EXHIBIT 10.37
PLEDGE AGREEMENT
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THIS PLEDGE AGREEMENT, dated as of October 17, 1996, made by
Corinthian Colleges, Inc., a Delaware corporation (the "Company"), and Xxxxxx
Colleges, Inc., a Delaware corporation ("Xxxxxx" and, together with the Company,
collectively referred to herein as the "Pledgors" and individually as a
"Pledgor"), in favor of The Prudential Insurance Company of America ("Pledgee").
W I T N E S S E T H:
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WHEREAS, the Pledgors are the owners of the shares of stock listed
opposite each Pledgor's name in Schedule A attached hereto and issued by the
companies listed opposite each Pledgor's name (the "Pledged Companies") set
forth on Schedule A (which, together with any additional shares pledged to the
Pledgee, are collectively referred to as the "Pledged Shares");
WHEREAS, the Company and the Pledgee have or are about to enter into
the Note Purchase and Revolving Credit Agreement, dated as of the date hereof
(as amended from time to time, the "Note Agreement"), pursuant to which the
Pledgee has agreed to purchase the Senior Secured Term Notes due 2003 of the
Company in the aggregate principal amount of $22,500,000 (as the same may be
amended from time to time, together with any notes issued in substitution or
exchange therefor, the "Term Notes"), and to make loans from time to time in an
aggregate principal amount not to exceed $5,000,000 outstanding at any time to
be evidenced by the Company's Senior Secured Revolving Notes due 1999 (as the
same may be amended from time to time, together with any note or notes issued in
substitution or exchange therefor, the "Revolving Notes" and, together with the
Term Notes collectively referred to herein as the "Notes" and individually as a
"Note"); and
WHEREAS, the Pledgee is willing to purchase the Notes and make
revolving loans, subject to the terms, covenants and conditions set forth in the
Note Agreement, but only if the Company's obligations under the Notes, the
Company's other obligations with respect to the Note Agreement and related
documents and all other obligations of the Company and each of its Subsidiaries
under any Transaction Document are collateralized by, among other things, all of
the Pledged Collateral through the granting of liens and security interests, as
provided for herein and in certain other documents.
NOW, THEREFORE, for the above reasons, in consideration of the
premises, and of the mutual covenants contained in the Note Agreement, and to
induce the Pledgee to purchase the Notes and make revolving loans pursuant to
the Note Agreement, the parties hereto agree as follows:
SECTION 1. Defined Terms.
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1.1 Terms Defined in the Note Agreement. All capitalized terms used
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in this Agreement that are defined in the Note Agreement are used in this
Agreement as defined in the Note Agreement, unless otherwise defined herein.
1.2 Other Defined Terms. As used in this Agreement, the following
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terms shall have the meanings indicated:
"Note Holder" shall mean, at any point in time, any holder of any of
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the outstanding Notes, collectively which shall be referred to as the "Note
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Holders".
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"Obligations" shall mean any and all obligations, liabilities and
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indebtedness of each Pledgor to the Pledgee or any other Note Holder, of any and
every kind and nature, whether principal, interest or premium, whether now or
hereafter owing, whether primary or secondary, direct or indirect, fixed,
contingent or otherwise, and whether an obligation for payment, performance or
otherwise, including, without limitation, all amounts due under the Note
Agreement, the Notes or any other Transaction Document (including, without
limitation, the principal of, interest on and any Yield Maintenance Amount with
respect to any Note) and the other instruments and documents (including this
Agreement) executed in connection with any of the foregoing instruments and
documents, other than the Warrants and the Registration Rights Agreement.
"UCC" shall have the meaning set forth in Section 1.3 of this
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Agreement.
1.3 Terms Defined in Uniform Commercial Code. All other terms used
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in this Agreement that are not specifically defined herein or the definitions of
which are not incorporated herein by reference shall have the meanings assigned
to such terms in the Uniform Commercial Code in effect in the State of
California as of the date first above written ("UCC") to the extent such other
terms are defined therein.
1.4 Singular/Plural. Unless the context of this Agreement otherwise
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clearly requires, references to the plural include the singular, the singular
include the plural and "or" has the inclusive meaning represented by the phrase
"and/or." The words "hereof," "herein," "hereunder" and similar terms in this
Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement. The section and other headings in this Agreement are for
reference purposes only and shall not control or affect the construction of this
Agreement or the interpretation thereof in any respect. References to sections,
subsections and schedules are to this Agreement unless stated otherwise.
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SECTION 2. Pledge. Each Pledgor hereby pledges, hypothecates,
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assigns, transfers, sets over and delivers to the Pledgee, and grants to the
Pledgee a security interest in, all of the following (all being collectively
referred to herein as the "Pledged Collateral"):
(a) the Pledged Shares and the certificates representing the Pledged
Shares, and all cash, securities, dividends, rights and other property at any
time and from time to time declared or distributed in respect of or in exchange
for any or all of the Pledged Shares;
(b) all additional shares of stock of any issuer of any of the
Pledged Shares at any time and from time to time acquired by each Pledgor in any
manner, and the certificates representing such additional shares, and also cash,
securities, dividends, rights and other property at any time and from time to
time declared or distributed in respect of or in exchange for any or all of such
shares; and
(c) all other property hereafter delivered in substitution for or in
addition to any of the foregoing, all certificates and instruments representing
or evidencing such property and all cash, securities, interest, dividends,
rights and other property at any time and from time to time declared or
distributed in respect of or in exchange for any or all thereof.
SECTION 3. Security for Obligations. This Agreement secures the
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payment of any and all of the Obligations.
SECTION 4. Delivery of Pledged Shares. All certificates or
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instruments representing or evidencing the Pledged Collateral shall be delivered
to the Pledgee and held by the Pledgee pursuant hereto and shall be accompanied
by duly executed instruments of transfer or assignment in blank, with signatures
guaranteed, all in form and substance satisfactory to the Pledgee. Such
certificates or instruments representing or evidencing the Pledged Collateral
shall be delivered concurrently with the execution of this Agreement by each
Pledgor and other Pledged Collateral shall be so delivered immediately upon the
acquisition by each Pledgor or possession thereof. In addition, the Pledgee
shall have the right at any time following the occurrence of an Event of Default
to exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations.
SECTION 5. Representations and Warranties. Each Pledgor represents
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and warrants that, as of the date hereof:
(a) the Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable;
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(b) it has good and lawful right and power to enter into this
Agreement and to pledge, assign and deliver the Pledged Collateral, all as
provided herein;
(c) the Pledged Shares constitute all of the issued and outstanding
shares of the stock of each of the Pledged Companies;
(d) it is the legal and beneficial owner of the Pledged Collateral
free and clear of any lien, security interest, option or other charge,
encumbrance or restriction on the Pledged Collateral except for the security
interest created by this Agreement;
(e) this Agreement constitutes a legal, valid and binding obligation
of such Pledgor and is enforceable against such Pledgor in accordance with the
terms of the Agreement, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and to general principles of equity;
(f) there are no outstanding options, warrants or other agreements
with respect to the Pledged Collateral other than this Agreement;
(g) it is not a party to or otherwise bound by any agreement, other
than this Agreement, which restricts in any manner the rights of any present or
future holder of any of the Pledged Collateral with respect to the Pledged
Collateral;
(h) no portion of the Pledged Shares is subject to any right of first
refusal or restriction which could affect the ability of any purchaser from any
Pledgee to sell the same, except for restrictions prohibiting distributions in
violation of the Securities Act;
(i) no consent of any other party and no authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required either for (i) the pledge by such Pledgor of the
Pledged Collateral pursuant to this Agreement or for the execution, delivery or
performance of this Agreement by such Pledgor, (ii) the exercise by the Pledgee
of the voting or other rights provided for in this Agreement or the remedies in
respect of the Pledged Collateral pursuant to this Agreement (except as may be
required in connection with such disposition by laws affecting the offering and
sale of securities generally), or (iii) the perfection of the security interests
granted by this Agreement;
(j) upon delivery of the Pledged Collateral as required by Section 2
of this Agreement, the Pledgee shall have a continuing and valid first perfected
priority security interest in the Pledged Collateral securing payment of the
Obligations and each one of them will be a "bona fide purchaser" (as such term
is defined in Article 8 of the UCC) of the Pledged Collateral;
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(k) it has not performed any acts which might prevent the Pledgee
from enforcing any of the terms and conditions of this Agreement; and
(l) all of the representations and warranties made in this Section 5
shall survive the execution and delivery of this Agreement and the extension of
credit by the Pledgee to any of the Pledgors and shall be deemed to be repeated
and confirmed on the date of the granting of each extension of credit and, as
related to any additional securities or property which hereafter becomes subject
to the pledge hereunder, each time additional securities or property become
subject to pledge under this Agreement.
SECTION 6. Further Assurances. Each Pledgor agrees that at any time
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and from time to time, at the sole cost and expense of such Pledgor, it will
promptly execute and deliver all further instruments and documents, and take all
further action (including, without limitation, the filing of Uniform Commercial
Code financing statements), which may be necessary or desirable, or that the
Pledgee may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Pledgee to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral.
SECTION 7. Pledgee Appointed Attorney-in-Fact. Each Pledgor appoints
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the Pledgee (and Persons designated by the Pledgee) as its attorney-in-fact,
with full power of substitution and full authority in the place and stead of
each Pledgor and in the name of each Pledgor or otherwise, from time to time 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. Without limiting the generality of the foregoing, the Pledgee shall
have the right, whether or not an Event of Default shall have occurred and be
continuing, to (i) notify the parties obligated on any of the Pledged Collateral
to make payment to the Pledgee of any amounts due or to become due thereunder,
and (ii) take control of any the Pledged Collateral not in the Pledgee's
possession.
SECTION 8. Voting Rights; Dividends.
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(a) So long as no Event of Default shall have occurred and be
continuing:
(i) each Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof so long as such exercise is not, and is
not for any purpose, inconsistent with the terms of this Agreement or
the other Transaction Documents; and
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(ii) each Pledgor shall be entitled to receive any and all cash
dividends on the Pledged Collateral, the description and payment of
which is not in violation of any provision of any Transaction
Document, but any and all stock dividends, liquidating dividends,
distributions in property, returns of capital or other dividends or
distributions made on or in respect of the Pledged Collateral, whether
resulting from a subdivision, combination or reclassification of the
outstanding capital stock of any issuer thereof or received in
exchange for the Pledged Collateral or any part thereof or as a result
of any merger, consolidation, acquisition or other exchange of assets
to which any issuer may be a party or otherwise, and any and all cash
and other property received in exchange for any Pledged Collateral
hereunder and, if received by such Pledgor, shall forthwith be
delivered to the Pledgee (accompanied, if appropriate, by proper
instruments of assignment or stock powers executed by such Pledgor in
accordance with the Pledgee' instructions or both) to be held subject
to the terms of this Agreement.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) all rights of each Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to Section 8(a)(i) hereof and to receive the dividends and
other payments which it would otherwise be authorized to receive and
retain pursuant to Section 8(a)(ii) hereof shall become vested in the
Pledgee, which shall thereupon have the sole right to exercise such
voting and other consensual rights and to receive and hold as Pledged
Collateral such dividends and other payments; and
(ii) all dividends and other payments which are received by each
Pledgor contrary to the provisions of Section 8(b)(i) hereof shall be
(A) received in trust for the benefit of the Pledgee, (B) segregated
from other funds of such Pledgor, and (C) forthwith paid over to the
Pledgee as Pledged Collateral in the same form as so received (with
any necessary endorsement).
SECTION 9. Covenants.
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9.1 Transfers and Other Liens. Each Pledgor covenants that it shall
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not:
(a) sell, assign or otherwise dispose of, or grant any option or
other right with respect to, any of the Pledged Collateral without the prior
written consent of the Pledgee;
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(b) create or permit to exist any Lien upon or with respect to any of
the Pledged Collateral, except in favor of the Pledgee;
(c) cause or permit any of the Pledged Companies to amend its
Articles of Incorporation or other organizational document in any way that
affects the Pledged Collateral without the prior written consent of the Pledgee;
(d) become a party to or otherwise bound by any agreement, other than
this Agreement, which restricts in any manner the rights of any present or
future holder of any of the Pledged Collateral with respect to the Pledged
Collateral;
(e) permit any portion of the Pledged Shares to be subject to any
right of first refusal or restriction which could affect the ability of any
purchaser from the Pledgee to sell the same, except for restrictions prohibiting
distributions in violation of the Securities Act; nor
(f) perform any acts which might prevent the Pledgee from enforcing
any terms and conditions of this Agreement.
9.2 Defend Pledgee's Interest. Each Pledgor covenants and agrees
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that it will defend Pledgee's right, title and security interest in and to the
Pledged Collateral and the proceeds of the Pledged Collateral against claims and
demands of all Persons whatsoever.
9.3 Voting Pledged Collateral. Each Pledgor covenants that it shall
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not vote the Pledged Collateral to (i) authorize the issuance of any additional
shares of capital stock of any of the issuers of any of the Pledged Collateral,
or (ii) directly or indirectly reclassify or change any rights with respect to
the Pledged Collateral, unless the Pledgee shall have first consented in
writing.
SECTION 10. Pledgee May Perform. If any Pledgor fails to perform any
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agreement contained herein, after written notice to Pledgor the Pledgee may
itself perform, or cause performance of, such agreement, and the expenses of the
Pledgee incurred in connection therewith shall be payable by such Pledgor in
accordance with the provisions of Section 14 of this Agreement.
SECTION 11. Reasonable Care. The Pledgee and the Pledgee shall be
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deemed to have exercised reasonable care in the custody and preservation of the
Pledged Collateral in their possession if the Pledged Collateral is accorded
treatment substantially equal to that which the Pledgee, accords its own
property, it being understood that the Pledgee shall not have any responsibility
under any circumstances whatsoever for (i) ascertaining or taking action with
respect to calls, conversions,
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exchanges, maturities, tenders or other matters relative to any Pledged
Collateral, whether or not the Pledgee has or is deemed to have knowledge of
such matters, or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Pledged Collateral. The Pledgee shall further be
deemed to have exercised reasonable care in the custody and preservation of any
of the Pledged Collateral in its possession if it takes such action for that
purpose as any Pledgor shall request in writing, but failure by the Pledgee to
comply with any such request shall not of itself be deemed a failure to exercise
reasonable care, and no failure by the Pledgee to do any act with respect to the
preservation of such Pledged Collateral not so requested by a Pledgor shall of
itself be deemed a failure to exercise reasonable care in the custody or
preservation of such Pledged Collateral.
SECTION 12. Rights Regarding Pledged Collateral and Obligations. The
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Pledgee may from time to time, after the occurrence and continuance of an Event
of Default, without notice to any Pledgor, take all or any of the following
actions:
(a) transfer all or any part of the Pledged Collateral into the name
of the Pledgee or its nominee or nominees, with or without disclosing that such
Pledged Collateral is subject to the lien and security interest hereunder;
(b) notify the parties obligated on any of the Pledged Collateral to
make payment to the Pledgee of any amounts due or to become due thereunder;
(c) enforce collection of any of the Pledged Collateral by suit or
otherwise, and surrender, release or exchange all or any part thereof or
compromise or extend or renew for any period (whether or not longer than the
original period) any obligations of any nature of any party with respect
thereto; and
(d) take control of any proceeds of the Pledged Collateral.
SECTION 13. Remedies Upon Default.
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(a) Each Pledgor agrees that from time to time, after an Event of
Default shall occur and be continuing, the Pledgee or its agent or agents shall
have the right to sell the Pledged Collateral at a price and using such methods
as may be determined at the sole discretion of the Pledgee without notice to any
Pledgor, or, if such waiver of notice is invalid at law, upon ten (10) days'
written notice (which each Pledgor agrees is reasonable notification within the
meaning of Section 9-504(3) of the UCC). Any purchaser of the Pledged
Collateral at any such sale shall thereafter hold the same, absolutely, free
from any claim or right of any kind, including any equitable right or right of
redemption of any Pledgor. Each Pledgor hereby specifically waives all rights
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of redemption, stay or appraisal, which it has or may have under any rule of law
or statute now existing or hereafter adopted. At the request of the Pledgee,
each Pledgor shall execute any and all documents or instruments which the
Pledgee deems desirable to evidence the Pledgee's rights as aforesaid. Such a
sale shall not be a prerequisite to the Pledgee's rights to require the Pledgor
to pay the Pledgee, in full, for any of the Obligations incurred by the Pledgee.
(b) Each Pledgor further agrees that the Pledgee, or any agent or
agents of the Pledgee, may:
(i) reasonably restrict the eligibility of prospective buyers;
(ii) bid on or purchase any of the Pledged Collateral at any
sale;
(iii) conduct, adjourn or cancel any public sale, to the
extent permitted by law or private sale for cash or upon credit as the
Pledgee sees fit, subject to compliance with the terms of any
applicable laws;
(iv) resell the Pledged Collateral on credit;
(v) include in the reimbursement costs of such sale any
expenses or indemnification practical to effectuate the sale or
desirable to comply with the laws, regulations or instruments referred
to in clause (iii) above;
(vi) grant partial or limited waivers or releases without
impairing other future rights of the Pledgee; and
(vii) if such sale is upon credit, (A) defer any delivery of
excess proceeds to such Pledgor until full payment for the Pledged
Collateral so sold is collected, (B) have such Pledgor remain liable
until full payment for the Pledged Collateral so sold is collected,
and (C) retain the Pledged Collateral or a security interest in the
Pledged Collateral.
(c) Each Pledgor further agrees that the Pledgee shall be entitled to
exercise all of the rights and remedies available to a secured party under the
UCC and all rights and remedies available to it under this Agreement, the Note
Agreement and any other document or instrument securing or evidencing the
Obligations, including, without limitation, the rights to exercise and enforce
their rights under Section 8(b) hereof with respect to the Pledged Collateral
and the right to sell, assign, transfer, endorse and deliver the whole or, from
time to time, any part of the Pledged Collateral or any interest therein. All
remedies hereunder are
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cumulative and are not exclusive of any other remedies provided by law.
(d) Each Pledgor recognizes that the Pledgee may be unable to effect
a public sale of all or a part of the Pledged Collateral and therefore, may be
compelled to resort to one or more private sales to a restricted group of
offerees and purchasers who fulfill certain suitability standards and who agree,
among other things, to acquire the Pledged Collateral for their own account for
investment and not for distribution or resale. Each Pledgor consents to private
sales so made even though such sales may be at prices and upon other terms less
favorable than if the Pledged Collateral were sold at public sales. Each Pledgor
agrees that the Pledgee shall have no obligation to delay sale of the Pledged
Collateral for the period of time necessary to permit the offering and sale of
the Pledged Collateral to be registered for sale under applicable laws. Each
Pledgor consents that private sales made under the foregoing circumstances will
be deemed to have been made in a commercially reasonable manner, and that the
Pledgee shall not be liable nor accountable to any Pledgor for any discount
allowed because such Pledged Collateral is sold in compliance with any such
limitation or restriction. In case of any sale of the Pledged Collateral on
credit or for future delivery, the Pledgee shall not incur any liability in case
of the failure of such purchaser to take up and pay for the Pledged Collateral
and, in case of any such failure, the Pledged Collateral may again be sold upon
like notice. In lieu of exercising the power of sale herein conferred upon it,
the Pledgee may proceed by a suit or suits at law or in equity to foreclose and
sell the Pledged Collateral. Each Pledgor agrees that the Pledgee shall have the
right to continue to retain the Pledged Collateral until such time as the
Pledgee (in its sole judgment) believe that an advantageous price can be secured
for the Pledged Collateral, and the Pledgee shall not be liable to any Pledgor
for any loss in the value of the Pledged Collateral by reason of any delay in
the sale thereof.
SECTION 14. Expenses. Each Pledgor will upon demand pay to the
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Pledgee the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which the
Pledgee may incur in connection with (i) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Pledged
Collateral hereunder, or (ii) the failure by such Pledgor to perform or observe
any of the provisions of this Agreement.
SECTION 15. Security Interest Absolute.
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(a) With respect to Xxxxxx, the Pledgee is hereby authorized, without
notice to or demand upon Xxxxxx, which notice or demand is expressly waived
hereby, and without discharging or otherwise affecting the obligations of Xxxxxx
hereunder (which
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shall remain absolute and unconditional notwithstanding any such action or
omission to act), from time to time, to:
(i) supplement, renew, extend, accelerate or otherwise change
the time for payment of, or other terms relating to, the Obligations or any
portion thereof, or otherwise modify, amend or change the terms, or waive
or otherwise consent to noncompliance with any provision, of the Note
Agreement or any other Transaction Document, including, without limitation,
increase the rate of interest thereon;
(ii) receive, take and hold security or collateral for the
payment or performance of the Obligations, or any part thereof, and
exchange, enforce, waive, substitute, liquidate, terminate, abandon, fail
to perfect, subordinate, transfer, otherwise alter and release any such
security or collateral;
(iii) settle, release, compromise, collect or otherwise
liquidate the Obligations, or any part thereof, in any manner;
(iv) add, release or substitute any one or more guarantors,
makers or endorsers of all or any part of the Obligations, and otherwise
deal with the Company or any guarantor, maker or endorser as the Pledgee
may elect in its sole discretion;
(v) apply any and all payments or recoveries from any Pledgor,
from the Company or any guarantor, maker or endorser of all or any part of
the Obligations, or any collateral to the Obligations in such order as the
Pledgee in its sole discretion may determine, whether any or all of the
Obligations are secured or unsecured or guaranteed or not guaranteed by
others.
(b) Xxxxxx hereby agrees that its obligations under this Agreement
are absolute and unconditional and shall not be discharged or otherwise affected
as a result of:
(i) the invalidity or unenforceability of any security for or
guaranty of all or any part of the Obligations or of the Note Agreement or
any other Transaction Document, or the lack of perfection or failure of
priority of any security for all or any part of the Obligations;
(ii) the absence of any attempt to collect the Obligations, or
any portion thereof, from the Company or any other Person or other action
to enforce the same;
(iii) any failure by the Pledgee to acquire, perfect and
maintain any security interest in,
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or to preserve any rights to, any security or collateral for all or any
part of the Obligations;
(iv) the avoidance of any lien or security interest in favor of
the Pledgee for any reason;
(v) any borrowing or grant of a security interest by the
Company or any guarantor, as debtor-in-possession, or extension of credit,
under Title 11 of the United States Code (the "Bankruptcy Code"); the
disallowance, under the Bankruptcy Code, of all or any portion of the
Pledgee's claim(s) for repayment of the Obligations; any use of cash
collateral under the Bankruptcy Code; any agreement or stipulation as to
the provision of adequate protection in any bankruptcy proceeding;
(v) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced by or
against the Company, any other Pledgor or any guarantor, maker or endorser,
including without limitation, any discharge of, or bar or stay against
collecting or accelerating, all or any part of the Obligations or the
Liabilities (or any interest thereon) in or as a result of any such
proceeding;
(vi) any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor or surety.
(c) Until such time as the Obligations have been performed and paid
in full and the Note Agreement has been terminated, Xxxxxx hereby irrevocably
waives and releases the Company and any other Person from all "claims" (as
defined in Section 101 of the Bankruptcy Code) to which Xxxxxx is or would at
any time be entitled by virtue of its obligations under this Agreement,
including, without limitation, any right of subrogation (whether contractual,
under Section 509 of the Bankruptcy Code or otherwise), reimbursement,
contribution, exoneration or similar right against the Company or any other
Person, or by virtue of any other indebtedness or obligations of the Company or
any other Person to any Pledgor now existing or hereafter incurred. Xxxxxx
further waives:
(i) any requirements of diligence or promptness on the part of
the Pledgee; and presentment, demand for payment or performance and protest
and notice of protest with respect to the Obligations or any guaranty with
respect thereto;
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(iii) notices (A) of nonperformance, (B) of default in respect
of the Obligations, (C) of the existence, creation or incurrence of new or
additional Obligations, (D) that any or all of the Obligations is due, (E)
of any and all proceedings to collect from the Company, any maker, endorser
or any guarantor of all or any part of the Obligations, or from anyone
else, and (F) of exchange, sale, surrender or other handling of any
security or collateral given to the Pledgee to secure payment of the
Obligations or any guaranty therefor;
(iv) any right to require the Pledgee to (A) proceed first
against the Company or any other Person whatsoever, (B) proceed against or
exhaust any security given to or held by the Pledgee in connection with the
Obligations, or (C) pursue any other remedy in the Pledgee's power
whatsoever;
(v) any defense arising by reason of (A) any disability or
other defense of the Company or any guarantor, (B) the cessation from any
cause whatsoever of the liability of the Company or any guarantor (other
than by full payment and performance of the Obligations and the termination
of the Note Agreement) or (C) any act or omission of the Pledgee or others
which directly or indirectly, by operation of law or otherwise, results in
or aids the discharge or release of the Company or any guarantor or any
security given to or held by the Pledgee in connection with the
Obligations; and
(vi) any and all other suretyship defenses under applicable
law.
SECTION 16. Amendments, Waivers and Consents. No amendment or waiver
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of any provision of this Agreement nor consent to any departure by any Pledgor
herefrom, nor release of the Pledged Collateral, shall in any event be effective
unless the same shall be in writing and signed by the Pledgee, and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which is given. No failure on the part of the
Pledgee to exercise, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy by the Pledgee preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
SECTION 17. Successors and Assigns. This Agreement shall be binding
----------------------
upon each Pledgor and their respective successors and assigns and shall inure to
the benefit of the Pledgee and its successors and assigns.
13
SECTION 18. Addresses for Notices. All written communications
---------------------
provided for hereunder shall be sent by first class mail or telegraphic notice
or nationwide overnight delivery service (with charges prepaid) or by hand
delivery or telecopy and (i) if to the Pledgee addressed as specified for such
communications in the Purchaser Schedule attached to the Note Agreement, or at
such other address as the Pledgee shall have specified to the Pledgors in
writing, (ii) if to any other Note Holder, addressed to such other Note Holder
at such address as such other Note Holder shall have specified to the Pledgors
in writing or, if any such other Note Holder shall not have so specified an
address to the Pledgors, then addressed to such other Note Holder in care of the
last Note Holder of such Note which shall have so specified an address to the
Pledgors, and (iii) if to any Pledgor, addressed to it at the particular address
shown for the Company in paragraph 11H of the Note Agreement, or at such other
address as such Pledgor shall have specified for it to the holder of each Note
in writing.
SECTION 19. Governing Law; Construction. THIS AGREEMENT SHALL BE
---------------------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE INTERNAL LAW OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
SECTION 20. Termination. This Agreement shall terminate when all the
-----------
Obligations have been fully paid and performed and the Note Agreement and all
commitments thereunder have been terminated, at which time the Pledgee shall
reassign and deliver (or cause to be reassigned and redelivered) to each Pledgor
at Pledgor's expense, or to such person or persons as the Pledgors shall
designate, against receipt, such of the Pledged Collateral (if any) as shall
have not been sold or otherwise applied by the Pledgee pursuant to the terms of
this Agreement and shall still be held by it hereunder, together with
appropriate instruments of reassignment and release. Any such reassignment
shall be without recourse upon or warranty by the Pledgee and at the expense of
each Pledgor.
SECTION 21. Payments Set Aside. Notwithstanding the provisions of
------------------
Section 20 of this Agreement, to the extent that any the Company or any of its
Subsidiaries makes a payment or payments to the Pledgee or the Pledgee enforces
its security interests or exercises its right of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part of such
payment or payments or proceeds are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any
14
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such recovery, the obligation or part of such obligation originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not
occurred.
SECTION 22. Counsel's Opinion. Each Pledgor hereby directs the
-----------------
counsel referred to in paragraph 3A(1) of the Note Agreement to deliver the
opinions referred to in such paragraph, and agrees that the issuance and sale of
any Notes will constitute a reconfirmation of such direction.
SECTION 23. Survival of Representations, Warranties and Covenants;
------------------------------------------------------
Joint and Several Obligations. All representations, warranties and covenants
-----------------------------
made by the Pledgors to the Pledgee in connection with this Agreement and all
statements contained in any certificate or other instrument delivered to the
Pledgee pursuant to this Agreement shall be deemed representations, warranties
and covenants hereunder of the Pledgors and shall survive the execution and
delivery of this Agreement until the termination of this Agreement in accordance
with Section 20. All covenants and agreements of each Pledgor herein are joint
and several obligations of each such Pledgor.
* * * * *
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly
executed and delivered as of the date first above written.
CORINTHIAN COLLEGES, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Title: President/CEO
----------------------------
XXXXXX COLLEGES, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Title: President/CEO
----------------------------
Accepted by:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:_________________________
Title:______________________
40
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly
executed and delivered as of the date first above written.
CORINTHIAN COLLEGES, INC.
By:______________________________
Title:___________________________
XXXXXX COLLEGES, INC.
By:______________________________
Title:___________________________
Accepted by:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: SIGNATURE ILLEGIBLE
----------------------------
Title: VICE PRESIDENT
-------------------------
SCHEDULE A
Pledgor Pledged Shares
------- --------------
Corinthian Colleges, Inc. 100 shares of Xxxxxx Colleges, Inc.
represented by certificate no. 1
100 shares of Corinthian Schools, Inc.
represented by certificate no. 1
Xxxxxx Colleges, Inc. 100 shares of Florida Metropolitian
University, Inc. represented by
certificate no. 1
100 shares of Xxxxxx Business Group,
Inc. represented by certificate no. 1
