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EXHIBIT 2(k)(4)
COLLATERAL AGREEMENT*
Among
[ ],
As Pledgor,
MH Holdings I,
MH Holdings II,
The Xxxx Xxxxxx Family Trust,
Xxxx Xxxxxx,
THE BANK OF NEW YORK, As Collateral Agent
and
DECS TRUST III
Dated as of
March [ ], 1998
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* This is a form of Collateral Agreement. A substantially identical agreement
will be entered into by each Pledgor.
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The following Table of Contents has been inserted for convenience
of reference only and does not constitute a part of the Collateral Agreement.
TABLE OF CONTENTS
SECTION
1. The Security Interests.....................................................1
2. Definitions................................................................2
3. Representations and Warranties of each of the Xxxx Xxxxxx Entities.........6
4. Representations and Warranties of the Collateral Agent.....................7
5. Certain Covenants of each of the Xxxx Xxxxxx Entities......................8
6. Administration of the Collateral and Valuation of the Securities..........10
7. Income and Voting Rights on Collateral....................................14
8. Remedies upon Events of Default...........................................15
9. The Collateral Agent......................................................17
10. Guarantee................................................................20
11. Miscellaneous............................................................21
12. Termination of Collateral Agreement......................................23
13. No Personal Liability of Trustees........................................23
Exhibit A - Certificate for Substituted Collateral
Exhibit B - Certificate for Additional Collateral
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COLLATERAL AGREEMENT
THIS COLLATERAL AGREEMENT (the "Agreement"), dated as of March
[ ], 1998, among [ ], a limited liability company organized under the law of the
State of Delaware (the "Pledgor"), MH Holdings I and MH Holdings II, each a
limited liability company organized under the laws of the State of Delaware
(each a "Corporate Seller Control Person", and together, the "Corporate Seller
Control Persons"), the Xxxx Xxxxxx Family Trust, originally established on
September 3, 1987, as amended and restated on December 13, 1996, and further
amended on September 17, 1997 and as further amended on March 22, 1998
(collectively the "Xxxx Xxxxxx Family Trust"), Xxxx Xxxxxx, The Bank of New
York, a New York banking corporation, as collateral agent (the "Collateral
Agent") hereunder for the benefit of DECS Trust III, a statutory business trust
organized under the Business Trust Act of the State of Delaware (such trust and
the trustees thereof acting in their capacity as such being referred to herein
as the "Trust" or "Purchaser"), and the Trust;
W I T N E S S E T H:
WHEREAS, pursuant to the Forward Purchase Agreement (the
"Purchase Agreement"), dated as of March [ ], 1998, among each of the Xxxx
Xxxxxx Entities and Purchaser, the Pledgor has agreed to sell and Purchaser has
agreed to purchase Class B Common Stock, $.01 par value (the "Common Stock"), of
Herbalife International, Inc., a Nevada corporation (the "Company"), subject to
the terms and conditions of the Purchase Agreement; and
NOW, THEREFORE, to secure the performance by the Pledgor of its
obligations under the Purchase Agreement and to secure the observance and
performance of the covenants and agreements contained herein and in the Purchase
Agreement, the parties hereto agree as follows:
1. The Security Interests.
In order to secure the observance and performance of the
covenants and agreements contained herein and in the Purchase Agreement:
(a) Security Interests. The Pledgor hereby grants, sells,
conveys, assigns, transfers and pledges unto the Collateral Agent, as agent of
and for the benefit of the Trust, a security interest in and to, and a lien upon
and right of set-off against, all of Pledgor's right, title and interest in and
to (i) the Pledged Items described in paragraphs (b) and (c); (ii) all additions
to and substitutions for such Pledged Items; (iii) (subject to the remittance of
certain payments upon satisfaction of the conditions specified in Section 7(a)
hereof) all income, proceeds and collections received or to be received, or
derived or to be derived, now or any time hereafter from or in connection with
the Pledged Items (whether such proceeds arise before or after the commencement
of any proceeding under any applicable bankruptcy, insolvency or other similar
law, by or against the Pledgor with respect to the Pledgor); and (iv) all powers
and rights now owned or hereafter acquired under or with respect to the Pledged
Items (such Pledged Items, additions, substitutions, income, proceeds,
collections, powers and rights being herein collectively called the
"Collateral"). The Collateral Agent shall have all of the rights, remedies
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and recourses with respect to the Collateral afforded a secured party by the New
York Uniform Commercial Code, in addition to, and not in limitation of, the
other rights, remedies and recourses afforded to the Collateral Agent by this
Agreement.
(b) Firm Payment Date. At the Firm Payment Date, the Pledgor
shall deliver to the Collateral Agent in pledge hereunder one or more
certificates in registered form representing in the aggregate [ ] shares of the
Common Stock, indorsed in blank or in the name of the Collateral Agent for the
benefit of the Trust (together with all signature guarantees and any other
documents necessary to permit the Collateral Agent to effect the re-registration
of such Common Stock without further action by the Pledgor) or, if such Common
Stock is not issuable in certificated form but is held in book entry form by The
Depository Trust Company, the Pledgor shall transfer such number of shares of
Common Stock to an account of the Collateral Agent or to an account (other than
an account of the Pledgor) designated by the Collateral Agent with The
Depository Trust Company.
(c) Option Closing Date. Effective upon and subject to the
receipt by the Pledgor of the Additional Purchase Price, at the Option Closing
Date, the Pledgor shall deliver to the Collateral Agent in pledge hereunder one
or more certificates in registered form representing in the aggregate a number
of shares of Common Stock equal to the Additional Share Base Amount, indorsed in
blank or in the name of the Collateral Agent for the benefit of the Trust
(together with all signature guarantees and any other documents necessary to
permit the Collateral Agent to effect the re-registration of such Common Stock
without further action by the Pledgor) or, if such Common Stock is not issuable
in certificated form but is held in book entry form by The Depository Trust
Company, the Pledgor shall transfer such number of shares of Common Stock to an
account of the Collateral Agent or to an account (other than an account of the
Pledgor) designated by the Collateral Agent with The Depository Trust Company.
(d) Reregistration. Immediately following the Firm Payment Date
and any Option Closing Date, the Collateral Agent shall cause all certificates
for Common Stock delivered pursuant to Section 1(b) or 1(c) above to be
re-registered on the books of the transfer agent for the Common Stock into the
name of the Collateral Agent or its nominee, and shall thereafter maintain them
in such form until the termination of this Agreement; provided, however, that at
any time following the Firm Payment Date and any Option Closing Date, the
Collateral Agent may cause any such certificates for the Common Stock to be
deposited with The Depository Trust Company and thereafter hold such
certificates in book entry form in an account (other than an account of the
Pledgor) designated by the Collateral Agent.
2. Definitions.
Capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to them in the Purchase Agreement. Capitalized terms
used herein shall have the meanings as follows:
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person or is a partner in, or a trustee, settlor, beneficiary, member,
manager, director or officer of, such Person and, with
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respect to any Person that is a natural person, further includes such Person's
immediate family members, including his father, mother, spouse and children, the
spouses of his children, his siblings and their spouses and children. For
purposes of this definition, "control" (including the terms "controlled by" or
"under common control with") means, as to any Person, the possession, direct or
indirect, of the power to vote ten percent or more of the limited liability
company interests of such Person (or of the securities having ordinary voting
power for the election of directors of such Person), or the power to direct or
cause the direction of the management and policies of such Person, whether
through ownership of voting securities or by contract or otherwise.
"Authorized Representative" of the Pledgor means any trustee or
other representative as to whom Pledgor shall have delivered notice to the
Collateral Agent that such trustee or other representative is authorized to act
hereunder on behalf of Pledgor.
"Business Day" means any day except a Saturday, Sunday or other
day on which banking institutions in New York City are authorized or obligated
by law or regulation to close or a day on which the New York Stock Exchange,
Inc. is closed.
"Cash Delivery Obligations" means, at any time (A) if no
Adjustment Event shall have occurred prior to such time, zero, and (B) from and
after any Adjustment Event, the product of: (i) the Firm Share Base Amount plus
the Additional Share Base Amount (if any) and (ii) the Transaction Value of any
property other than Reported Securities received by the Pledgor in such
Adjustment Event, multiplied successively by each number by which the Exchange
Rate shall have been multiplied on or prior to the Adjustment Event pursuant to
the adjustments provided for under Section 6.1 of the Purchase Agreement.
"Collateral" has the meaning specified in Section 1(a).
"Collateral Agent" means the financial institution identified as
such in the preliminary paragraph hereof, or any successor appointed in
accordance with Section 9.
"Collateral Agreement" means this Collateral Agreement and any
exhibits hereto.
"Collateral Event of Default" has the meaning specified in
Section 6(e).
"Collateral Requirement" means, as of any date and with respect
to: (i) any Common Stock, 100%; (ii) any Reported Securities, 100%; (iii) any
U.S. Government Securities pledged in respect of Cash Delivery Obligations,
105%; and (iv) any other U.S. Government Securities, 150%, provided that upon
and after any failure to cure an Insufficiency Determination by 4:00 p.m. New
York City time on the Business Day following telephonic notice of such
Insufficiency Determination as described in Section 6(e), which insufficiency
shall be continuing on such Business Day, the Collateral Requirement relating to
any U.S. Government Securities (other than U.S. Government Securities pledged in
respect of Cash Delivery Obligations) shall be 200%. The portion of any pledged
U.S. Government Securities that shall be deemed at any time to be in respect of
Cash Delivery Obligations shall be as provided in Section 6(e).
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"Delivery Date" has the meaning specified in Section 8(a).
"Eligible Collateral" means (i) Common Stock, (ii) U.S.
Government Securities, and (iii) from and after any Adjustment Event, Reported
Securities, provided, in each case, that (A) the Pledgor has good and marketable
title thereto, free of all Liens (other than the Liens created by this
Collateral Agreement) and Transfer Restrictions and (B) the Collateral Agent has
a valid, first priority perfected security interest therein and first lien
thereon, and provided further that to the extent the number of shares of Common
Stock or Reported Securities pledged hereunder exceeds at any time the Maximum
Deliverable Number thereof, such excess shares shall not be Eligible Collateral.
"Event of Default" means the occurrence of: (i) an event
described in clause (a) or (b) of Article VII of the Purchase Agreement, (ii) a
Collateral Event of Default, (iii) a failure by Pledgor to have caused the
Collateral to meet the requirements described in Section 5(d), (iv) if an
Adjustment Event shall have occurred prior to the Exchange Date, failure by
Pledgor to cause to be delivered to Purchaser on the Exchange Date the
consideration then required to be delivered pursuant to Section 6.2 of the
Purchase Agreement or (v) if Pledgor shall have exercised its Cash Delivery
Option, a failure by the Pledgor to deliver cash on the Exchange Date in the
amount required under Section 1.3(d) of the Purchase Agreement.
"Ineligible Collateral" means Collateral that does not constitute
"Eligible Collateral".
"Lien" means any lien, mortgage, security interest, pledge,
charge or encumbrance of any kind.
"Market Value" means, as of any date: (a) with respect to any
Common Stock (except as otherwise provided in Section 6(e)(2)), the Closing
Price on such date; (b) with respect to any U.S. Government Security, the
product of (x)(i) the average unit bid price for such security on the Trading
Day prior to such date as published in the New York edition of The Wall Street
Journal or The New York Times or, if not so published, (ii) the lower bid price
quoted (which quotation shall be evidenced in writing) on such date (or if such
date is not a Trading Date, on the preceding Trading Date) by either of two
nationally recognized dealers making a market in such security which are members
of the National Association of Securities Dealers, Inc. and (y) the number of
such units comprised in the outstanding principal amount of such U.S. Government
Security; and (c) with respect to any unit of Reported Securities, the Closing
Price thereof on such date; provided that the "Market Value" of any Ineligible
Collateral shall be zero.
"Maximum Deliverable Number" means, on any date, with respect to
the Common Stock, the product of the Firm Share Base Amount plus the Additional
Share Base Amount (if any), multiplied successively by each number by which the
Exchange Rate shall have been multiplied on or prior to such date pursuant to
the adjustments provided for under Section 6.1 of the Purchase Agreement. The
Maximum Deliverable Number of Reported Securities means, on any date, the
product of (i) the Firm Share Base Amount plus the Additional Share Base Amount
(if any) and (ii) the number of Reported Securities received by the Pledgor in
the Adjustment Event for each share of Common Stock, multiplied successively by
each number by
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which the Exchange Rate shall have been multiplied on or prior to such date and
after the date of such Adjustment Event pursuant to the adjustments provided for
under Article VI of the Purchase Agreement.
"Person" means an individual, a corporation, a partnership, an
association, a limited liability company, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Pledge Value" means, as of any date and with respect to any
particular type of Collateral, an amount equal to the aggregate Market Value of
such Collateral divided by the Collateral Requirement for such Collateral.
"Pledge Value Requirement" means, as of any date, (a) the
aggregate Market Value on such date of the Maximum Deliverable Number of shares
of Common Stock or, from and after an Adjustment Event, Reported Securities, on
such date plus (b) from and after an Adjustment Event, the Cash Delivery
Obligations.
"Pledged Items" means, as of any date, any and all securities and
instruments delivered by the Pledgor to be held by the Collateral Agent under
this Collateral Agreement as Collateral, whether Eligible Collateral or
Ineligible Collateral.
"Prior Collateral" has the meaning specified in Section 6(b)(1).
"Responsible Officer" means, when used with respect to the
Collateral Agent, any vice president, assistant vice president, assistant
treasurer or assistant secretary located in the division or department of the
Collateral Agent responsible for performing the obligations of the Collateral
Agent under this Collateral Agreement, or in any other division or department of
the Collateral Agent performing operations substantially equivalent to those
performed by such division or department pursuant hereto, or any other officer
of the Collateral Agent or any successor Collateral Agent customarily performing
functions similar to those performed by any of the aforesaid officers, and also
means, with respect to any matter relating to this Collateral Agreement or the
Collateral, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Transfer Restriction" means, with respect to any item of
Collateral, any condition to or restriction on the ability of the holder thereof
to sell, assign or otherwise transfer such item of Collateral or to enforce the
provisions thereof or of any document related thereto whether set forth in such
item of Collateral itself or in any document related thereto, including, without
limitation, (i) any requirement that any sale, assignment or other transfer or
enforcement of such item of Collateral be consented to or approved by any
Person, including, without limitation, the issuer thereof or any other obligor
thereon, (ii) any limitations on the type or status, financial or otherwise, of
any purchaser, pledgee, assignee or transferee of such item of Collateral, (iii)
any requirement of the delivery of any certificate, consent, agreement, opinion
of counsel, notice or any other document of any Person to the issuer of, any
other obligor on or any registrar or transfer agent for, such item of
Collateral, prior to the sale, pledge, assignment or other transfer or
enforcement of such item of Collateral and (iv) any registration or
qualification
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requirement for such item of Collateral pursuant to any federal or state
securities law; provided that the required delivery of any assignment from the
seller, pledgor, assignor or transferor of such item of Collateral, together
with any evidence of the corporate or other authority of such Person, shall not
constitute a "Transfer Restriction."
"Trustee" or "Trustees" means any trustee or trustees of the
Trust identified on the signature pages hereto, or any successor as such trustee
or trustees.
"UCC" means the Uniform Commercial Code as in effect in the State
of New York.
"U.S. Government Securities" means direct obligations of the
United States of America that mature on a date that is one year or less from the
date such obligations are pledged hereunder, but in any event prior to the
Exchange Date.
3. Representations and Warranties of each of the Xxxx Xxxxxx
Entities.
Each of the Xxxx Xxxxxx Entities, jointly and severally, hereby
represents and warrants to the Collateral Agent and the Trust that:
(a) Power. Each of the Xxxx Xxxxxx Entities has full power
and authority to execute and deliver this Collateral Agreement and to
perform and observe the provisions hereof;
(b) Non-Contravention. The execution, delivery and
performance by each of the Xxxx Xxxxxx Entities of this Collateral
Agreement do not and will not violate, contravene or constitute a
default under any provision of applicable law or regulation or of any
material agreement, judgment, injunction, order, decree or other
instrument binding upon such Xxxx Xxxxxx Entity. Each of the Xxxx Xxxxxx
Entities is not in default under any agreement by which the Collateral
may be bound and no litigation, arbitration or administrative
proceedings are current or pending, which default, litigation,
arbitration or administrative proceedings are material to the Collateral
in the context of this Collateral Agreement.
(c) Binding Effect. This Collateral Agreement constitutes
a valid and binding agreement of each of the Xxxx Xxxxxx Entities
enforceable against such Xxxx Xxxxxx Entity in accordance with its
terms.
(d) Solvency. Each of the Xxxx Xxxxxx Entities is
presently solvent and able to pay, and paying his or its debts as they
become due, and anticipates that it will continue to be able to pay his
or its debts as they become due for the foreseeable future.
(e) No Transfer Restrictions. Except for any legend with
respect to restrictions pursuant to applicable federal and state
securities laws on transfer of the Common Stock pledged by the Pledgor
hereunder which appears on the [face] [back] of the certificates
representing such Common Stock (and which (i) will not be applicable to
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the delivery of any such Common Stock to the Trust pursuant to the
Purchase Agreement and this Agreement or to the delivery of any such
Common Stock by the Trust to the holders of DECS pursuant to the DECS
and (ii) will be removed at the request of the Collateral Agent to the
transfer agent for the Common Stock prior to any such delivery to the
holders of DECS) no Transfer Restrictions exist with respect to or
otherwise apply to the assignment of, or transfer by the Pledgor of
possession of, any items of Collateral to the Collateral Agent
hereunder, or the subsequent sale or transfer of such items of
Collateral by the Collateral Agent pursuant to the terms hereof.
(f) Title to Collateral; Perfected Security Interest. The
Pledgor has good and marketable title to the Pledged Items, free of all
Liens (other than the Lien created by this Collateral Agreement) and
Transfer Restrictions (except for any legend as provided in Section 3(e)
hereof). Upon delivery of the Pledged Items described in paragraphs (b)
and (c) of Section 1 to the Collateral Agent hereunder, the Collateral
Agent will obtain a valid, first priority perfected security interest
in, and a first lien upon, such Pledged Items subject to no other Lien.
None of the Collateral is or shall be pledged by the Pledgor as
collateral for any other purpose.
(g) Control of Xxxx Xxxxxx Family Trust. The Xxxx Xxxxxx
Family Trust is solely controlled by Xxxx Xxxxxx as the sole trustee of
such trust.
(h) Interest in Corporate Seller Control Persons. The Xxxx
Xxxxxx Family Trust holds 99% of the membership interests in each of the
Corporate Seller Control Persons.
(i) Interest in Seller. The Corporate Seller Control
Persons collectively hold 100% of the membership interests in the
Seller.
4. Representations and Warranties of the Collateral Agent.
The Collateral Agent represents and warrants to the Pledgor and
the Trust that:
(a) Corporate Existence and Power. The Collateral Agent is
a banking corporation, duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and
has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to enter into, and
perform its obligations under, this Collateral Agreement.
(b) Authorization and Non-Contravention. The execution,
delivery and performance by the Collateral Agent of this Collateral
Agreement have been duly authorized by all necessary corporate action on
the part of the Collateral Agent (no action by the shareholders of the
Collateral Agent being required) and do not and will not violate,
contravene or constitute a default under any provision of applicable law
or regulation or of the charter or by-laws of the Collateral Agent or of
any material agreement, judgment, injunction, order, decree or other
instrument binding upon the Collateral Agent.
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(c) Binding Effect. This Collateral Agreement constitutes
a valid and binding agreement of the Collateral Agent enforceable
against the Collateral Agent in accordance with its terms.
5. Certain Covenants of each of the Xxxx Xxxxxx Entities.
The Pledgor agrees that, so long as any of its obligations under
the Purchase Agreement remain outstanding:
(a) Title to Collateral. The Pledgor shall at all times
hereafter have good and marketable title to the Collateral pledged
hereunder, free of all Liens (other than the Liens created by this
Collateral Agreement) and Transfer Restrictions (except for any legend
as provided in Section 3(e) hereof), and, subject to the terms of this
Collateral Agreement, will at all times hereafter have good, right and
lawful authority to assign, transfer and pledge such Collateral and all
such additions thereto and substitutions therefor under this Collateral
Agreement.
(b) Pledge Value Requirement. The Pledgor shall cause the
aggregate Pledge Value of the Collateral to be equal to or greater than
the Pledge Value Requirement at all times, and shall pledge additional
Collateral in the manner described in Section 6(d) as necessary to cause
such requirement to be met.
(c) Pledge upon Adjustment Event. Upon the occurrence of
an Adjustment Event, the Pledgor shall immediately cause to be delivered
to the Collateral Agent, in the manner provided in Section 6(d): (i)
U.S. Government Securities having an aggregate Market Value at least
equal to 105% of the Cash Delivery Obligations, if any; and (ii)
Reported Securities in an amount at least equal to the Maximum
Deliverable Number thereof (if any), or, at Pledgor's election, U.S.
Government Securities having an aggregate Market Value at least equal to
150% of such Maximum Deliverable Number of Reported Securities; in each
case to be held as substitute or additional Collateral hereunder.
(d) Composition of Pledged Items. Notwithstanding the
Pledgor's right to substitute Collateral pursuant to Section 6(b), the
Pledgor shall cause the Collateral to include, on the Exchange Date,
unless Pledgor shall have exercised its Cash Delivery Option, a number
of shares of Common Stock (and/or, if an Adjustment Event shall have
occurred, Reported Securities) at least equal to the number of shares of
Common Stock (and/or, if an Adjustment Event shall have occurred,
Reported Securities) required to be delivered under the Purchase
Agreement on the Exchange Date. If the Pledgor exercises its Cash
Delivery Option, then the Pledgor shall cause the Collateral to consist
entirely of U.S. Government Obligations or cash at all times from and
after the date 25 Business Days prior to the Exchange Date.
(e) Further Assurances. The Pledgor shall, at its expense
and in such manner and form as the Trust or the Collateral Agent may
require, give, execute, deliver, file and record any financing
statement, notice, instrument, document, agreement or other
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papers that may be necessary or desirable in order to create, preserve,
perfect, substantiate or validate any security interest granted pursuant
hereto or to enable the Collateral Agent to exercise and enforce its
rights and the rights of the Trust hereunder with respect to such
security interest. To the extent permitted by applicable law, the
Pledgor hereby authorizes the Collateral Agent to execute and file, in
the name of the Pledgor or otherwise, Uniform Commercial Code financing
or continuation statements (which may be carbon, photographic,
photostatic or other reproductions of this Agreement or of a financing
statement relating to this Agreement) which the Collateral Agent in its
sole discretion may deem necessary or appropriate to further perfect, or
maintain the perfection of the security interests granted hereby.
Each Xxxx Xxxxxx Entity, jointly and severally, agrees so
long as any of its obligations under the Purchase Agreement remain
outstanding:
(f) Control of Xxxx Xxxxxx Family Trust. The Xxxx Xxxxxx
Family Trust shall be solely controlled by Xxxx Xxxxxx and Xxxx Xxxxxx
shall be the sole trustee of such trust so long as he has legal capacity
to so act.
(g) Each Xxxx Xxxxxx Entity (other than Xxxx Xxxxxx) shall
not consolidate with or merge with or into, or transfer all or
substantially of its assets to, any other Person unless:
(i) either (x) such Xxxx Xxxxxx Entity shall be the
resulting or surviving entity or (y) such other Person is an
entity organized and existing under the laws of the United
States, a State thereof or the District of Columbia, such other
Person expressly assumes by supplemental agreement executed and
delivered to the Trust, in form satisfactory to counsel to the
Trust, all the obligations of such Xxxx Xxxxxx Entity under the
Underwriting Agreement, Collateral Agreement, the Reimbursement
Agreement, and this Agreement (in which case all such obligations
of such Xxxx Xxxxxx Entity shall terminate); and
(ii) such Xxxx Xxxxxx Entity shall deliver to the Trust
prior to the proposed transaction an Officer's Certificate and an
Opinion of Counsel, each of which shall state that such
consolidation, merger or transfer and such supplemental agreement
comply with this Section 5(g) and that all conditions precedent
herein provided for relating to such transaction have been
complied with.
Upon any consolidation or merger, or any transfer of all
or substantially all of the assets of a Xxxx Xxxxxx Entity in accordance
with this Section 5(g), the successor entity formed by such
consolidation or into which such Xxxx Xxxxxx Entity is merged or to
which such transfer is made shall succeed to, and be substituted for,
and may exercise every right and power of such Xxxx Xxxxxx Entity under
this Agreement with the same effect as if such successor entity had been
named as such Xxxx Xxxxxx Entity herein, and the predecessor entity,
shall be relieved of any further obligation under this Agreement.
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6. Administration of the Collateral and Valuation of the
Securities.
(a) Valuation of Collateral. The Collateral Agent shall determine
on each Business Day whether the Pledge Value is at least equal to the Pledge
Value Requirement and whether an Insufficiency Determination or Collateral Event
of Default shall have occurred and, from and after any substitution of U.S.
Government Securities for pledged Common Stock or Reported Securities pursuant
to paragraph (b) of this Section 6, shall determine the Pledge Value on each
Business Day and shall provide written notice of the Pledge Value to the
Pledgor.
(b) Substitution of Collateral. The Pledgor may substitute
Collateral in accordance with the following provisions:
(1) Unless an Event of Default or a failure by the Pledgor
to meet any of its obligations under Section 5(b) or (c) hereof has
occurred and is continuing, the Pledgor shall have the right at any time
and from time to time to deposit Eligible Collateral with the Collateral
Agent in substitution for Pledged Items previously deposited hereunder
("Prior Collateral") and to obtain the release from the Lien hereof of
such Prior Collateral.
(2) If the Pledgor wishes to deposit Eligible Collateral
with the Collateral Agent in substitution for Prior Collateral, the
Pledgor shall (i) give written notice to the Collateral Agent
identifying the Prior Collateral to be released from the Lien hereof,
(ii) deliver to the Collateral Agent concurrently with such Eligible
Collateral a certificate of the Pledgor substantially in the form of
Exhibit A hereto and dated the date of such delivery, (A) identifying
the items of Eligible Collateral being substituted for the Prior
Collateral and the Prior Collateral that is to be transferred to the
Pledgor and (B) certifying that the representations and warranties
contained in such Exhibit A hereto are true and correct on and as of the
date thereof and (iii) deliver to the Collateral Agent concurrently with
such Eligible Collateral an opinion (dated the date of such delivery) of
counsel, substantially similar to those delivered by Irell & Xxxxxxx LLP
at the Firm Purchase Date with respect to similar matters, addressed to
the Collateral Agent confirming the representations contained in the
second sentence of paragraph 3(b) of Exhibit A hereto. The Pledgor
hereby covenants and agrees to take all actions required under Section
6(d) and any other actions necessary to create for the benefit of the
Collateral Agent a valid, first priority perfected security interest in,
and a first lien upon, such Eligible Collateral deposited with the
Collateral Agent in substitution for Prior Collateral.
(3) No such substitution shall be made unless and until
the Collateral Agent shall have determined that the aggregate Pledge
Value of all of the Collateral at the time of such proposed
substitution, after giving effect to the proposed substitution, shall at
least equal the Pledge Value Requirement.
(c) Additional Collateral. The Pledgor may pledge additional
Collateral hereunder at any time. Concurrently with the delivery of any
additional Eligible Collateral, the Pledgor shall deliver (i) a certificate of
the Pledgor substantially in the form of Exhibit B hereto
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and dated the date of such delivery, (A) identifying the additional items of
Eligible Collateral being pledged and (B) certifying that with respect to such
items of additional Eligible Collateral the representations and warranties
contained in such Exhibit B hereto are true and correct on and as of the date
thereof and (ii) an opinion, dated the date of such delivery, of counsel
addressed to the Collateral Agent, substantially similar to those delivered by
Irell & Xxxxxxx LLP at the Firm Purchase Date with respect to similar matters,
confirming the representations contained in the second sentence of paragraph
2(b) of Exhibit B hereto. The Pledgor hereby covenants and agrees to take all
actions required under Section 6(d) and any other actions necessary to create
for the benefit of the Collateral Agent a valid, first priority perfected
security interest in, and a first lien upon, such additional Eligible
Collateral.
(d) Delivery of Collateral. The Pledgor shall deliver all
Collateral to the Collateral Agent in accordance with the following provisions:
(1) Pledged Common Stock. In the case of Collateral
consisting of Common Stock, by delivery of certificates evidencing such
Common Stock, indorsed in blank (together with all signature guarantees
and any other documents necessary to permit the Collateral Agent to
effect the re-registration thereof without further action by the
Pledgor) or registered in the name of the Collateral Agent or its
nominee or, if such Common Stock is not issuable in certificated form
but is held in book entry form by The Depository Trust Company, by
transfer to an account of the Collateral Agent or to an account (other
than an account of the Pledgor) designated by the Collateral Agent with
The Depository Trust Company;
(2) Pledged U.S. Government Securities. In the case of
Collateral consisting of U.S. Government Securities, by transfer thereof
through the Book Entry System of the Federal Reserve System to the
account of the Collateral Agent or to an account (other than an account
of the Pledgor) designated by the Collateral Agent; and
(3) Pledged Reported Securities. In the case of Collateral
consisting of Reported Securities, by delivery of certificates
evidencing such Reported Securities, indorsed in blank (together with
all signature guarantees and any other documents necessary to permit the
Collateral Agent to effect the re-registration thereof without further
action by the Pledgor) or registered in the name of the Collateral Agent
or its nominee or, if such Reported Securities are not issuable in
certificated form but are held in book entry form by The Depository
Trust Company, by transfer to an account of the Collateral Agent or to
an account (other than an account of the Pledgor) designated by the
Collateral Agent with The Depository Trust Company. Each such delivery
of Reported Securities shall be accompanied by an opinion of counsel,
substantially similar to those delivered by Irell & Xxxxxxx LLP at the
Firm Purchase Date with respect to similar matters, satisfactory to the
Collateral Agent that the Collateral Agent has obtained a valid, first
priority perfected security interest in, and a first lien upon, such
Reported Securities.
Upon delivery of any Pledged Item under this Collateral
Agreement, the Collateral Agent shall examine such Pledged Item and any opinions
and certificates delivered
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pursuant to Sections 6(b), 6(c), 6(d)(3) or otherwise pursuant to the terms
hereof in connection therewith to determine that they comply as to form with the
requirements for Eligible Collateral. Immediately following the delivery to the
Collateral Agent of any Collateral in the form of certificates indorsed in
blank, the Collateral Agent shall cause all such certificates to be
re-registered on the books of the applicable transfer agent into the name of the
Collateral Agent or its nominee, and shall thereafter maintain all such
Collateral in such form until the termination of this Agreement; provided,
however, that at any time following such delivery to the Collateral Agent, the
Collateral Agent may cause any such certificates to be deposited with The
Depository Trust Company and thereafter hold such certificates in book entry
form in an account (other than an account of Pledgor) designated by the
Collateral Agent. The Pledgor hereby designates the Collateral Agent as the
person in whose name any Collateral held in book entry form in the Federal
Reserve System shall be registered.
(e) Insufficiency Determination.
(1) If on any Business Day the Collateral Agent determines
that the aggregate Pledge Value of the Collateral is less than the
Pledge Value Requirement (any such determination, an "Insufficiency
Determination"), the Collateral Agent shall, by telephone call to an
Authorized Representative of the Pledgor followed by a written
confirmation of such call, promptly notify the Pledgor of such
determination and of the amount of the insufficiency.
(2) If, by 4:00 p.m., New York City time on the Business
Day following the day on which telephonic notice shall have been given
pursuant to the preceding paragraph (e)(1), the Pledgor shall have
failed to deliver, in the manner set forth in paragraphs (c) and (d) of
this Section 6, sufficient additional Eligible Collateral so that, after
giving effect to such delivery (and taking into account that Common
Stock and Reported Securities in excess of the Maximum Deliverable
Number thereof shall not constitute Eligible Collateral), the aggregate
Pledge Value of the Collateral, as of such Business Day, is at least
equal to the Pledge Value Requirement, then (x) the Collateral
Requirement with respect to any U.S. Government Securities pledged
hereunder (other than in respect of Cash Delivery Obligations) shall be
increased from 150% to 200%, and (y) unless a Collateral Event of
Default shall have occurred and be continuing, the Collateral Agent
shall:
(i) commence sales, in the manner described in
paragraph (3) below, of such portion of the Collateral consisting
of U.S. Government Securities as may be required to be sold in
order to generate proceeds sufficient to purchase Common Stock
and/or, after an Adjustment Event, Reported Securities, as
described in the following clause (ii); and
(ii) commence purchases, in the manner described in
paragraph (3) below, of Common Stock and/or, after an Adjustment
Event, Reported Securities, in an amount sufficient to cause the
aggregate Pledge Value of the Collateral to be at least equal to
the Pledge Value Requirement.
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Notwithstanding the foregoing, the Collateral Agent shall
discontinue sales and purchases pursuant to the preceding clauses (i)
and (ii), respectively, if at any time a Collateral Event of Default
shall have occurred and be continuing. The Collateral Agent shall
determine the Market Value and the Pledge Value of the Collateral after
each purchase of Common Stock or Reported Securities pursuant to the
preceding clause (ii) in order to determine whether the Pledge Value
Requirement is met and whether a Collateral Event of Default has
occurred. Solely for purposes of such calculation, the Market Value of
the Common Stock or Reported Securities shall be: (A) the most recent
sales price as reported in the composite transactions for the principal
securities exchange on which the Common Stock or Reported Securities, as
the case may be, are then listed or, if such securities are not so
listed, the last quoted ask price for such securities in the
over-the-counter market as reported by The NASDAQ National Market or, if
not so reported, by the National Quotation Bureau or a similar
organization; or (B) if higher, in the case of Common Stock, the most
recent available Closing Price.
A "Collateral Event of Default" shall mean, at any time,
the occurrence of any of the following: (A) failure of the aggregate
Market Value of the Collateral to equal or exceed the Pledge Value
Requirement; (B) failure of the Market Value of any U.S. Government
Securities pledged at such time (not including any U.S. Government
Securities pledged in respect of Cash Delivery Obligations at such time)
to have an aggregate Market Value of at least 105% of the Market Value
of a number of shares of Common Stock (or, from and after any Adjustment
Event, Reported Securities) equal to (x) the Maximum Deliverable Number
thereof minus (y) the number thereof pledged as Collateral hereunder at
such time; or (C) from and after any Adjustment Event, failure of the
U.S. Government Securities pledged in respect of Cash Delivery
Obligations to have an aggregate Market Value at least equal to 105% of
the Cash Delivery Obligations at such time, if, in the case of a failure
described in this clause (C), such failure shall continue to be in
effect at 4:00 p.m., New York City time, on the Business Day following
the day on which telephonic notice in respect thereof shall have been
given pursuant to paragraph (e)(1) above. For purposes of this
Agreement, the portion of any pledged U.S. Government Securities that
shall be deemed to be in respect of Cash Delivery Obligations at any
time shall be a portion having a Market Value equal to 105% of the Cash
Delivery Obligations at such time (or, if less, the aggregate Market
Value of all U.S. Government Securities pledged at such time).
(3) Collateral sold and Common Stock or shares of Reported
Securities purchased by the Collateral Agent pursuant to the preceding
paragraphs (e)(2)(i) and (ii) may be sold and purchased on any
securities exchange or in any over-the-counter market or in any private
purchase transaction, and at such price or prices, in each case as the
Collateral Agent may deem satisfactory. The Pledgor covenants and agrees
that it will execute and deliver such documents and take such other
action as the Collateral Agent deems necessary or advisable in order
that any such sales and purchases may be made in compliance with law.
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(f) Release of Excess Collateral. If on any Business Day the
Collateral Agent determines that the aggregate Pledge Value of the Pledgor's
Eligible Collateral exceeds the Pledge Value Requirement and no Event of Default
or failure by the Pledgor to meet any of its obligations under Sections 5 or 6
hereof has occurred and is continuing, the Pledgor may obtain the release from
the Lien hereof of any Collateral having an aggregate Pledge Value on such
Business Day less than or equal to such excess, upon delivery to the Collateral
Agent of a written notice from an Authorized Representative of the Pledgor
indicating the items of Collateral to be released. Such Collateral shall be
released only after the Collateral Agent shall have determined that the
aggregate Pledge Value of all of the Collateral remaining after such release as
determined on such Business Day is at least equal to the Pledge Value
Requirement.
(g) Delivery of Purchase Agreement Consideration. On the Exchange
Date, unless Pledgor shall have exercised its Cash Delivery Option, the
Collateral Agent shall deliver to the Trust Common Stock (or, if an Adjustment
Event shall have occurred, Reported Securities) then held by it hereunder
representing the number of shares of Common Stock (or, if an Adjustment Event
shall have occurred, Reported Securities) then required to be delivered under
the Purchase Agreement. Upon such delivery, the Trust shall hold such Common
Stock or Reported Securities, as the case may be, absolutely and free from any
claim or right whatsoever.
(h) Investment of Cash Collateral. The Collateral Agent shall
invest any cash received by it pursuant to Section 6.2 of the Purchase Agreement
in U.S. Treasury Securities maturing on or before the Exchange Date.
7. Income and Voting Rights on Collateral.
(a) Unless an Event of Default or failure by the Pledgor to meet
any of Pledgor's obligations under Section 5(b) or (c) hereof has occurred and
is continuing, the Pledgor shall be entitled to receive for Pledgor's own
account all dividends, interest and, if any, principal and premium relating to
all of the Collateral, unless the payment thereof to the Pledgor would reduce
the aggregate Pledge Value of the Collateral below the Pledge Value Requirement.
The Collateral Agent agrees to remit to the Pledgor on the Business Day received
or the first Business Day thereafter all such payments received by it. If an
Event of Default or failure by the Pledgor to meet any of its obligations under
Section 5(b) or (c) hereof has occurred and is continuing, all such payments
made or accrued after and during the continuance of such Event of Default or
failure shall be retained by the Collateral Agent, and any such payments which
are received by the Pledgor shall be received in trust for the benefit of the
Trust, shall be segregated from other funds of the Pledgor and shall forthwith
be paid over to the Collateral Agent. Any such payments so retained by, or paid
over to, the Collateral Agent shall be held by the Collateral Agent as
Collateral hereunder. If any such Event of Default or failure is no longer
continuing, then the Collateral Agent shall remit any such payments that are so
retained by, or paid to it, on the first Business Day after the Collateral Agent
shall have received notice from the Trust that such Event of Default or failure
is no longer continuing, unless the payment thereof to the Pledgor would reduce
the aggregate Pledge Value of the Collateral below the Pledge Value Requirement.
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(b) Unless an Event of Default has occurred and is continuing,
the Pledgor shall have the right, from time to time, to vote and to give
consents, ratifications and waivers with respect to the Collateral, and the
Collateral Agent shall promptly deliver to the Pledgor such proxies, powers of
attorney, consents, ratifications and waivers in respect of any of the
Collateral which is registered in the name of the Collateral Agent or its
nominee and shall further deliver such documents and instruments as shall be
specified in a written request by the Pledgor.
If an Event of Default shall have occurred and be continuing, the
Collateral Agent shall have the right to the extent permitted by law, and the
Pledgor shall take all such action as may be necessary or appropriate to give
effect to such right, to vote and to give consents, ratifications and waivers,
and take any other action with respect to any or all of the Collateral with the
same force and effect as if the Collateral Agent were the absolute and sole
owner thereof.
8. Remedies upon Events of Default.
(a) If any Event of Default shall have occurred and be
continuing, the Collateral Agent may exercise on behalf of the Trust all the
rights of a secured party under the UCC (whether or not in effect in the
jurisdiction where such rights are exercised) and, in addition, without being
required to give any notice, except as herein provided or as may be required by
mandatory provisions of law, shall: (i) deliver all Collateral consisting of
Common Stock or Reported Securities (but not, in either case, in excess of the
number of shares thereof deliverable under the Purchase Agreement at such time)
to the Trust on the date of the notice delivered to the Collateral Agent
pursuant to the last paragraph of Article VII of the Purchase Agreement relating
to such Event of Default (or, in the case of an Event of Default described in
clause (iii), (iv) or (v) of the definition thereof, on the Exchange Date) (in
either case, the "Delivery Date"), whereupon the Trust shall hold such Common
Stock or Reported Securities absolutely free from any claim or right of
whatsoever kind, including any equity or right of redemption of the Pledgor
which may be waived, and the Pledgor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or appraisal which Pledgor
has or may have under any law now existing or hereafter adopted; and (ii) if
such delivery shall be insufficient to satisfy in full all of the obligations of
Pledgor under the Purchase Agreement, sell all of the remaining Collateral, or
such lesser portion thereof as may be necessary to generate proceeds sufficient
to satisfy in full all of the obligations of Pledgor under the Purchase
Agreement, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery, and at such
price or prices as the Collateral Agent may deem satisfactory. The Pledgor
covenants and agrees to execute and deliver such documents and take such other
action as the Collateral Agent deems necessary or advisable in order that any
such sale may be made in compliance with law. Upon any such sale the Collateral
Agent shall have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold absolutely and free from any claim or right of whatsoever
kind, including any equity or right of redemption of the Pledgor which may be
waived, and the Pledgor, to the extent permitted by law, hereby specifically
waives all rights of redemption, stay or appraisal which Pledgor has or may have
under any law now existing or hereafter adopted. The notice (if any) of such
sale required by Article 9 of the UCC shall (1) in
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case of a public sale, state the time and place fixed for such sale, (2) in case
of sale at a broker's board or on a securities exchange, state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or the portion thereof so being sold, will first be offered for sale at such
board or exchange, and (3) in the case of a private sale, state the day after
which such sale may be consummated. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Collateral Agent may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may determine. The Collateral Agent shall not be obligated to
make any such sale pursuant to any such notice. The Collateral Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned. In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Collateral Agent until the selling price is paid by the
purchaser thereof, but the Collateral Agent shall not incur any liability in
case of the failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice. The Collateral Agent, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the security interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
(b) Power of Attorney. The Collateral Agent is hereby irrevocably
appointed the true and lawful attorney of the Pledgor with full power and
authority, in the name and stead of the Pledgor, to do all of the following: (i)
upon any delivery or sale of all or any part of any Collateral made either under
the power of delivery or sale given hereunder or under judgment or decree in any
judicial proceedings for foreclosure or otherwise for the enforcement of this
Collateral Agreement, to make all necessary deeds, bills of sale and instruments
of assignment, transfer or conveyance of the property thus delivered or sold;
(ii) upon the occurrence of an Adjustment Event while any shares of Common Stock
are Pledged Items, to take any necessary actions with respect to such shares of
Common Stock to cause the Pledged Items to conform to the requirements of this
Agreement following the occurrence of the Adjustment Event, including, without
limitation, the tender of shares of Common Stock and the sale of property (other
than Reported Securities) received in respect of Common Stock. For such purposes
the Collateral Agent may execute all necessary documents and instruments. This
power of attorney shall be deemed coupled with an interest, and the Pledgor
hereby ratifies and confirms all that his attorneys acting under such power, or
such attorneys' successors or agents, shall lawfully do by virtue of this
Collateral Agreement. If so requested by the Collateral Agent, by the Trustees
or by any purchaser of the Collateral or a portion thereof, the Pledgor shall
further ratify and confirm any such delivery or sale by executing and delivering
to the Collateral Agent, to the Trustees or to such purchaser or purchasers at
the expense of the Pledgor all proper deeds, bills of sale, instruments of
assignment, conveyance of transfer and releases as may be designated in any such
request. The Pledgor's obligations and authorizations hereunder shall not be
terminated by operation of law or the occurrence of any event whatsoever,
including the death or disability of the Pledgor, or the occurrence of any other
event.
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(c) Application of Collateral and Proceeds. In the case of an
Event of Default, the Collateral Agent may proceed to realize upon the security
interest in the Collateral against any one or more of the types of Collateral,
at any one time, as the Collateral Agent shall determine in its sole discretion
subject to the foregoing provisions of this Section 8. The proceeds of any sale
of, or other realization upon, or other receipt from, any of the Collateral
remaining after delivery to the Trust pursuant to Section 8(a) shall be applied
by the Collateral Agent in the following order of priorities:
(1) first, to the payment to the Trust of an amount equal to: (A) the
aggregate Market Value of a number of shares of Common Stock
equal to (1) the number of shares of Common Stock required to be
delivered under the Purchase Agreement on the Delivery Date minus
(2) the number of shares of Common Stock delivered by the
Collateral Agent to the Trust on the Delivery Date as described
above; or (B) from and after an Adjustment Event, the sum of (1)
the Cash Delivery Obligations on the Delivery Date and (2) the
aggregate Market Value on the Delivery Date of a number of
Reported Securities (and, if applicable, shares of Common Stock)
equal to (x) the number thereof required to be delivered on the
Delivery Date under Section 6.2 of the Purchase Agreement minus
(y) the number thereof delivered by the Collateral Agent to the
Trust on the Delivery Date as described above; or (C) if the
Pledgor shall have exercised its Cash Delivery Option, the amount
of cash required to be delivered under Section 1.3(d) of the
Purchase Agreement minus the amount of cash so delivered;
(2) second, to the payment to the Collateral Agent of the expenses of
such sale or other realization, including reasonable compensation
to the Collateral Agent and its agents and counsel, and all
expenses, liabilities and advances incurred or made by the
Collateral Agent in connection therewith, including brokerage
fees in connection with the sale by the Collateral Agent of any
Pledged Item; and
(3) finally, if all of the obligations of the Pledgor hereunder and
under the Purchase Agreement have been fully discharged or
sufficient funds have been set aside by the Collateral Agent at
the request of the Pledgor for the discharge thereof, any
remaining proceeds shall be released to the Pledgor.
9. The Collateral Agent.
The Collateral Agent accepts its duties and responsibilities
hereunder as agent for the Trust, on and subject to the following terms and
conditions:
(a) Performance of Duties. The Collateral Agent undertakes to
perform such duties and only such duties as are expressly set forth herein and,
beyond the exercise of reasonable care in the performance of such duties, no
implied covenants or obligations shall be read into this Collateral Agreement
against the Collateral Agent. No provision hereof shall be construed to relieve
the Collateral Agent from liability for its own grossly negligent action,
grossly negligent failure to act or its own willful misconduct, subject to the
following:
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(1) The Collateral Agent may consult with counsel, and the
advice or opinion of such counsel shall be full and complete
authorization and protection in respect of an action taken or suffered
hereunder in good faith and in accordance with such advice or opinion of
counsel.
(2) The Collateral Agent shall not be liable with respect
to any action taken, suffered or omitted by it in good faith (i)
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred on it by this Collateral Agreement or (ii) in
accordance with any direction or request of the Trustees.
(3) The Collateral Agent shall not be liable for any error
of judgment made in good faith by any of its officers, unless the
Collateral Agent was grossly negligent in ascertaining the pertinent
facts.
(4) In the absence of bad faith on its part, the
Collateral Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any note, notice, resolution, consent, certificate, affidavit, letter,
telegram, teletype message, statement, order or other document believed
by it to be genuine and correct and to have been signed or sent by the
proper Person or Persons.
(5) No provision of this Collateral Agreement shall
require the Collateral Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(6) The Collateral Agent may perform any duties hereunder
either directly or by or through agents or attorneys, and the Collateral
Agent shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder.
In furtherance thereof, any subsidiary owned or controlled by the
Collateral Agent, or its successors, as agent for the Collateral Agent,
may perform any or all of the duties of the Collateral Agent relating to
the valuation of securities and other instruments constituting
Collateral hereunder.
(7) In no event shall the Collateral Agent be personally
liable for any taxes or other governmental charges imposed upon or in
respect of (i) the collateral or (ii) the income or other distributions
thereon.
(8) Unless and until the Collateral Agent shall have
received notice from the Pledgor, or unless and until a Responsible
Officer of the Collateral Agent shall have actual knowledge to the
contrary, the Collateral Agent shall be entitled to deem and treat all
Collateral delivered to it hereunder as Eligible Collateral hereunder,
provided that the Collateral Agent has carried out the duties specified
in Section 6 with respect to such Collateral at the time of delivery
thereof.
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The Collateral Agent shall not be responsible for the correctness
of the recitals and statements herein which are made by the Pledgor or for any
statement or certificate delivered by the Pledgor pursuant hereto. Except as
specifically provided herein, the Collateral Agent shall not be responsible for
the validity, sufficiency, collectibility or marketability of any Collateral
given to or held by it hereunder or for the validity or sufficiency of the
Purchase Agreement or the Lien on the Collateral purported to be created hereby.
(b) Knowledge. The Collateral Agent shall not be deemed to have
knowledge of any Event of Default (except a Collateral Event of Default), unless
and until a Responsible Officer of the Collateral Agent shall have actual
knowledge thereof or shall have received written notice thereof.
(c) Merger. Any corporation or association into which the
Collateral Agent may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its agency business and assets
as a whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation or transfer to
which it is a party, shall, subject to the prior written consent of the Trust,
be and become a successor Collateral Agent hereunder and vested with all of the
title to the Collateral and all of the powers, discretions, immunities,
privileges and other matters as was its predecessor without, except as provided
above, the execution or filing of any instrument or any further act, deed or
conveyance on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
(d) Resignation. The Collateral Agent and any successor
Collateral Agent may at any time resign by giving thirty days' written notice by
registered or certified mail to the Pledgor and notice to the Trust in
accordance with the provisions of Section 10(d) hereof. Such resignation shall
take effect upon the appointment of a successor Collateral Agent by the Trust.
(e) Removal. The Collateral Agent may be removed at any time by
an instrument or concurrent instruments in writing delivered to the Collateral
Agent and to the Pledgor and signed by the Trust.
(f) Appointment of Successor. (1) If the Collateral Agent
hereunder shall resign or be removed, or be dissolved or shall be in the course
of dissolution or liquidation or otherwise become incapable of action hereunder,
or if it shall be taken under the control of any public officer or officers or
of a receiver appointed by a court, a successor may be appointed by the Trust by
an instrument or concurrent instruments in writing signed by the Trust or by its
attorneys in fact fully authorized a copy of such instrument or concurrent
instruments shall be sent by registered mail to the Pledgor.
(2) Every such temporary or permanent successor Collateral Agent
appointed pursuant to the provisions hereof shall be a trust company or bank in
good standing, having a reported capital and surplus of not less than
$100,000,000 and capable of holding the Collateral in the State of New York, if
there be such an institution willing, qualified and able to accept the duties of
the Collateral Agent hereunder upon customary terms.
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(g) Acceptance by Successor. Every temporary or permanent
successor Collateral Agent appointed hereunder shall execute, acknowledge and
deliver to its predecessor and also to the Pledgor an instrument in writing
accepting such appointment hereunder, whereupon such successor, without any
further act, deed or conveyance, shall become fully vested with all the estates,
properties, rights, powers, duties and obligations of its predecessors. Such
predecessor shall, nevertheless, on the written request of its successor or the
Pledgor, execute and deliver an instrument transferring to such successor all
the estates, properties, rights and powers of such predecessor hereunder. Every
predecessor Collateral Agent shall deliver all Collateral held by it as the
Collateral Agent hereunder to its successor. Should any instrument in writing
from the Pledgor be required by a successor Collateral Agent for more fully and
certainly vesting in such successor the estates, properties, rights, powers,
duties and obligations hereby vested or intended to be vested in the
predecessor, any and all such instruments in writing shall, at the request of
the temporary or permanent successor Collateral Agent, be forthwith executed,
acknowledged and delivered by the Pledgor.
10. Guarantee.
(a) In order to induce the Purchaser to enter into this Agreement
and for other valuable consideration, each of Xxxx Xxxxxx, the Xxxx Xxxxxx
Family Trust and the Corporate Seller Control Persons, jointly and severally,
hereby irrevocably guarantees (as primary obligor and not merely as surety) to
the Purchaser, the trustees, directors, officers, employees and agents of the
Purchaser, and each person who controls the Purchaser within the meaning of the
Act or the Exchange Act or other Federal or state statutory law or regulation,
of common law or otherwise (each of such persons, a "Beneficiary") (i) the
accuracy of the representations and warranties of the Pledgor contained in
Section 3 hereof and (ii) the performance by the Pledgor of the covenants and
agreements contained in each of Section 1, Section 3, Section 5, Section 6, and
Section 8 hereof.
(b) The obligations of Xxxx Xxxxxx, the Xxxx Xxxxxx Family Trust
and each Corporate Seller Control Person under this Section 10 shall be
unconditional, irrespective of the validity or enforceability of any other
provision of this Agreement.
(c) The obligations of Xxxx Xxxxxx, the Xxxx Xxxxxx Family Trust
and each Corporate Seller Control Person under this Section 10 constitute
guarantees of performance and of payment, and not merely guarantees of
collection, and shall remain in full force and effect until all obligations of
and all amounts payable by the Pledgor in respect of the matters (the
"Guaranteed Matters") that are the subject of the obligations of Xxxx Xxxxxx,
the Xxxx Xxxxxx Family Trust and each Corporate Seller Control Person under this
Section 10 of this Agreement have been validly, finally and irrevocably
performed or paid in full, as the case may be, and shall not be affected in any
way by the absence of any action to obtain such performance or amounts, as the
case may be, from the Pledgor or by any variation, extension, waiver, compromise
or release of any or all of the obligations of the Pledgor hereunder or of any
security from time to time therefor. Each of Xxxx Xxxxxx, the Xxxx Xxxxxx Family
Trust and the Corporate Seller Control Persons hereby waives all requirements as
to promptness, diligence, presentment, demand for payment, protest and notice of
any kind with respect to his or its obligations under
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this Section 10. Each of Xxxx Xxxxxx, the Xxxx Xxxxxx Family Trust and the
Corporate Seller Control Persons hereby agrees, jointly and severally, that
action may be taken directly against such person under this Section 10 without
any action being taken against the Pledgor.
(d) The obligations of Xxxx Xxxxxx, the Xxxx Xxxxxx Family Trust
and each Corporate Seller Control Person under this Section 10 shall not be
affected by any change in applicable laws, rules or regulations or by any
present or future action of any governmental authority or court amending,
varying, reducing or otherwise affecting or purporting to amend, vary, reduce or
otherwise affect any of the obligations of the Pledgor under this Agreement or
by any other circumstance (other than by complete, irrevocable performance or
payment) that might otherwise constitute a legal or equitable discharge or
defense of a surety or a guarantor. If the Pledgor merges or consolidates with
or into another entity, loses its separate legal identity or ceases to exist,
Xxxx Xxxxxx, the Xxxx Xxxxxx Family Trust and the Corporate Seller Control
Persons shall nonetheless continue to be liable for the performance of all
obligations or the payment of all amounts, as the case may be, that would have
been due or payable, as the case may be, by the Pledgor in respect of the
Guaranteed Matters.
(e) The obligations of Xxxx Xxxxxx, the Xxxx Xxxxxx Family Trust
and the Corporate Seller Control Persons under this Section 10 shall remain in
full force and effect or shall be reinstated (as the case may be) if at any time
any obligation or payment of the Pledgor in respect of the Guaranteed Matters,
in whole or in part, is rescinded or must otherwise be returned by a Beneficiary
upon the insolvency, bankruptcy or reorganization of the Company or otherwise,
all as though such performance or payment, as the case may be, had not been
made.
(f) If at any time when any obligation of, or any amount payable
by the Pledgor in respect of, the Guaranteed Matters is overdue and unperformed
or unpaid, as the case may be, Xxxx Xxxxxx, the Xxxx Xxxxxx Family Trust or any
Corporate Seller Control Person receives any amount as a result of any action
against the Pledgor or any of its property or assets or otherwise for or on
account of any payment made by Xxxx Xxxxxx, the Xxxx Xxxxxx Family Trust or the
Corporate Seller Control Persons pursuant to this Section 10, Xxxx Xxxxxx, the
Xxxx Xxxxxx Family Trust or such Corporate Seller Control Person, as the case
may be, shall forthwith pay such amount received by it to Xxxxx Xxxxxx Inc., on
behalf of the Beneficiaries, without demand, to be credited and applied toward
any such amount payable by the Pledgor.
(g) The guarantee agreements set forth in this Agreement shall be
in addition to any liability which the Pledgor, Xxxx Xxxxxx, the Xxxx Xxxxxx
Family Trust or either Corporate Seller Control Person may otherwise have.
11. Miscellaneous.
(a) Benefit of Agreement; Successors and Assigns. Whenever any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All the covenants and agreements herein
contained by or on behalf of the Pledgor, any other Xxxx Xxxxxx Entity and the
Collateral Agent shall bind, and inure to the benefit of, their respective
successors and assigns whether so expressed or not, and shall be enforceable by
and inure to the benefit of the Trust and its successors and assigns. This
Agreement will be
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(A) binding on and legally enforceable against the estate of Xxxx Xxxxxx should
he become deceased or the legal representative, attorney, or guardian of Xxxx
Xxxxxx should he lack legal capacity and (B) binding on and legally enforceable
against the Xxxx Xxxxxx Family Trust despite the death or legal incapacity of
any settlor or beneficiary of such trust.
(b) Separability. To the extent permitted by law, the
unenforceability or invalidity of any provision or provisions of this Collateral
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
(c) Amendments and Waivers. Any term, covenant, agreement or
condition of this Collateral Agreement may be amended or compliance therewith
may be waived (either generally or in a particular instance and either
retrospectively or prospectively) but only by a writing signed by the Collateral
Agent, each Xxxx Xxxxxx Entity and the Trust.
(d) Notices.
(1) Any notice provided for herein, unless otherwise
specified, shall be in writing (including transmittals by telex or
telecopier) and shall be given to a party at the address set forth
opposite such party's name on the signature pages hereto or at such
other address as may be designated by notice duly given in accordance
with this Section 11(d) to each other party hereto.
(2) Each such notice given pursuant to paragraph (1) shall
be effective (i) if sent by certified mail (return receipt requested),
72 hours after being deposited in the United States mail, postage
prepaid; (ii) if given by telex or telecopier, when such telex or
telecopied notice is transmitted; or (iii) if given by any other means,
when delivered at the address specified in this Section 12(d).
(e) Governing Law. This Collateral Agreement shall in all
respects be construed in accordance with and governed by the laws of the State
of New York; provided that as to Pledged Items located in any jurisdiction other
than the State of New York, the Collateral Agent on behalf of the Trust shall
have all of the rights to which a secured party is entitled under the laws of
such other jurisdiction.
(f) Counterparts. This Collateral Agreement may be executed,
acknowledged and delivered in any number of counterparts and such counterparts
taken together shall constitute one and the same instrument.
(g) Application of Bankruptcy Code. The parties hereto
acknowledge and agree that the Collateral Agent is a "financial institution"
within the meaning of Section 101(22) of Title 11 of the United States Code (the
"Bankruptcy Code") and is acting as agent and custodian for the Trust in
connection with the Purchase Agreement and that the Trust is a "customer" of the
Collateral Agent within the meaning of said Section 101(22).
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(h) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT ASSERT
(WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY
FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR
OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT OR HE HAS BEEN INFORMED BY THE
OTHER PARTY HERETO THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL
INDUCEMENT UPON WHICH SUCH OTHER PARTY HERETO HAS RELIED, IS RELYING AND WILL
RELY IN ENTERING INTO THIS AGREEMENT AND ANY DOCUMENT RELATED THERETO. EACH
PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY HERETO TO THE WAIVER OF ITS
OR HIS RIGHTS TO TRIAL BY JURY.
12. Termination of Collateral Agreement.
This Collateral Agreement and the rights hereby granted by the
Pledgor in the Collateral shall cease, terminate and be void upon fulfillment of
all of the obligations of the Pledgor under the Purchase Agreement, and the
Pledgor shall have no further liability hereunder upon such termination. Any
Collateral remaining at the time of such termination shall be fully released and
discharged from the Lien hereof and delivered to the Pledgor by the Collateral
Agent, all at the expense of the Pledgor.
13. No Personal Liability of Trustees.
By executing this Collateral Agreement none of the Trustees
assumes any personal liability hereunder.
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IN WITNESS WHEREOF, each of the Pledgor, the Corporate Seller
Control Persons, the Xxxx Xxxxxx Family Trust, Xxxx Xxxxxx, the Collateral Agent
and the Trust has caused this Collateral Agreement to be duly executed on its
behalf as of the date hereof.
PLEDGOR:
------------------------------------------
By:
------------------------------------------
Name:
Title:
Address for Notices:
------------------------------------------
Attention:
------------------------------------------
MH HOLDINGS I:
------------------------------------------
By:
------------------------------------------
Name:
Title:
Address for Notices:
------------------------------------------
Attention:
------------------------------------------
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27
MH HOLDINGS II:
------------------------------------------
By:
------------------------------------------
Name:
Title:
Address for Notices:
------------------------------------------
Attention:
------------------------------------------
XXXX XXXXXX FAMILY TRUST
------------------------------------------
By:
------------------------------------------
Name:
Title:
Address for Notices:
------------------------------------------
Attention:
------------------------------------------
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XXXX XXXXXX
------------------------------------------
By:
------------------------------------------
Name:
Title:
Address for Notices:
------------------------------------------
Attention:
------------------------------------------
THE TRUST:
DECS TRUST III
By:
--------------------------------------
Xxxxxx X. Xxxxxxx,
as Trustee
By:
--------------------------------------
Xxxxxxx X. Xxxxxx, III,
as Trustee
By:
--------------------------------------
Xxxxx X. X'Xxxxx,
as Trustee
Address for Notices:
-----------------------------------------
Attention:
-----------------------------------------
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COLLATERAL AGENT:
as Collateral Agent
By:
---------------------------------------
Name:
Title:
Address for Notices:
-----------------------------------------
Attention:
-----------------------------------------
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Exhibit A
to
Collateral Agreement
CERTIFICATE FOR SUBSTITUTED COLLATERAL
The undersigned, _____________ (the "Pledgor"), hereby certifies, pursuant to
Section 6(b) of the Collateral Agreement dated as of March [ ], 1998 among the
Pledgor, The Bank of New York, as Collateral Agent, certain other parties
thereto, and DECS TRUST III (the "Collateral Agreement"; terms defined in the
Collateral Agreement being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the
Collateral Agent to be held by the Collateral Agent as substituted Collateral
(the "Substituted Collateral"):
2. The Pledgor requests that the Collateral Agent transfer to the
Pledgor the following Prior Collateral, pursuant to Section 6(b) of the
Collateral Agreement:
3. The Pledgor hereby represents and warrants to the Collateral
Agent and the Trust that:
(a) Consents to Transfer. No Transfer Restrictions
exist with respect to or otherwise apply to the assignment of, or
transfer by the Pledgor of possession of, any items of
Substituted Collateral to the Collateral Agent under the
Collateral Agreement, or the subsequent sale or transfer of such
items of Substituted Collateral by the Collateral Agent pursuant
to the terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security
Interest. The Pledgor has good and marketable title to the
Substituted Collateral, free of all Liens (other than the Lien
created by the Collateral Agreement) and Transfer Restrictions.
Upon delivery of the Collateral to the Collateral Agent, the
Collateral Agent will obtain a valid, first priority perfected
security interest in, and a first lien upon, such Substituted
Collateral subject to no other Lien. None of such Substituted
Collateral is or shall be pledged by the Pledgor as collateral
for any other purpose.
This Certificate may be relied upon by the Trust as fully and to
the same extent as if this Certificate had been specifically addressed to the
Trust.
A-1
31
IN WITNESS WHEREOF, the undersigned has executed this Certificate
this _____ day of ______, 1998.
-------------------------------------------
Name:
Title:
X-0
00
Xxxxxxx X
to
Collateral Agreement
CERTIFICATE FOR ADDITIONAL COLLATERAL
The undersigned, __________________ (the "Pledgor"), hereby
certifies, pursuant to Section 6(c) of the Collateral Agreement, dated as of
March [ ], 1998, among the Pledgor, The Bank of New York, as Collateral Agent,
certain other parties thereto, and DECS TRUST III (the "Collateral Agreement";
terms defined in the Collateral Agreement being used herein as defined therein),
that:
1. The Pledgor is delivering the following securities to the
Collateral Agent to be held by the Collateral Agent as additional Collateral
(the "Additional Collateral"):
2. The Pledgor hereby represents and warrants to the Collateral
Agent that:
(a) Consents to Transfer. No Transfer Restrictions exist
with respect to or otherwise apply to the assignment of, or transfer by
the Pledgor of possession of, any items of Additional Collateral to the
Collateral Agent under the Collateral Agreement, or the subsequent sale
or transfer of such items of Additional Collateral by the Collateral
Agent pursuant to the terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest. The
Pledgor has good and marketable title to the Additional Collateral, free
of all Liens (other than the Lien created by the Collateral Agreement)
and Transfer Restrictions. Upon delivery of the Collateral to the
Collateral Agent, the Collateral Agent will obtain a valid, first
priority perfected security interest in, and a first lien upon, such
additional Collateral subject to no other Lien. None of such Additional
Collateral is or shall be pledged by the Pledgor as collateral for any
other purpose.
This Certificate may be relied upon by the Trust as fully and to
the same extent as if this Certificate had been specifically addressed to the
Trust.
B-1
33
IN WITNESS WHEREOF, the undersigned has executed this Certificate
this _____ day of _____ 1998.
-------------------------------------------
Name:
Title:
B-2
