THIS PLEDGE AGREEMENT (this "Pledge Agreement") is made and entered into as
of September 18, 1996, by USA FINANCE, INC., a Delaware corporation ("Pledgor"),
having an office at 0000 Xxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000, in
favor of SUNAMERICA FINANCIAL RESOURCES, INC., a Delaware corporation (together
with its successors and assigns, "Pledgee"), having an address at 00000 Xxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxxxxxx Xxxx, Xxxxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, Pledgor is the legal and beneficial owner of all of the shares of
stock described on Part I of Schedule I hereto and issued by the corporation
named on such Part I of Schedule I.
WHEREAS, Contract Funding Corp ("Funding"), as Seller, Gold Coast Finance,
Inc. ("Gold Coast"), as Collection Agent, and SunAmerica Financial Resources,
Inc., as Facility Agent and Purchaser, are entering into a Receivables Purchase
and Sale Agreement (as amended, supplemented or otherwise modified from time to
time, the "Purchase Agreement") dated as of September 18, 1996, pursuant to
which Purchaser will purchase and Seller will sell Receivables subject to the
terms and conditions thereof. Capitalized terms used in this Pledge Agreement
but not defined herein shall have the meanings ascribed to such terms in the
Purchase Agreement.
WHEREAS, Pledgor is the owner of 100% of the capital stock of each of Gold
Coast, National-Wide Premium Finance Corporation ("National-Wide") and Funding
and will receive substantial direct and indirect benefits from the transactions
contemplated by the Purchase Agreement and Purchase Documents.
WHEREAS, Pledgor has guaranteed the obligations of Gold Coast and
National-Wide under the Purchase Documents pursuant to the USA Guaranty executed
by Pledgor in favor of Pledgee.
WHEREAS, Pledgee has agreed to make certain loans, from time to time, to
Pledgor as evidenced by that certain demand promissory note dated as of
September 18, 1996 executed by Pledgor in favor of Pledgee (as amended,
supplemented, extended or otherwise modified from time to time, the "Note").
WHEREAS, Pledgor is willing irrevocably and unconditionally to grant
certain security interests in favor of Pledgee as herein provided.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, receipt of which is hereby acknowledged, and in
order to induce Pledgee to extend credit under the Note and enter into the
Purchase Documents, Pledgor hereby agrees as follows:
1. Pledge. Pledgor hereby pledges to Pledgee, and grants to Pledgee a
security interest in, the following collateral to secure the Secured Obligations
(as defined in Section 2) (the "Pledged Collateral"):
(a) the shares of stock of the issuers identified on Schedule I hereto
held by it (the "Pledged Shares") and the certificates representing the Pledged
Shares, and all stock dividends, cash dividends, all other dividends, cash,
instruments, chattel paper, warrants, options and other rights, property or
proceeds and products from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Shares;
(b) all additional shares of stock of the issuers identified on Schedule
I hereto at any time acquired by Pledgor in any manner, and all securities
convertible into and warrants, options and other rights to purchase any shares
of stock and the certificates or other instruments representing such additional
shares, securities, warrants, options or other rights (and any such additional
shares shall constitute part of the Pledged Shares under this Pledge Agreement),
and all stock dividends, cash dividends, cash, instruments, chattel paper,
warrants and any other rights, property or proceeds and products from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all such shares, securities, warrants, options or other rights;
(c) all other claims of any kind or nature, and any instruments,
certificates, chattel paper or other writings evidencing such claims, whether in
contract or tort and whether arising by operation of law, consensual agreement
or otherwise, at any time acquired by Pledgor against any issuer of the Pledged
Shares; and
(d) all proceeds of any of the foregoing. The term "proceeds" shall have
the meaning assigned to that term under the Uniform Commercial Code as in effect
in any relevant jurisdiction.
2. Security for Obligations. This Pledge Agreement and all of the Pledged
Collateral secure the payment and performance when due of all obligations,
liabilities and indebtedness of every nature of Pledgor to Pledgee, whether at
stated maturity, on mandatory prepayment, by acceleration or otherwise, now or
hereafter existing under or arising out of or in connection with the Note or the
USA Guaranty and all renewals, extensions, restructurings and refinancings of
the foregoing, whether for principal, interest (including, without limitation,
interest
2
which, but for the filing of a petition in bankruptcy, would accrue on such
obligations whether or not such interest is an allowed claim), fees, expenses or
otherwise, and all obligations or liabilities of Pledgor now or hereafter
existing under this Pledge Agreement (all such debts, obligations and
liabilities being collectively called the "Secured Obligations").
3. Delivery of Pledged Collateral. All certificates or instruments
representing or evidencing the Pledged Collateral shall be delivered to and held
by or on behalf of Pledgee pursuant hereto and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed indorsements or
undated instruments of transfer or assignment in blank with signatures
guaranteed, all in form and substance acceptable to Pledgee. Pledgee shall have
the right, at any time in its discretion and without notice to Pledgor following
the occurrence of an Event of Default, to transfer to or to register in the name
of Pledgee or any of its nominees any or all of the Pledged Collateral.
4. Representations and Warranties. In order to induce Pledgee to make loans
under the Note and to enter into the Purchase Documents and this Pledge
Agreement, Pledgor represents and warrants that the following statements are,
true, correct and complete as follows:
(a) Schedule I hereto completely and accurately sets forth the number of
shares of the issued and outstanding stock of Contract Funding Corp., a Delaware
corporation, held, beneficially or of record, by Pledgor as of the Closing Date.
The Pledged Shares constitute the percentage of the issued and outstanding
shares of stock of the applicable issuer set forth on Schedule I. All shares of
such stock owned by Pledgor have been, or will be upon issuance, duly authorized
and validly issued in compliance with all applicable securities laws and are or
will be, as the case may be, fully paid and nonassessable. There are no
outstanding warrants, options, subscriptions or other contractual arrangements
for the purchase of any other shares of stock or any securities convertible into
shares of stock of any of the issuers of the Pledged Shares, and there are no
preemptive rights with respect to the shares of stock of any such issuer.
(b) Pledgor is the legal, record and beneficial owner of the Pledged
Collateral.
(c) The delivery of the Pledged Shares to Pledgee pursuant to this
Pledge Agreement creates a valid and perfected first priority security interest
in the Pledged Collateral, free of any adverse claim, securing the payment of
the Secured Obligations.
(d) No consent of any other party (including, without limitation, any
stockholder or creditor of Pledgor) and no consent, authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required either (i) for the pledge by Pledgor of the Pledged
Collateral pursuant to this Pledge Agreement or for the execution, delivery or
performance of this Pledge Agreement by Pledgor, or (ii) for the exercise by
Pledgee of the voting or other rights provided for in this Pledge Agreement or
the remedies in respect of the Pledged Collateral pursuant to this Pledge
Agreement (except as may
3
be required in connection with such disposition of any Pledged Collateral by
laws affecting the offering and sale of securities generally).
(e) None of the Pledged Shares constitutes margin stock, as defined in
Regulation U of the Board of Governors of the Federal Reserve System.
(f) This Pledge Agreement is the legal, valid and binding obligation of
Pledgor, enforceable against it in accordance with its terms.
(g) All information heretofore, herein or hereafter supplied to Pledgee
by or on behalf of Pledgor with respect to the Pledged Collateral is and will be
accurate and complete in all material respects.
(h) The chief executive office of Pledgor is located at the address set
forth in the preamble of this Pledge Agreement.
5. Further Assurances.
(a) Pledgor will, from time to time, at its expense, promptly execute
and deliver all further instruments and documents and take all further action
that may be necessary or desirable, or that Pledgee may request, in order to
perfect and protect any security interest granted or purported to be granted
hereby, to enable Pledgee to exercise and enforce the rights and remedies of
Pledgee hereunder with respect to any Pledged Collateral or to carry out the
provisions and purposes hereof. Without limiting the generality of the
foregoing, Pledgor will: (i) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as Pledgee may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby under
the laws of any applicable jurisdiction; (ii) upon Pledgee's request, appear in
and defend any action or proceeding that may affect Pledgor's title to or
Pledgee's security interest in the Pledged Collateral; and (iii) immediately
after the purchase or other acquisition of Pledged Collateral after the date
hereof, deliver to Pledgee all such Pledged Collateral hereunder.
(b) Pledgor will, promptly upon request, provide to Pledgee all
information and evidence it may reasonably request concerning the Pledged
Collateral to enable Pledgee to enforce the provisions of this Pledge Agreement.
(c) Pledgor will, immediately upon the purchase or acquisition of any
additional shares of stock of the issuers identified on Schedule I hereto,
deliver to Pledgee such Pledged Shares or such instruments, as the case may be,
as required by Section 3 above, together with a proxy substantially in the form
attached hereto as Exhibit A, and a pledge amendment, duly executed by Pledgor,
in substantially the form of Exhibit B hereto (a "Pledge Amendment"), in respect
of the additional shares or instruments which are to be pledged pursuant to this
Pledge Agreement. Pledgor hereby authorizes Pledgee to attach each Pledge
Amendment to this Pledge Agreement and agrees that all shares and instruments
listed on any Pledge
4
Amendment delivered to Pledgee shall for all purposes hereunder be considered
Pledged Collateral.
6. Negative Covenants. So long as any Secured Obligation shall remain
unpaid or outstanding, Pledgor shall not:
(a) create, incur, assume or suffer to exist any security interest, lien
or other encumbrance on any of the Pledged Collateral now owned or hereafter
acquired other than pursuant to this Pledge Agreement;
(b) permit any issuer of any Pledged Shares to merge or consolidate;
(c) engage, directly or indirectly, in any business other than the
business conducted by Pledgor on the Closing Date and similar and related
businesses; or
(d) convert any of the Pledged Collateral into other stock or securities
(including any warrants, options, subscriptions or other contractual
arrangements for the purchase of stock or securities convertible into stock).
7. Voting Rights; Dividends; Etc.
(a) For purposes of this Pledge Agreement, "Event of Default" shall mean
any default or failure to perform any obligation of Pledgor under the Note or
USA Guaranty. So long as no Event of Default shall have occurred and be
continuing (and in the case of subsection 7(a)(i) hereof, so long as Pledgee
shall not have made the election to exercise the rights set forth in subsection
(c) below):
(i) Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms of this Pledge Agreement, the
Note or the USA Guaranty, provided, however, that, after the occurrence and
during the continuance of an Event of Default and so long as Pledgee shall not
have made the election to exercise the rights set forth in subsection (c) below,
Pledgor shall not exercise or refrain from exercising any such right if, in
Pledgee's reasonable judgment, such action or inaction would have a material
adverse effect on the value of the Pledged Collateral or any part thereof; and
provided, further, that Pledgor shall give Pledgee at least ten (10) days prior
written notice of the manner in which it intends to exercise, and the reasons
therefor, or the reasons for refraining from exercising, any such right.
(ii) Pledgor shall be entitled to receive and retain any cash
dividends and distributions paid or payable with respect to any of the Pledged
Collateral. Any and all instruments, chattel paper and other rights, property or
proceeds and products (other than cash or checks) received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged Collateral,
shall be, and shall be forthwith,
5
delivered to Pledgee to hold as Pledged Collateral, and shall, if received by
Pledgor, be received in trust for the benefit of Pledgee, be segregated from the
other property or funds of Pledgor, and be forthwith delivered to Pledgee as
Pledged Collateral in the same form as so received (with any necessary
indorsement).
(iii) Pledgee shall execute and deliver (or cause to be executed and
delivered) to Pledgor all such proxies and other instruments as Pledgor may
reasonably request for the purpose of enabling Pledgor to exercise the voting
and other rights which it is entitled to exercise pursuant to paragraph (i)
above.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) All rights of Pledgor to receive and retain any cash dividends
and distributions pursuant to subsection 7(a)(ii) shall cease and become vested
solely in Pledgee, who shall thereupon have the sole right to receive and hold
as Pledged Collateral such dividends and distributions (and apply them to
payment of the Secured Obligations).
(ii) Upon the election by Pledgee in accordance with subsection 7(c)
below, all rights of Pledgor to exercise the voting and other consensual rights
pursuant to subsection 7(a)(i) above shall cease and be vested solely in
Pledgee, who shall thereupon have the exclusive right to exercise such voting
and other consensual rights. In order to effect such transfer of rights, Pledgee
shall have the right, upon such notice, to date and present to the issuer of the
Pledged Shares the irrevocable proxy executed by Pledgor substantially in the
form attached hereto as Exhibit A (the "Proxy");
(iii) All dividends and distributions which are received by Pledgor
contrary to the provisions of this subsection 7(b)(i) shall be received in trust
for the benefit of Pledgee, shall be segregated from other funds of Pledgor and
shall be forthwith paid over to Pledgee as Pledged Collateral in the same form
as so received (with any necessary indorsement).
(c) Notwithstanding anything to the contrary contained in this Section
7, the rights of Pledgee to exercise voting and other consensual rights pursuant
to subsection 7(b)(ii) hereof without regard to directions from Pledgor shall
arise only upon the election by Pledgee from and after the occurrence and during
the continuance of any Event of Default to exercise such rights; provided that
Pledgee shall not be obligated to notify Pledgor of any such election, which
election shall be effective when made, and may be evidenced by Pledgee or its
designee or nominee exercising such voting or other consensual rights. The
exercise by Pledgee of its rights hereunder shall not constitute an election by
Pledgee to retain the Pledged Collateral in satisfaction of the Secured
Obligations, or affect Pledgee's rights to any other collateral or against any
other party.
6
8. Subsequent Changes Affecting Collateral; Transfers and Other Liens;
Additional Shares.
(a) Pledgor represents to Pledgee that Pledgor has made its own
arrangements for keeping informed of changes or potential changes affecting the
Pledged Collateral (including, but not limited to, rights to convert, rights to
subscribe, payment of dividends, reorganization or other exchanges, tender
offers and voting rights), and Pledgor agrees that Pledgee shall not have any
responsibility or liability for informing Pledgor of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto.
(b) Pledgor agrees that Pledgor will not (i) sell, assign (by operation
of law or otherwise) or otherwise dispose of, or grant any option with respect
to, any of the Pledged Collateral or (ii) enter into any other contractual
obligations which could reasonably be expected to restrict or inhibit Pledgee's
rights or ability to sell or otherwise dispose of the Pledged Collateral or any
part thereof after the occurrence of an Event of Default.
(c) Pledgor agrees that it will (i) not cause any issuer of the Pledged
Shares to issue any stock or other securities (including any warrants, options,
subscriptions or other contractual arrangements for the purchase of stock or
securities convertible into stock) in addition to or in substitution for the
Pledged Shares except to Pledgor, and (ii) deliver hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all writings
evidencing any additional Pledged Collateral. Pledgor hereby authorizes Pledgee
to modify this Pledge Agreement by unilaterally amending Schedule I to include
such shares of stock or other securities.
9. Pledgee Appointed Attorney-in-Fact. Pledgor hereby irrevocably appoints
Pledgee as Pledgor's attorney-in-fact effective upon the occurrence of an Event
of Default, with full authority in the place and stead of Pledgor and in the
name of Pledgor, Pledgee or otherwise, from time to time in Pledgee's discretion
to take any action (including completion and presentation of the Proxy) and to
execute any instrument that Pledgee may deem necessary or advisable to
accomplish the purposes of this Pledge Agreement, including, without limitation,
to (i) receive, indorse and collect all instruments made payable to Pledgor
representing any dividend, distribution or other payment in respect of the
Pledged Collateral or any part thereof and (ii) to exercise the voting and other
consensual rights pertaining to the Pledged Collateral; and (iii) sell,
transfer, pledge, make any agreement with respect to or otherwise deal with any
of the Pledged Collateral as fully and completely as though Pledgee were the
absolute owner thereof for all purposes, and to do, at Pledgee's option and
Pledgor's expense, at any time and from time to time, all acts and things that
Pledgee deems necessary to protect, preserve or realize upon the Pledged
Collateral. Pledgor hereby ratifies and approves all acts of Pledgee made or
taken pursuant to this Section 9. Except as specifically set forth in Section 11
hereof, neither Pledgee nor any person designated by Pledgee shall be liable for
any acts or omissions or for any error of judgment or mistake of fact or law.
This power of attorney is coupled with an interest and shall be irrevocable
until all Secured Obligations shall have been fully satisfied and paid in full
in cash and the Note and USA Guaranty shall have been terminated.
7
10. Pledgee May Perform. If Pledgor fails to perform any agreement
contained herein, Pledgee may itself perform, or cause performance of, such
agreement, and the expenses of Pledgee incurred in connection therewith shall be
payable by Pledgor under Section 16 hereof, and be a part of the Secured
Obligations.
11. Limitation on Duty of Pledgee with Respect to the Pledged Collateral.
The powers conferred on Pledgee hereunder are solely to protect its interests in
the Pledged Collateral and shall not impose any duty on it to exercise any such
powers. Except for the safe custody of any Pledged Collateral in its possession
and the accounting for monies actually received by it hereunder, Pledgee shall
have no duty with respect to any Pledged Collateral. Pledgee shall be deemed to
have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
that is substantially equivalent to that which Pledgee accords its own property,
it being expressly agreed that Pledgee shall not have responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral, whether
or not Pledgee has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any parties with respect
to any Pledged Collateral, but Pledgee may do so and all expenses incurred in
connection therewith shall be payable by and for the sole account of Pledgor and
shall be part of the Secured Obligations.
8
12. Remedies upon Event of Default. If any Event of Default shall have
occurred:
(a) Pledgee may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party under the Uniform
Commercial Code (the "UCC") in effect in the State of New York at that time,
whether or not the UCC applies to the affected Pledged Collateral, and Pledgee
may also, without notice except as specified below, sell the Pledged Collateral
or any part thereof in one or more parcels at a public or private sale, at any
exchange, broker's board or at any of Pledgee's offices or elsewhere, for cash,
on credit, or for future delivery, at such price or prices and upon such other
terms as Pledgee deems commercially reasonable. Pledgor acknowledges and agrees
that such a private sale may result in prices and other terms which may be less
favorable to the seller than if such sale were a public sale. Pledgor agrees
that, to the extent notice of sale shall be required by law, at least five days'
notice to Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification.
At any sale of the Pledged Collateral, if permitted by law, Pledgee may bid
(which bid may be, in whole or in part, in the form of cancellation of
indebtedness) for the purchase of the Pledged Collateral or any portion thereof.
Pledgee shall not be obligated to make any sale of Pledged Collateral regardless
of notice of sale having been given. Pledgee may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. Pledgee shall be under no obligation to delay a sale of any of
the Pledged Collateral for the period of time necessary to permit the issuing
corporation of such securities to register such securities for public sale under
the Securities Act of 1933, as from time to time amended (the "Securities Act"),
or under any other applicable securities laws, even if the issuing corporation
would agree to do so. To the extent permitted by law, Pledgor hereby
specifically waives all rights of redemption, stay or appraisal which it has or
may have under any law now existing or hereafter enacted.
(b) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as from time to time amended (the
"Securities Act"), and other applicable securities laws, Pledgee may be
compelled, with respect to any sale of all or any part of the Pledged Collateral
conducted without prior registration or qualification of such Pledged Collateral
under the Securities Act and/or such securities laws, to limit purchasers to
those who will agree, among other things, to acquire the Pledged Collateral for
their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that any such private sales may be at
prices and on terms less favorable to Pledgee than those obtainable through a
public sale without such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the Securities Act)
and, notwithstanding such circumstances Pledgor agrees that any such private
sale shall be deemed to have been made in a commercially reasonable manner and
that Pledgee shall have no obligation to engage in public sales and no
obligation to delay the sale of any Pledged Collateral for the period of time
necessary to permit the issuer thereof to register it for a form of public sale
requiring registration under the Securities Act or under any other applicable
securities laws. Pledgor
9
waives any claims against Pledgee arising by reason of the fact that the price
at any private sale was less than the price that might have been obtained at a
public sale, or was less than the Secured Obligations, even if Pledgee shall
accept the first offer received and does not offer the Pledged Collateral to
more than one prospective purchaser. If Pledgee determines to exercise its right
to sell any or all of the Pledged Collateral, upon written request, Pledgor
shall and shall cause each issuer of the Pledged Shares from time to time to
furnish to Pledgee all such information Pledgee may request in order to
determine the number of shares and other instruments included in the Pledged
Collateral which may be sold by Pledgee as exempt transactions under the
Securities Act and the rules of the Securities and Exchange Commission
thereunder, as the same are from time to time in effect, and any other
applicable laws.
(c) Any cash held by Pledgee as Pledged Collateral and all cash proceeds
received by Pledgee in respect of any sale of, collection from, or other
realization upon all or any part of the Pledged Collateral may, in the
discretion of Pledgee, be held by Pledgee as collateral for, and/or then or at
any time thereafter applied (after payment of any amounts payable to Pledgee
pursuant to Section 16) in whole or in part by Pledgee against, all or any part
of the Secured Obligations in such order as Pledgee shall elect. Any surplus of
such cash or cash proceeds held by Pledgee and remaining after payment in full
of all the Secured Obligations shall be paid over to Pledgor or to whomsoever
may be lawfully entitled to receive such surplus or as a court of competent
jurisdiction may direct; provided, that in the event that all of the conditions
to the termination of this Pledge Agreement pursuant to Section 18 shall not
have been fulfilled, such balance shall be held and applied from time to time as
provided in this subsection 12(c) until all such conditions shall have been
fulfilled.
13. Registration Rights. If Pledgee shall determine to exercise its right
to sell all or any of the Pledged Collateral pursuant to Section 12, Pledgor
agrees that it will, at its own expense:
(a) execute and deliver, and cause each issuer of the Pledged
Collateral contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the opinion of
Pledgee, advisable to register such Pledged Collateral under the provisions of
the Securities Act, and to cause the registration statement relating thereto to
become effective and to remain effective until such time as all of the Pledged
Collateral included in such registration statement has been sold, and to make
all amendments and supplements thereto and to the related prospectus which, in
the opinion of Pledgee, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Pledged Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Pledged Collateral, as requested by Pledgee;
10
(c) cause the issuer of the Pledged Collateral to make available to its
security holders, as soon as practicable, an earnings statement which will
satisfy the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law.
Pledgor further acknowledges the impossibility of ascertaining the amount
of damages which would be suffered by Pledgee by reason of the failure by
Pledgor to perform any of the covenants contained in this Section and,
consequently, agrees that, if Pledgor shall fail to perform any of such
covenants contained in this Section it shall pay, as liquidated damages and not
as a penalty, an amount equal to the fair market value of the Pledged Collateral
(assuming it were sold pursuant to the request hereunder) on the date Pledgee
shall demand compliance with this Section.
Notwithstanding the foregoing, Pledgor recognizes that Pledgee may be
unable to effect a public sale of all or part of the Pledged Collateral and may
be compelled to resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire such
Pledged Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. Pledgor acknowledges that any such private
sales may be at prices and on terms less favorable to the seller than if sold at
public sales and agrees that such private sales shall be deemed to have been
made in a commercially reasonable manner, and that Pledgee has no obligation to
delay the sale of any such Pledged Collateral for the period of time necessary
to permit the issuer of such Pledged Collateral to register such Pledged
Collateral for public sale under the Securities Act.
14. Remedies Cumulative. No failure on the part of Pledgee to exercise, and
no delay in exercising and no course of dealing with respect to, any power,
privilege or right under this Pledge Agreement, the Note, the USA Guaranty or
the other Purchase Documents shall operate as a waiver thereof; nor shall any
single or partial exercise by Pledgee of any power, privilege or right under
this Pledge Agreement, the Note, the USA Guaranty or the other Purchase
Documents preclude any other or further exercise thereof or the exercise of any
other such power, privilege or right. The powers, privileges and rights in this
Pledge Agreement, the Note, the USA Guaranty and the other Purchase Documents
are cumulative and are not exclusive of any other remedies provided by law.
15. Application of Proceeds. Upon the occurrence of an Event of Default,
the proceeds of any sale of, or other realization upon, all or any part of the
Pledged Collateral shall be applied: first to all reasonable fees, costs and
expenses incurred by Pledgee with respect to the Note, USA Guaranty or the
Pledged Collateral, including, without limitation, those described in Section 16
herein; second, to accrued and unpaid interest on the Secured Obligations
(including any interest which but for the provisions of the Bankruptcy Code,
would have accrued on such amounts whether or not such interest is an allowed
claim); third, to the principal amounts of the Secured Obligations outstanding
and any other outstanding Secured
11
Obligations; fourth, to any other indebtedness or obligations of Pledgor owing
to Pledgee or to whomever may be lawfully entitled thereto; and fifth, to the
Pledgor.
16. Expenses. Pledgor shall promptly pay to Pledgee all reasonable
out-of-pocket costs and expenses of Pledgee (both before and after the execution
hereof) in connection with protecting or perfecting Pledgee's security interest
in the Pledged Collateral or in connection with any matters contemplated by or
arising out of this Pledge Agreement, the Note or USA Guaranty, whether (a) to
prepare, negotiate or execute any amendment to, modification of or extension of
this Pledge Agreement, the Note or USA Guaranty, (b) to commence, defend, or
intervene in any litigation or to file a petition, complaint, answer, motion or
other pleadings necessary to protect the rights of Pledgee under this Pledge
Agreement, the Note or USA Guaranty (c) to take any other action in or with
respect to any suit or proceeding (bankruptcy or otherwise) necessary to protect
the rights of Pledgee under this Pledge Agreement, the Note or USA Guaranty, (d)
to protect, collect, sell, take possession of, release or liquidate any of the
Pledged Collateral or (e) to attempt to enforce or to enforce any security
interest in any of the Pledged Collateral, or to enforce any rights of Pledgee
to collect any of the Secured Obligations, including all reasonable fees and
expenses of attorneys (including allocated costs of internal counsel) and
paralegals, and in the case of enforcement, pay such reasonable costs and
expenses for Pledgee.
17. Indemnity. In addition to the payment of expenses pursuant to Section
16, Pledgor agrees to indemnify, pay and hold Pledgee and its officers,
directors, employees, agents, affiliates and attorneys (collectively called the
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including the fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may be
imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of this Pledge Agreement, the Note or USA Guaranty or
the exercise of any right or remedy hereunder or under the other Note or USA
Guaranty (the "Indemnified Liabilities"); provided that Pledgor shall have no
obligation to an Indemnitee hereunder with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of that Indemnitee as
determined by a court of competent jurisdiction. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, Pledgor shall contribute the maximum portion that it is permitted to pay
and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them. The
agreements of Pledgor set forth in this Section 17 shall survive the termination
of this Pledge Agreement and the satisfaction and payment in full of all Secured
Obligations.
18. Termination of Security Interests; Release of Collateral. Upon payment
in full in cash and performance of all Secured Obligations and the termination
of the Note and the USA Guaranty, the security interests shall terminate and all
rights to the Pledged Collateral shall revert to Pledgor. Upon such termination
of the security interests or release of any Pledged Collateral, Pledgee will, at
the expense of Pledgor, and subject to Section 23 herein,
12
execute and deliver to Pledgor such documents as Pledgor shall reasonably
request to evidence the termination of the security interests or the release of
such Pledged Collateral which has not yet theretofore been sold or otherwise
applied or released. Such release shall be without recourse or warranty to
Pledgee.
19. Amendments, Waivers and Consents. No amendment, modification,
termination or waiver of any provision of this Pledge Agreement, or consent to
any departure by Pledgor therefrom, shall in any event be effective without the
written concurrence of Pledgee and Pledgor.
20. Notices. Any notice, approval, request, demand, consent or other
communication hereunder, including any notice of default or notice of sale,
shall be in writing (including telecommunication) and mailed, telecommunicated
or delivered, as to each party hereto, at the address set forth above (or to
such other address previously designated by written notice to the serving
party). All such notices and communications shall, when mailed or
telecommunicated, be effective when deposited in the mails or telecommunicated,
respectively.
21. Continuing Security Interest; Successors and Assigns. This Pledge
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (i) remain in full force and effect until the performance and payment
in full in cash of the Secured Obligations and termination of the Note and USA
Guaranty, (ii) be binding upon Pledgor, its successors and assigns, and (iii)
inure, together with the rights and remedies of Pledgee hereunder, to the
benefit of Pledgee and its successors and assigns. Without limiting the
generality of the foregoing clause (iii), Pledgee may assign or otherwise
transfer the Note or any interest therein held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Pledgee herein or otherwise. Until Pledgor receives written
notice of such assignment or transfer, Pledgor may continue to deal solely and
directly with the existing Pledgee in connection with this Pledge Agreement.
Pledgor may not assign or transfer any of its interests or obligations hereunder
without the prior consent of Pledgee.
13
22. Waiver.
(a) In addition to any other waivers herein, Pledgor waives to the
greatest extent it may lawfully do so, and agrees that it shall not at any time
insist upon, plead or in any manner whatever claim or take the benefit or
advantage of, any appraisal, valuation, stay, extension, marshalling of assets,
redemption or similar law, or exemption, whether now or at any time hereafter in
force, which may delay, prevent or otherwise affect the performance by Pledgor
of its obligations under, or the enforcement by Pledgee of, this Pledge
Agreement. Pledgor hereby waives diligence, presentment and demand (whether for
nonpayment or protest or of acceptance, maturity, extension of time, change in
nature or form of the Secured Obligations, acceptance of further security,
release of further security, or composition or agreement arrived at as to the
amount of, or their terms of the Secured Obligations) with respect to any of the
Secured Obligations or all other demands whatsoever and waives the benefit of
all provisions of law which are or might be in conflict with the terms of this
Pledge Agreement. Pledgor hereby waives any requirement on the part of any
holder of the Note or any of the Secured Obligations to mitigate the damages
resulting from any default under the Note or any of the Secured Obligations.
Pledgor represents, warrants and agrees that, as of the date of this Pledge
Agreement, its obligations under this Pledge Agreement are not subject to any
offsets or defenses against Pledgee of any kind. Pledgor further agrees that its
obligations under this Pledge Agreement shall not be subject to any
counterclaims, offsets or defenses against Pledgee of any kind which may arise
in the future.
(b) In the event Pledgee shall bid at any foreclosure or trustee's sale
or at any private sale permitted by law, Pledgee may bid all or less than the
amount of the Secured Obligations.
23. Reinstatement. This Pledge Agreement shall continue to be effective or
be reinstated, as the case may be, if at any time any amount received by Pledgee
in respect of the Secured Obligations is rescinded or must otherwise be restored
or returned by Pledgee upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of Pledgor or any of its Affiliates upon the appointment of
any intervenor or conservator of, or trustee or similar official for, Pledgor or
any of its Affiliates or any substantial part of its assets, or otherwise, all
as though such payments had not been made.
24. Severability. The provisions of this Pledge Agreement are severable,
and if any clause or provision shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Pledge Agreement in any
jurisdiction.
25. Interpretation. Time is of the essence of each provision of this Pledge
Agreement of which time is an element. All terms not defined herein or in the
Purchase
14
Agreement shall have the meanings set forth in the UCC, except where the context
otherwise requires.
26. Survival of Provisions. All agreements, representations and warranties
made herein shall survive the payment in full of the Secured Obligations and the
cancellation and termination of the Note and USA Guaranty.
27. Statute of Limitations. Pledgor hereby waives the right to plead any
statute of limitations as a defense to any indebtedness or obligation hereunder
or secured hereby to the full extent permitted by law.
28. Headings Descriptive. The headings in this Pledge Agreement are for
convenience of reference only and shall not constitute a part of this Pledge
Agreement for any other purpose or be given any substantive effect.
29. Entire Agreement. This Pledge Agreement is intended by the parties as a
final expression of their agreement with respect to the matters covered hereby
and is intended as a complete and exclusive statement of the terms and
conditions thereof.
30. Counterparts. This Pledge Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same agreement. The acknowledgment attached
hereto is incorporated in and made a part of this Note by this reference.
31. Governing Law. THIS PLEDGE AGREEMENT IS GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT
THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS GRANTED HEREBY, OR THE
REMEDIES HEREUNDER, IN RESPECT OF ANY PLEDGED COLLATERAL ARE GOVERNED BY THE
LAWS OF ANOTHER JURISDICTION.
32. Consent to Jurisdiction. PLEDGOR HEREBY CONSENTS TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK AND IRREVOCABLY
AGREES THAT, SUBJECT TO PLEDGEE'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS PLEDGE AGREEMENT SHALL BE LITIGATED IN SUCH COURTS.
PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS PLEDGE AGREEMENT.
15
33. Waiver of Jury Trial. PLEDGOR AND PLEDGEE HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS PLEDGE AGREEMENT. PLEDGOR AND PLEDGEE ACKNOWLEDGE THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY
RELIED ON THE WAIVER IN ENTERING INTO THIS PLEDGE AGREEMENT AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. PLEDGOR AND
PLEDGEE FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH
ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Pledgor has caused this Pledge Agreement to be duly
executed and delivered as of the day and year first above written.
USA FINANCE, INC.
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxxxx
Chief Executive Officer
By acceptance hereof as of the day and year first above written, Pledgee agrees
to be bound by the provisions hereof.
SUNAMERICA FINANCIAL RESOURCES, INC.,
a Delaware corporation
By: /s/ Xxxxxxxx X. Xxxxxxx
---------------------------------
Xxxxxxxx X. Xxxxxxx
Senior Vice President
S-1
SCHEDULE I
TO
PLEDGE AGREEMENT
Part I
Pledged Shares
Stock
Class of Certificate Number of
Issuer Stock Numbers Par Value Shares Percentage
------ -------- ----------- --------- --------- ----------
Contract Funding
Corp. Common 1 .01 1,000 100%
EXHIBIT A
IRREVOCABLE PROXY
The undersigned hereby appoints SUNAMERICA FINANCIAL RESOURCES, INC.
("Pledgee") as Proxy with full power of substitution, and hereby authorizes
Pledgee to represent and vote all of the shares of the capital stock of Contract
Funding Corp. held of record by the undersigned on the date of exercise hereof
or at any meeting or at any other time chosen by Pledgee in its sole discretion.
USA FINANCE, INC.
a Delaware corporation
Date: By:
------------------------ -------------------------------
Name:
Title:
EXHIBIT B
PLEDGE AMENDMENT
This Pledge Amendment, dated ___________________ is delivered
pursuant to Section 5(c) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement, dated as of September 18, 1996, between the undersigned and
SunAmerica Financial Resources, Inc., as Pledgee (the "Pledge Agreement";
capitalized terms defined therein being used herein as therein defined) and that
the shares/instruments listed on this Pledge Amendment shall be deemed to be
part of the Pledged Collateral and shall secure all Secured Obligations.
USA FINANCE, INC.
a Delaware corporation
By:
-------------------------------
Name:
Title:
====================== ================ ==================== ============= =============== ==================
Stock Number
Class Certificate Par of
Stock Issuer of Stock No(s). Value Shares Percentage
====================== ================ ==================== ============= =============== ==================
