security for the Obligations
or otherwise, and all rights, if any, of stay and/or appraisal which it
now has or may at any time in the future have under rule of law or
statute now existing or hereafter enacted. At any such sale, unless
prohibited by applicable law, the Pledgee on behalf of all Secured
Creditors (or certain of them) may bid for and purchase (by bidding in
Obligations or otherwise) all or any part of the Collateral so sold
free from any such right or equity of redemption. Neither the Pledgee
nor any Secured Creditor shall be liable for failure to collect or
realize upon any or all of the Collateral or for any delay in so doing
nor shall any of them be under any obligation to take any action
whatsoever with regard thereto; and
(v) to set-off any and all Collateral against any and all
Obligations, and to withdraw any and all cash or other Collateral from
any and all Collateral Accounts and to apply such cash and other
Collateral to the payment of any and all Obligations.
Any and all remedies and rights notwithstanding, in the event of default and
acceleration of any Obligations hereunder and under any Secured Debt Agreement,
neither the Pledgee nor any Secured Creditor shall vote, sell, or in any manner
exercise control as to any Regulated Insurance Company pledged as Collateral
without first making all required filings with, and obtaining written prior
approval from, each applicable insurance regulatory authority.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of
the Pledgee provided for in this Agreement or any other Secured Debt Agreement,
or now or hereafter existing at law or in equity or by statute shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by the Pledgee or any
Secured Creditor of any one or more of the rights, powers or remedies provided
for in this Agreement or any other Secured Debt Agreement or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later
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exercise by the Pledgee or any Secured Creditor of all such other rights, powers
or remedies, and no failure or delay on the part of the Pledgee or any Secured
Creditor to exercise any such right, power or remedy shall operate as a waiver
thereof. Unless otherwise required by the Credit Documents, no notice to or
demand on any Pledgor in any case shall entitle such Pledgor to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Pledgee or any Secured Creditor to any other
or further action in any circumstances without demand or notice. The Secured
Creditors agree that this Agreement may be enforced only by the action of the
Pledgee, acting upon the instructions of the Required Secured Creditors and that
no other Secured Creditor shall have any right individually to seek to enforce
or to enforce this Agreement or to realize upon the security to be granted
hereby, it being understood and agreed that such rights and remedies may be
exercised by the Pledgee for the benefit of the Secured Creditors upon the terms
of this Agreement and the other Secured Debt Agreements.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral pursuant to the
terms of this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing the Pledgee
of the type provided in clauses (vi) and (vii) of the definition of
Obligations contained in Section 1 hereof;
(ii) second, to the extent proceeds remain after the
application pursuant to the preceding clause (i), an amount equal to
the outstanding Obligations shall be paid to the Secured Creditors as
provided in Section 9(c) hereof with each Secured Creditor receiving an
amount equal to its outstanding Obligations or, if the proceeds are
insufficient to pay in full all such Obligations, its Pro Rata Share
(as defined below) of the amount remaining to be distributed; and
(iii) third, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) and (ii) and
following the termination of this Agreement pursuant to Section 19
hereof, to the respective Pledgor or, to the extent directed by such
Pledgor or a court of competent jurisdiction, to whomever may be
lawfully entitled to receive such surplus.
(b) For purposes of this Agreement, "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such Secured Creditor's
Obligations and the denominator of which is the then outstanding amount of all
Obligations.
(c) All payments required to be made to the Bank Creditors,
the DF Bank Creditors, the RSD Bank Creditor or the D&O Bank Creditors
hereunder, as the case may be, shall be made to (i) the Administrative Agent
under the Credit Agreement for the account of the Bank Creditors, (ii) the DF
Administrative Agent for the account of the DF Bank Creditors, (iii) the RSD
Bank for the account of the RSD Bank Creditor or (iv) the D&O Administrative
Agent
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for the account of the D&O Bank Creditors, as the case may be. All payments
required to be made to the Interest Rate Creditors hereunder shall be made
directly to the respective Interest Rate Creditors.
(d) For purposes of applying payments received in accordance
with this Section 9, the Pledgee shall be entitled to rely upon (i) the
Administrative Agent under the Credit Agreement, (ii) the DF Administrative
Agent under the DF Credit Agreement, (iii) the RSD Bank under the RSD Loan
Agreement, (iv) the D&O Administrative Agent under the D&O Credit Agreement and
(v) the Interest Rate Creditors for a determination (which the Administrative
Agent, the DF Administrative Agent, the RSD Bank, the D&O Administrative Agent,
each Interest Rate Creditor and the Secured Creditors agree (or shall agree) to
provide upon request of the Collateral Agent) of the outstanding Obligations
owed to the Bank Creditors, the DF Bank Creditors, the RSD Bank Creditor, the
D&O Bank Creditors or the Interest Rate Creditors, as the case may be. Unless it
has actual knowledge (including by way of written notice from a Bank Creditor, a
DF Bank Creditor, the RSD Bank Creditor, a D&O Bank Creditor or an Interest Rate
Creditor) to the contrary, the Administrative Agent under the Credit Agreement,
the DF Administrative Agent under the DF Credit Agreement, the RSD Bank under
the RSD Loan Agreement and the D&O Administrative Agent under the D&O Credit
Agreement, in furnishing information pursuant to the preceding sentence, and the
Collateral Agent, in acting hereunder, shall be entitled to assume that (v) no
Credit Agreement Obligations other than principal, interest and regularly
accruing fees are owing to any Bank Creditor, (w) no DF Credit Agreement
Obligations other than principal, interest and regularly accruing fees are owing
to any DF Bank Creditor, (x) no RSD Loan Agreement Obligations other than
principal, interest and regularly accruing fees are owing to the RSD Bank
Creditor, (y) no D&O Credit Agreement Obligations other than principal, interest
and regularly accruing fees are owing to any D&O Bank Creditor and (z) no
Interest Rate Agreement, or Interest Rate Obligations in respect thereof, are in
existence.
(e) Nothing in this Agreement shall release any Pledgor from
its obligations (if any) under any Secured Debt Agreement, all of which shall
remain in full force and effect as if this Agreement had not been entered into.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral
by the Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. The Borrower agrees (i) to indemnify and hold
harmless the Pledgee, each Secured Creditor and their respective successors,
assigns, employees, agents and servants (individually an "Indemnitee", and
collectively, the "Indemnitees") from and against any and all claims, demands,
losses, judgments and liabilities (including liabilities for penalties) of
whatsoever kind or nature, and (ii) to reimburse each Indemnitee for all
reasonable out-of-
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3
pocket costs and expenses, including reasonable attorneys' fees, in each case
arising out of or resulting from this Agreement or the exercise by any
Indemnitee of any right or remedy granted to it hereunder or under any other
Secured Debt Agreement (but excluding any claims, demands, losses, judgments and
liabilities (including liabilities for penalties) or expenses of whatsoever kind
or nature to the extent incurred or arising by reason of gross negligence or
willful misconduct of such Indemnitee). In no event shall any Indemnitee
hereunder be liable, in the absence of gross negligence or willful misconduct on
its part, for any matter or thing in connection with this Agreement other than
to account for monies or other property actually received by it in accordance
with the terms hereof. If and to the extent that the obligations of the Borrower
under this Section 11 are unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law. The indemnity obligations
of the Borrower contained in this Section 11 shall continue in full force and
effect notwithstanding the termination of all Interest Rate Agreements and the
payment of all Obligations and notwithstanding the discharge thereof.
12. FURTHER ASSURANCES; POWER OF ATTORNEY. (a) Each Pledgor
agrees that it will join with the Pledgee in executing and, at such Pledgor's
own expense, file and refile under the Uniform Commercial Code such financing
statements, continuation statements and other documents in such offices as the
Pledgee (acting on its own or on the instructions of the Required Secured
Creditors) may reasonably deem necessary or appropriate and wherever required or
permitted by law in order to perfect and preserve the Pledgee's security
interest in the Collateral hereunder and hereby authorizes the Pledgee to file
financing statements and amendments thereto relative to all or any part of the
Collateral without the signature of such Pledgor where permitted by law, and
agrees to do such further acts and things and to execute and deliver to the
Pledgee such additional conveyances, assignments, agreements and instruments as
the Pledgee may reasonably require or deem advisable to carry into effect the
purposes of this Agreement or to further assure and confirm unto the Pledgee its
rights, powers and remedies hereunder or thereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, from time to time after the occurrence
and during the continuance of an Event of Default, in the Pledgee's discretion
to take any action and to execute any instrument which the Pledgee may deem
necessary or advisable to accomplish the purposes of this Agreement.
13. THE PLEDGEE AS COLLATERAL AGENT. The Pledgee will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed that the obligations
of the Pledgee as holder of the Collateral and interests therein and with
respect to the disposition thereof, and otherwise under this Agreement, are only
those expressly set forth in this Agreement. The Pledgee shall act hereunder on
the terms and conditions set forth herein and in Section 10 of the Credit
Agreement.
14. TRANSFER BY THE PLEDGORS. No Pledgor will sell or
otherwise dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber any of
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the Collateral or any interest therein (except in accordance with the terms of
this Agreement and the Secured Debt Agreements).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS.
(a) Each Pledgor represents, warrants and covenants that:
(i) it is the legal, beneficial and record owner of, and has
good and valid title to, all Collateral consisting of Stock and that it
has sufficient interest in all Collateral in which a security interest
is purported to be created hereunder for such security interest to
attach (subject, in each case, to no pledge, lien, mortgage,
hypothecation, security interest, charge, option, Adverse Claim or
other encumbrance whatsoever, except the liens and security interests
created by this Agreement);
(ii) it has full power, authority and legal right to pledge
all the Collateral pledged by it pursuant to this Agreement;
(iii) this Agreement has been duly authorized, executed and
delivered by such Pledgor and constitutes a legal, valid and binding
obligation of such Pledgor enforceable against such Pledgor in
accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether
enforcement is sought in equity or at law);
(iv) except to the extent already obtained or made, no consent
of any other party (including, without limitation, any stockholder or
creditor of such Pledgor or any of its Subsidiaries) and no consent,
license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any
governmental authority is required to be obtained by such Pledgor in
connection with (a) the execution, delivery or performance of this
Agreement, (b) the validity or enforceability of this Agreement (except
as set forth in clause (iii) above), (c) the perfection or
enforceability of the Pledgee's security interest in the Collateral or
(d) the exercise by the Pledgee of any of its rights or remedies
provided herein, except as may be required in connection with the
disposition of the Stock by laws affecting the offering and sale of
securities generally;
(v) the execution, delivery and performance of this Agreement
will not violate any provision of any applicable law or regulation or
of any order, judgment, writ, award or decree of any court, arbitrator
or governmental authority, domestic or foreign, applicable to such
Pledgor, or of the certificate of incorporation, operating agreement,
limited liability company agreement or by-laws of such Pledgor or of
any securities issued by such Pledgor or any of its Subsidiaries, or of
any mortgage, deed of trust, indenture, lease, loan agreement, credit
agreement or other contract, agreement or instrument or undertaking to
which such Pledgor or any of its Subsidiaries is a party or which
purports to be binding upon such Pledgor or any of its Subsidiaries or
upon any of their respective assets and will not result in the creation
or imposition of (or the obligation to create or impose) any lien or
encumbrance on any of the assets of such Pledgor or any of its
Subsidiaries except as contemplated by this Agreement;
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(vi) all of the Collateral (consisting of Stock, Limited
Liability Company Interests or Partnership Interests) has been duly and
validly issued, is fully paid and non-assessable and is subject to no
options to purchase or similar rights;
(vii) the pledge, collateral assignment and delivery to the
Pledgee of the Collateral consisting of certificated securities
pursuant to this Agreement creates a valid and perfected first priority
security interest in such Stock, and the proceeds thereof, subject to
no prior Lien or encumbrance or to any agreement purporting to grant to
any third party a Lien or encumbrance on the property or assets of such
Pledgor which would include the Stock and the Pledgee is entitled to
all the rights, priorities and benefits afforded by the UCC or other
relevant law as enacted in any relevant jurisdiction to perfect
security interests in respect of such Collateral; and
(viii) "control" (as defined in Section 8-106 of the UCC) has
been obtained by the Pledgee over all Collateral consisting of Stock
with respect to which such "control" may be obtained pursuant to
Section 8-106 of the UCC.
(b) Each Pledgor covenants and agrees that it will defend the
Pledgee's right, title and security interest in and to the Stock and the
proceeds thereof against the claims and demands of all persons whomsoever; and
each Pledgor covenants and agrees that it will have like title to and right to
pledge any other property at any time hereafter pledged to the Pledgee as
Collateral hereunder and will likewise defend the right thereto and security
interest therein of the Pledgee and the Secured Creditors.
(c) Each Pledgor covenants and agrees that it will take no
action which would violate any of the terms of any Secured Debt Agreement.
16. CHIEF EXECUTIVE OFFICE; RECORDS. The chief executive
office of each Pledgor is located at the address specified in Annex E hereto. No
Pledgor will move its chief executive office except to such new location as such
Pledgor may establish in accordance with the last sentence of this Section 16.
The originals of all documents in the possession of such Pledgor evidencing all
Collateral, including but not limited to all Limited Liability Company Interests
and Partnership Interests, and the only original books of account and records of
such Pledgor relating thereto are, and will continue to be, kept at such chief
executive office at the location specified in Annex E hereto, or at such new
locations as such Pledgor may establish in accordance with the last sentence of
this Section 16. All Limited Liability Company Interests and Partnership
Interests are, and will continue to be, maintained at, and controlled and
directed (including, without limitation, for general accounting purposes) from,
such chief executive office location specified in Annex E hereto, or such new
locations as such Pledgor may establish in accordance with the last sentence of
this Section 16. No Pledgor shall establish a new location for such offices
until (i) it shall have given to the Collateral Agent not less than 30 days'
prior written notice of its intention so to do, clearly describing such new
location and providing such other information in connection therewith as the
Collateral Agent may reasonably request and (ii) with respect to such new
location, it shall have taken all action, satisfactory to the Collateral Agent,
to maintain the security interest of the Collateral Agent in the Collateral
intended to be
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granted hereby at all times fully perfected and in full force and effect.
Promptly after establishing a new location for such offices in accordance with
the immediately preceding sentence, such Pledgor shall deliver to the Pledgee a
supplement to Annex E hereto so as to cause such Annex E hereto to be complete
and accurate.
17. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of
each 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,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever (other than termination of this Agreement pursuant to
Section 19 hereof), including, without limitation:
(i) any renewal, extension, amendment or modification of, or
addition or supplement to or deletion from any Secured Debt Agreement
(other than this Agreement in accordance with its terms), or any other
instrument or agreement referred to therein, or any assignment or
transfer of any thereof;
(ii) any waiver, consent, extension, indulgence or other
action or inaction under or in respect of any such agreement or
instrument or this Agreement (other than a waiver, consent or extension
with respect to this Agreement in accordance with its terms);
(iii) any furnishing of any additional security to the Pledgee
or its assignee or any acceptance thereof or any release of any
security by the Pledgee or its assignee;
(iv) any limitation on any party's liability or obligations
under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof; or
(v) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating
to any Pledgor or any Subsidiary of any Pledgor, or any action taken
with respect to this Agreement by any trustee or receiver, or by any
court, in any such proceeding, whether or not such Pledgor shall have
notice or knowledge of any of the foregoing.
18. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and any Pledgor shall have received from the Pledgee
a written request or requests that such Pledgor cause any registration,
qualification or compliance under any Federal or state securities law or laws to
be effected with respect to all or any part of the Collateral consisting of
Stock, Limited Liability Company Interests or Partnership Interests, such
Pledgor as soon as practicable and at its expense will use its best efforts to
cause such registration to be effected (and be kept effective) and will use its
best efforts to cause such qualification and compliance to be effected (and be
kept effective) as may be so requested and as would permit or facilitate the
sale and distribution of such Collateral consisting of Stock, Limited Liability
Company Interests or Partnership Interests, including, without limitation,
registration under the Securities Act of 1933, as then in effect (or any similar
statute then in effect), appropriate qualifications under applicable blue sky or
other state securities laws and appropriate compliance with any other
governmental requirements; provided, that the Pledgee shall furnish to such
Pledgor such
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information regarding the Pledgee as such Pledgor may request in writing and as
shall be required in connection with any such registration, qualification or
compliance. Each Pledgor will cause the Pledgee to be kept reasonably advised in
writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars and other documents incident thereto
as the Pledgee from time to time may reasonably request, and will indemnify, to
the extent permitted by law, the Pledgee and all other Secured Creditors
participating in the distribution of such Collateral consisting of Stock,
Limited Liability Company Interests or Partnership Interests against all claims,
losses, damages and liabilities caused by any untrue statement (or alleged
untrue statement) of a material fact contained therein (or in any related
registration statement, notification or the like) or by any omission (or alleged
omission) to state therein (or in any related registration statement,
notification or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same may have been caused by an untrue statement or omission based upon
information furnished in writing to such Pledgor by the Pledgee expressly for
use therein.
(b) If at any time when the Pledgee shall determine to
exercise its right to sell all or any part of the Collateral consisting of
Stock, Limited Liability Company Interests or Partnership Interests pursuant to
Section 7, and such Collateral or the part thereof to be sold shall not, for any
reason whatsoever, be effectively registered under the Securities Act of 1933,
as then in effect, the Pledgee may sell such Collateral or part thereof by
private sale in such manner and under such circumstances as the Pledgee may deem
necessary or advisable in order that such sale may legally be effected without
such registration. Without limiting the generality of the foregoing, in any such
event the Pledgee: (i) may proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Collateral or
part thereof shall have been filed under such Securities Act; (ii) may approach
and negotiate with a single possible purchaser to effect such sale; and (iii)
may restrict such sale to a purchaser who will represent and agree that such
purchaser is purchasing for its own account, for investment, and not with a view
to the distribution or sale of such Collateral or part thereof. In the event of
any such sale, the Pledgee shall incur no responsibility or liability for
selling all or any part of the Collateral at a price which the Pledgee may in
good xxxxx xxxx reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might be realized if the sale were
deferred until the registration as aforesaid.
19. TERMINATION; RELEASE. (a) On the Termination Date (as
defined below), this Agreement shall terminate (provided that all indemnities
set forth herein including, without limitation, in Section 11 hereof shall
survive any such termination) and the Pledgee, at the request and expense of any
Pledgor, will execute and deliver to such Pledgor a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement
(including, without limitation, UCC termination statements and instruments of
satisfaction, discharge and/or reconveyance), and will duly assign, transfer and
deliver to such Pledgor (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of the Pledgee and
as has not theretofore been sold or otherwise applied or released pursuant to
this Agreement, together with any moneys at the time held by the Pledgee or any
of its sub-agents hereunder and, with respect to any Collateral consisting of an
Uncertificated Security (other than an Uncertificated
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Security credited on the books of a Clearing Corporation), a Partnership
Interest or a Limited Liability Company Interest, a termination of the agreement
relating thereto executed and delivered by the issuer of such Uncertificated
Security pursuant to Section 3.2(a)(ii) or by the respective partnership or
limited liability company pursuant to Section 3.2(a)(iv). As used in this
Agreement, "Termination Date" shall mean the date upon which the total
commitments under each of the Credit Agreement, the DF Credit Agreement, the RSD
Loan Agreement and the D&O Credit Agreement and all Interest Rate Agreements
have been terminated and all Obligations have been paid in full.
(b) In the event that any part of the Collateral is sold or
otherwise disposed of in connection with a sale or disposition permitted by the
Credit Agreement, the DF Credit Agreement, the RSD Loan Agreement and the D&O
Credit Agreement or is otherwise released at the direction of the Required
Secured Creditors (but including all of the Banks if required by Section 11.12
of the Credit Agreement), and the proceeds of such sale or sales or from such
release are applied in accordance with the terms of the Secured Debt Agreements
to the extent required to be so applied, the Pledgee, at the request and expense
of any Pledgor will duly assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) such of the Collateral as
is then being (or has been) so sold or released and as may be in possession of
the Pledgee and has not theretofore been released pursuant to this Agreement.
(c) At any time that any Pledgor desires that Collateral be
released as provided in the foregoing Section 19(a) or (b), it shall deliver to
the Pledgee a certificate signed by an executive officer of such Pledgor stating
that the release of the respective Collateral is permitted pursuant to Section
19(a) or (b). If reasonably requested by the Pledgee (although the Pledgee shall
have no obligation to make any such request), such Pledgor shall furnish
appropriate legal opinions (from counsel reasonably acceptable to the Pledgee)
to the effect set forth in the immediately preceding sentence.
(d) The Pledgee shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it in accordance
with this Section 19.
20. NOTICES, ETC. All notices and other communications
hereunder shall be in writing and shall be delivered or mailed by first class
mail, postage prepaid, addressed:
(i) if to any Pledgor, at its address set forth opposite its
signature below;
(ii) if to the Pledgee, at:
Deutsche Bank AG, New York Branch
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
-22-
(iii) if to any Bank, at such address as such Bank shall have
specified in the Credit Agreement;
(iv) if to any DF Bank, at such address as such DF Bank shall
have specified in the DF Credit Agreement;
(v) if to the RSD Bank, at such address as the RSD Bank shall
have specified in the RSD Loan Agreement;
(vi) if to any D&O Bank, at such address as such D&O Bank
shall have specified in the D&O Credit Agreement; and
(vii) if to any Interest Rate Creditor, at such address as
such Interest Rate Creditor shall have specified in writing to the
Borrower and the Pledgee;
or at such address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
21. THE PLEDGEE. The Pledgee will hold, directly or indirectly
in accordance with this Agreement, all items of the Collateral at any time
received by it under this Agreement. It is expressly understood and agreed that
the obligations of the Pledgee with respect to the Collateral, interests therein
and the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in the UCC and this Agreement.
22. WAIVER; AMENDMENT. Except as contemplated in Section 28
hereof, none of the terms and conditions of this Agreement may be changed,
waived, discharged or terminated in any manner whatsoever unless such change,
waiver, discharge or termination is in writing duly signed by each Pledgor to be
bound thereby and the Pledgee (with the consent of the Required Secured
Creditors), provided, however, that no such change, waiver, modification or
variance shall be made to Section 9 hereof or this Section 22 without the
consent of each Secured Creditor adversely affected thereby, provided further
that any change, waiver, modification or variance affecting the rights and
benefits of a single Class (as defined below) of Secured Creditors (and not all
Secured Creditors in a like or similar manner) shall require the written consent
of the Requisite Creditors of such Class of Secured Creditors. For the purpose
of this Agreement, the term "Class" shall mean each class of Secured Creditors,
i.e., whether (i) the Bank Creditors as holders of the Credit Agreement
Obligations, (ii) the DF Bank Creditors as holders of the DF Credit Agreement
Obligations, (iii) the RSD Bank Creditor as holder of the RSD Loan Agreement
Obligations, (iv) the D&O Bank Creditors as holders of the D&O Credit Agreement
Obligations or (v) the Interest Rate Creditors as holders of the Interest Rate
Obligations. For the purpose of this Agreement, the term "Requisite Creditors"
of any Class shall mean each of (i) with respect to the Credit Agreement
Obligations, the Required Banks, (ii) with respect to the DF Credit Agreement
Obligations, the Required Banks (as defined therein), (iii) with respect to the
RSD Loan Agreement Obligations, the RSD Bank, (iv) with respect to the D&O
Credit Agreement Obligations, the Required Banks (as defined therein) and (v)
with respect to the Interest Rate Obligations, the holders of 51% of all
obligations outstanding from time to time under the Interest Rate Agreements.
-23-
23. MISCELLANEOUS. This Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and
effect, subject to release and/or termination as set forth in Section 19, (ii)
be binding upon each Pledgor, its successors and assigns; provided, however,
that no Pledgor shall assign any of its rights or obligations hereunder without
the prior written consent of the Pledgee (with the prior written consent of the
Required Secured Creditors), and (iii) inure, together with the rights and
remedies of the Pledgee hereunder, to the benefit of the Pledgee, the Secured
Creditors and their respective successors, transferees and assigns. THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK. The headings of the several sections and subsections in this
Agreement are for purposes of reference only and shall not limit or define the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument. In the event that any provision of this Agreement shall prove to
be invalid or un enforceable, such provision shall be deemed to be severable
from the other provisions of this Agreement which shall remain binding on all
parties hereto.
24. WAIVER OF JURY TRIAL. Each Pledgor hereby irrevocably
waives all right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this agreement or the transactions contemplated
hereby.
25. RECOURSE. This Agreement is made with full recourse to
each Pledgor and pursuant to and upon all the representations, warranties,
covenants and agreements on the part of the Pledgors contained herein and in the
other Secured Debt Agreements and otherwise in writing in connection herewith or
therewith.
26. LIMITED OBLIGATIONS. It is the desire and intent of the
Pledgors and the Secured Creditors that this Agreement shall be enforced against
each Pledgor to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought.
27. NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER. (a)
Nothing herein shall be construed to make the Pledgee or any other Secured
Creditor liable as a member of any limited liability company or partnership and
neither the Pledgee nor any other Secured Creditor by virtue of this Agreement
or otherwise (except as referred to in the following sentence) shall have any of
the duties, obligations or liabilities of a member of any limited liability
company or partnership. The parties hereto expressly agree that, unless the
Pledgee shall become the absolute owner of Collateral consisting of a Limited
Liability Company Interest or Partnership Interest pursuant hereto, this
Agreement shall not be construed as creating a partnership or joint venture
among the Pledgee, any other Secured Creditor and/or any Pledgor.
(b) Except as provided in the last sentence of paragraph (a)
of this Section 27, the Pledgee, by accepting this Agreement, did not intend to
become a member of any limited liability company or partnership or otherwise be
deemed to be a co-venturer with respect to any Pledgor or any limited liability
company or partnership either before or after an Event of Default shall have
occurred. The Pledgee shall have only those powers set forth herein and the
Secured
-24-
Creditors shall assume none of the duties, obligations or liabilities of
a member of any limited liability company or partnership or any Pledgor except
as provided in the last sentence of paragraph (a) of this Section 27.
(c) The Pledgee and the other Secured Creditors shall not be
obligated to perform or discharge any obligation of any Pledgor as a result of
the pledge hereby effected.
(d) The acceptance by the Pledgee of this Agreement, with all
the rights, powers, privileges and authority so created, shall not at any time
or in any event obligate the Pledgee or any other Secured Creditor to appear in
or defend any action or proceeding relating to the Collateral to which it is not
a party, or to take any action hereunder or thereunder, or to expend any money
or incur any expenses or perform or discharge any obligation, duty or liability
under the Collateral.
28. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to any Secured Debt Agreement shall
automatically become a Pledgor hereunder by executing a counterpart hereof and
delivering the same to the Pledgee.
* * *
-25-
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
Addresses:
195 Xxxx Xxxxxx Xxxxx Road FRONTIER INSURANCE GROUP, INC.,
Xxxx Xxxx, XX 00000-0000 as Pledgor
Attention: Xxxx X. Xxxxxxx
Tel. No. (000) 000-0000
Fax. No. (000) 000-0000
By:
-------------------------------
Name:
Title:
DEUTSCHE BANK AG, NEW YORK
BRANCH, as Pledgee
By:
-------------------------------
Name:
Title:
ANNEX A
LIST OF SUBSIDIARIES
[BORROWER TO LIST SUBSIDIARIES]
ANNEX B
LIST OF STOCK
Name of
Issuing Type of Number of Certificate Percentage Sub-clause of Section 3.2(a)
Corporation Shares Shares No. Owned of Pledge Agreement
----------- ------ -------- ----------- ---------- ----------------------------
[TO BE PROVIDED BY THE BORROWER]
ANNEX C
LIST OF LIMITED LIABILITY COMPANY INTERESTS
ANNEX D
LIST OF PARTNERSHIP INTERESTS
Name of Type of Sub-clause of Section 3.2(a)
Partnership Interest Percentage Owned of Pledge Agreement
----------- -------- ---------------- -------------------
[TO BE PROVIDED BY THE BORROWER]
ANNEX E
LIST OF CHIEF EXECUTIVE OFFICES
Annex F
Form of Agreement Regarding Uncertificated Securities, Limited Liability
Company Interests and Partnership Interests
AGREEMENT (as amended, modified or supplemented from time to
time, this "Agreement"), dated as of _________ __, _____, among each of the
undersigned pledgors (each a "Pledgor" and collectively, the "Pledgors"),
DEUTSCHE BANK AG, NEW YORK BRANCH, not in its individual capacity but solely as
Collateral Agent (the "Pledgee"), and __________, as the issuer of the
Uncertificated Securities, Limited Liability Company Interests and/or
Partnership Interests (each as defined below) (the "Issuer").
W I T N E S S E T H :
WHEREAS, each Pledgor and the Pledgee are entering into a
Pledge Agreement, dated as of January 21, 2000 (as amended, amended and
restated, modified or supplemented from time to time, the "Pledge Agreement"),
under which, among other things, in order to secure the payment of the
Obligations (as defined in the Pledge Agreement), each Pledgor will pledge to
the Pledgee for the benefit of the Secured Creditors (as defined in the Pledge
Agreement), and grant a security interest in favor of the Pledgee for the
benefit of the Secured Creditors in, all of the right, title and interest of
such Pledgor in and to any and all (1) "uncertificated securities" (as defined
in Section 8-102(a)(18) of the Uniform Commercial Code, as adopted in the State
of New York) ("Uncertificated Securities"), (2) Partnership Interests (as
defined in the Pledge Agreement) and (3) Limited Liability Company Interests (as
defined in the Pledge Agreement), in each case issued from time to time by the
Issuer, whether now existing or hereafter from time to time acquired by such
Pledgor (with all of such Uncertificated Securities, Partnership Interests and
Limited Liability Company Interests being herein collectively called the "Issuer
Pledged Interests"); and
WHEREAS, each Pledgor desires the Issuer to enter into this
Agreement in order to perfect the security interest of the Pledgee under the
Pledge Agreement in the Issuer Pledged Interests, to vest in the Pledgee control
of the Issuer Pledge Interests and to provide for the rights of the parties
under this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Each Pledgor hereby irrevocably authorizes and directs the
Issuer, and the Issuer hereby agrees, to comply with any and all reasonable
instructions and reasonable orders originated by the Pledgee (and its successors
and assigns) regarding any and all of the Issuer Pledged Interests without the
further consent by the registered owner (including the respective Pledgor), and
not to comply with any instructions or orders regarding any or all of the Issuer
Pledged Interests originated by any person or entity other than the Pledgee (and
its successors and assigns) or a court of competent jurisdiction.
Annex F
Page 2
2. The Issuer hereby certifies that (i) no notice of any
security interest, lien or other encumbrance or claim affecting the Issuer
Pledged Interests (other than the security interest of the Pledgee) has been
received by it, and (ii) the security interest of the Pledgee in the Issuer
Pledged Interests has been registered in the books and records of the Issuer.
3. The Issuer hereby represents and warrants that (i) the
pledge by the Pledgors of, and the granting by the Pledgors of a security
interest in, the Issuer Pledged Interests to the Pledgee, for the benefit of the
Secured Creditors, does not violate the charter, by-laws, partnership agreement,
membership agreement or any other agreement governing the Issuer or the Issuer
Pledged Interests, and (ii) the Issuer Pledged Interests are fully paid and
nonassessable.
4. All notices, statements of accounts, reports, prospectuses,
financial statements and other communications to be sent to any Pledgor by the
Issuer in respect of the Issuer will also be sent to the Pledgee at the
following address:
Deutsche Bank AG, New York Branch
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Tel No.: (000) 000-0000
Fax No.: (000) 000-0000
5. Until the Pledgee shall have delivered written notice to
the Issuer that all of the Obligations have been paid in full and this Agreement
is terminated, the Issuer will send any and all redemptions, distributions,
interest or other payments in respect of the Issuer Pledged Interests from the
Issuer for the account of the Pledgor only by wire transfers to the following
address:
----------------------------
----------------------------
----------------------------
ABA No.:
Account in the Name of:
Account No.:
6. Except as expressly provided otherwise in Sections 4 and 5,
all notices, instructions, orders and communications hereunder shall be sent or
delivered by mail, telex, telecopy or overnight courier service and all such
notices and communications shall, when mailed, telexed, telecopied or sent by
overnight courier, be effective when deposited in the mails or delivered to the
overnight courier, prepaid and properly addressed for delivery on such or the
next Business Day, or sent by telex or telecopier. All notices and other
communications shall be in writing and addressed as follows:
Annex F
Page 3
(a) if to any Pledgor, at:
c/o Frontier Insurance Group, Inc.
000 Xxxx Xxxxxx Xxxxx Xxxx
Xxxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
(b) if to the Pledgee, at:
Deutsche Bank AG, New York Branch
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Tel No.: (000) 000-0000
Fax No.: (000) 000-0000
(c) if to the Issuer, at:
-----------------------
-----------------------
-----------------------
Attention: ______________
Tel. No.: ___________
Fax No.: ___________
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. As used in this
Section 6, "Business Day" means any day other than a Saturday, Sunday, or other
day in which banks in New York are authorized to remain closed.
7. This Agreement shall be binding upon the successors and
assigns of each Pledgor and the Issuer and shall inure to the benefit of and be
enforceable by the Pledgee and its successors and assigns. This Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which shall constitute one instrument. In the event that any provision of
this Agreement shall prove to be invalid or unenforceable, such provision shall
be deemed to be severable from the other provisions of this Agreement which
shall remain binding on all parties hereto. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever except in writing signed by the Pledgee, the Issuer and any Pledgor
which at such time owns any Issuer Pledged Interests.
8. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its
principles of conflict of laws.
Annex F
Page 4
IN WITNESS WHEREOF, each Pledgor, the Pledgee and the Issuer
have caused this Agreement to be executed by their duly elected officers duly
authorized as of the date first above written.
--------------------------,
as Pledgor
By
----------------------------------
Name:
Title:
DEUTSCHE BANK AG, NEW YORK BRANCH,
not in its individual capacity but solely as Collateral
Agent and Pledgee
By
----------------------------------
Name:
Title:
[ ],
the Issuer
By
----------------------------------
Name:
Title:
