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PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
Xxxxxxx Xxxxx Preferred Funding I, L.P.
Dated as of December __, 1996
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TABLE OF CONTENTS
PAGE
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ARTICLE I
SECTION 1.1. Definitions......................................... 2
ARTICLE II
SECTION 2.1. Guarantee........................................... 3
SECTION 2.2. Waiver of Notice and Demand......................... 3
SECTION 2.3. Obligations Not Affected............................ 3
SECTION 2.4. Rights of Holders................................... 5
SECTION 2.5. Guarantee of Payment................................ 5
SECTION 2.6. Subrogation......................................... 5
SECTION 2.7. Independent Obligations............................. 6
ARTICLE III
SECTION 3.1. Limitation of Transactions.......................... 6
SECTION 3.2. Ranking............................................. 7
ARTICLE IV
SECTION 4.1. Termination......................................... 7
ARTICLE V
SECTION 5.1. Successors and Assigns.............................. 8
SECTION 5.2. Amendments.......................................... 8
SECTION 5.3. Notices............................................. 8
SECTION 5.4. Benefit............................................. 9
SECTION 5.5. Governing Law....................................... 9
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PARTNERSHIP GUARANTEE AGREEMENT
This PARTNERSHIP GUARANTEE AGREEMENT, dated as of December __, 1996,
is executed and delivered by Xxxxxxx Xxxxx & Co., Inc., a Delaware corporation
(the "Company" or the "Guarantor"), for the benefit of the holders from time to
time of the Partnership Preferred Securities (as defined below).
WHEREAS, pursuant to an Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement"), dated as of the date hereof, of
Xxxxxxx Xxxxx Preferred Funding I, L.P., a Delaware limited partnership (the
"Issuer"), the Issuer may issue a single series of limited partner interests in
the Issuer (the "Partnership Preferred Securities");
WHEREAS, pursuant to the Partnership Agreement, the proceeds
received by the Issuer from the issuance and sale of the Partnership Preferred
Securities will be invested by the Issuer in the Affiliate Investment
Instruments and Eligible Debt Securities (each as defined in the Partnership
Agreement); and
WHEREAS, the Guarantor, as incentive for the Holders (as defined
herein) to purchase Partnership Preferred Securities, desires hereby irrevocably
and unconditionally to agree, to the extent set forth herein, to pay to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Partnership Preferred Securities, which purchase the Guarantor hereby
acknowledges shall directly or indirectly provide at least some material benefit
to the Guarantor, the Guarantor executes and delivers this Guarantee Agreement
for the benefit of the Holders.
ARTICLE I
SECTION 1.1. Definitions
As used in this Partnership Guarantee Agreement, the terms set forth
below shall, unless the context otherwise requires, have the following meanings.
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Partnership Agreement.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Finance Subsidiary" means any wholly-owned subsidiary of the
Company the principal purpose of which is to raise capital for the Company by
issuing securities that are guaranteed by the Company and the proceeds of which
are loaned to or invested in the Company or one or more of its affiliates.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Partnership Preferred
Securities, to the extent not paid or made by the Issuer: (i) any accumulated
and unpaid distributions that have theretofore been declared on the Partnership
Preferred Securities out of funds legally available therefor at such time, (ii)
the redemption price, including all accumulated and unpaid Distributions to the
date of redemption (the "Redemption Price"), payable out of funds legally
available therefor at such time, with respect to any Partnership Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary termination or liquidation of the Issuer, the lesser of (a) the
aggregate of the liquidation preference and all accumulated and unpaid
distributions on the Partnership Preferred Securities to the date of payment out
of funds legally available therefor and (b) the amount of assets of the Issuer
after satisfaction of all liabilities remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Partnership Preferred Securities; provided,
however, that in
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determining whether the holders of the requisite percentage of Partnership
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not apply to Partnership Preferred Securities owned
beneficially by the Guarantor or any Affiliate of the Guarantor.
"Rights Agreement" means the rights Agreement dated as of December
16, 1987 between the Company and The Chase Manhattan Bank (successor by merger
to Manufacturers Hanover Trust Company), or any successor to such Rights
Agreement.
ARTICLE II
SECTION 2.1. Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments, as and when due (without duplication of
amounts theretofore paid by the Issuer), regardless of any defense, right of
set-off or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 2.2. Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Partnership
Guarantee Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 2.3. Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Partnership Guarantee Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
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(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Partnership
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Partnership
Preferred Securities or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the
Partnership Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Partnership
Preferred Securities;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Partnership
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 2.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
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SECTION 2.4. Rights of Holders
The Guarantor expressly acknowledges that (i) this Partnership
Guarantee Agreement will be deposited with the General Partner to be held for
the benefit of the Holders; (ii) in the event of the appointment of a Special
Representative to, among other things, enforce this Partnership Guarantee
Agreement, the Special Representative may take possession of this Partnership
Guarantee Agreement for such purpose; (iii) if no Special Representative has
been appointed, the General Partner has the right to enforce this Partnership
Guarantee Agreement on behalf of the Holders; (iv) the Holders of not less than
a majority in aggregate liquidation preference of the Partnership Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available in respect of this Partnership Guarantee
Agreement including the giving of directions to the General Partner or the
Special Representative, as the case may be; and (v) if the General Partner or
Special Representative fails to enforce this Partnership Guarantee Agreement as
above provided, any Holder may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Partnership Guarantee Agreement,
without first instituting a legal proceeding against the Issuer or any other
person or entity. Notwithstanding the foregoing, if the Guarantor has failed to
make a guarantee payment, a Holder may directly institute a proceeding against
Guarantor to enforce such payment under this Partnership Guarantee Agreement.
SECTION 2.5. Guarantee of Payment
This Partnership Guarantee Agreement will not be discharged except
by payment of the Guarantee Payments in full to the extent not paid by the
Issuer.
SECTION 2.6. Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Partnership Guarantee Agreement provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by
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way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Partnership Guarantee Agreement, if, at
the time of any such payment, any amounts are due and unpaid under this
Partnership Guarantee Agreement. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 2.7. Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Partnership
Preferred Securities and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Partnership Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (f), inclusive, of Section 2.3 hereof.
ARTICLE III
SECTION 3.1. Limitation of Transactions
So long as any Partnership Preferred Securities remain outstanding,
if (a) for any distribution period, full distributions on a cumulative basis on
any Partnership Preferred Securities have not been paid or declared and set
apart for payment (b) there shall have occurred an Event of Default under the
Partnership Agreement or (c) the Guarantor shall be in default with respect to
its payment obligations under this Partnership Guarantee Agreement, the Trust
Preferred Securities Guarantee, the Trust Common Securities Guarantee or any
Investment Guarantee then, during such period the Company shall not, nor permit
any majority owned subsidiary to (i) declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to any of its capital stock or comparable
equity interest (except for (x) dividends or distributions in shares of, or
options, warrants or rights to subscribe for or purchase shares of, its capital
stock and conversions or exchanges of common stock of one class into common
stock of another class, (y) redemp-
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tions or purchases of any rights pursuant to the Rights Agreement and the
issuance of preferred stock pursuant to such rights and (z) purchases or
acquisitions by the Company or its affiliates in connection with transactions
effected by or for the account of customers of the Company or any of its
subsidiaries or in connection with the distribution or trading of such capital
stock or comparable equity interest) and (ii) permit any Finance Subsidiary to
make, or make any payments that would enable any Finance Subsidiary to make, any
payment of any dividends on, any distribution with respect to, or any
redemption, purchase or other acquisition of, or any liquidation payment with
respect to any preferred security or comparable equity interest of any Finance
Subsidiary.
SECTION 3.2. Ranking
This Partnership Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued from time to time
by the Guarantor and with any other guarantee now or hereafter entered into by
the Guarantor in respect of any preferred or preference stock of any Finance
Subsidiary, and (iii) senior to the Guarantor's common stock. Any similar
guarantee given hereafter by the Company with respect to Partnership Preferred
Securities that is silent as to seniority will rank pari passu with this
Partnership Guarantee Agreement.
ARTICLE IV
SECTION 4.1. Termination
This Partnership Guarantee Agreement shall terminate and be of no
further force and effect, as to the Partnership Preferred Securities, upon full
payment of the Redemption Price of all Partnership Preferred Securities, and
will terminate completely upon full payment of the amounts payable in accordance
with the Partnership Agreement upon liquidation of the Issuer. This Partnership
Guarantee Agreement will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must, in accordance with Delaware
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Revised Uniform Limited Partnership Act, restore payment of any sums paid under
any Partnership Preferred Securities or this Partnership Guarantee Agreement.
ARTICLE V
SECTION 5.1. Successors and Assigns
All guarantees and agreements contained in this Partnership
Guarantee Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Partnership Preferred Securities then outstanding.
SECTION 5.2. Amendments
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Partnership Guarantee Agreement may only be amended with the prior approval of
the Holders of not less than a majority in aggregate liquidation preference of
all the outstanding Partnership Preferred Securities.
SECTION 5.3. Notices
Any notice, request or other communication required or permitted to
be given hereunder to the Guarantor shall be given in writing by delivering the
same against receipt therefor by facsimile transmission (confirmed by mail),
addressed to the Guarantor, as follows (and if so given, shall be deemed given
when mailed):
Xxxxxxx Xxxxx & Co., Inc.
World Financial Center
South Tower
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Treasurer
Any notice, request or other communication required or permitted to
be given hereunder to the Holders shall be given by the Guarantor in the same
manner as notices sent by the Issuer to the Holders.
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SECTION 5.4. Benefit
This Partnership Guarantee Agreement is solely for the benefit of
the Holders and is not separately transferable from the Partnership Preferred
Securities.
SECTION 5.5. Governing Law
THIS PARTNERSHIP GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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THIS PARTNERSHIP GUARANTEE AGREEMENT is executed as of the day and
year first above written.
XXXXXXX XXXXX & CO., INC.
By: _______________________
Name: Xxxxxxx Xxxx
Title: Senior Vice President
and Treasurer
