PLEDGE AGREEMENT
[BANK OF AMERICA LOGO]
EQUITY FINANCIAL PRODUCTS GROUP
TABLE OF CONTENTS
SECTION 1. The Security Interests
SECTION 2. Definitions
SECTION 3. Representations and Warranties of Pledgor
SECTION 4. Certain Covenants of Pledgor
SECTION 5. Administration of the Collateral and Valuation of the Securities
SECTION 6. Income and Voting Rights in Collateral
SECTION 7. Remedies upon Events of Default
SECTION 8. Miscellaneous
SECTION 9. Termination of Pledge Agreement
THIS AGREEMENT is made as of the date stated on the last page hereof among
the counterparty named on the last page hereof ("PLEDGOR"), NMS SERVICES
(CAYMAN) INC. ("SECURED PARTY") and BANC OF AMERICA SECURITIES LLC, as Agent
(the "AGENT").
WHEREAS, pursuant to the Master Note Purchase Agreement (as amended from
time to time, the "NOTE PURCHASE AGREEMENT") dated as of the date hereof among
Pledgor, Fairfax Financial Holdings Limited, as Guarantor, Secured Party and the
Agent, Pledgor has issued notes (the "NOTES") exchangeable for shares of common
stock (the "COMMON STOCK"), par value $0.01, of Odyssey Re Holdings Corp., a
Delaware corporation (the "COMPANY"), to Secured Party;
WHEREAS, it is a condition to the obligations of Secured Party under the
Note Purchase Agreement that Pledgor, Secured Party and Agent enter into this
Agreement and that Pledgor grant the pledge provided for herein as an
uninterrupted continuation of the pledge provided for in the Pledge Agreement
dated as of March 3, 2003 among Pledgor, Secured Party and the Agent (the
"PREVIOUS PLEDGE AGREEMENT");
NOW, THEREFORE, in consideration of their mutual covenants contained
herein and to secure the performance by Pledgor of its obligations under the
Notes and the observance and performance of the covenants and agreements
contained herein and in the Note Purchase Agreement, the parties hereto,
intending to be legally bound, hereby mutually covenant and agree as follows:
SECTION 1. The Security Interests. In order to secure the full and
punctual observance and performance of the covenants and agreements contained
herein, in the Note Purchase Agreement and under the Notes:
(a) Pledgor hereby assigns and pledges to Secured Party, and grants to
Secured Party, security interests having priority over all other security
interests, with power of sale in and to (i) the Initial Pledged Items described
in paragraph (b); (ii) all additions to and substitutions for such Initial
Pledged Items (including, without limitation, any securities, instruments or
other property delivered or pledged pursuant to Section 4(a) or 5(b)) (such
additions and substitutions, the "ADDITIONS AND SUBSTITUTIONS"); (iii) all
income, proceeds and collections received or to be received, or derived or to be
derived, now or any time hereafter (whether before or after the commencement of
any proceeding under applicable bankruptcy, insolvency or similar law, by or
against Pledgor, with respect to Pledgor) from or in connection with the Initial
Pledged Items or the Additions and Substitutions (including, without limitation,
any shares of capital stock issued by the Company in respect of any Common Stock
(or security entitlements in respect thereof) constituting Collateral or any
cash, securities or other property distributed in respect of or exchanged for
any Common Stock (or security entitlements in respect thereof) constituting
Collateral, or into which any such Common Stock (or security entitlements in
respect thereof) is converted, in connection with any Merger Event or otherwise,
and any security entitlements in respect of any of the foregoing); (iv) the
Collateral Account and all securities and other financial assets (each as
defined in Section 8-102 of the UCC), including the Initial Pledged Items and
the Additions and Substitutions, and other funds, property or assets from time
to time held therein or credited thereto; (v) all powers and rights now owned or
hereafter acquired under or with respect to the Initial Pledged Items or the
Additions and Substitutions; and (vi) security entitlements in respect of any of
the foregoing; provided, however, that none of the foregoing shall include any
dividend or distribution on the Common
Stock consisting solely of cash (such Initial Pledged Items, Additions and
Substitutions, proceeds, collections, powers, rights, Collateral Account and
assets held therein or credited thereto and security entitlements being herein
collectively called the "COLLATERAL"). Secured Party shall have all of the
rights, remedies and recourses with respect to the Collateral afforded a secured
party by the UCC, in addition to, and not in limitation of, the other rights,
remedies and recourses afforded to Secured Party by this Agreement.
(b) On or prior to the Issue Date (as such term is defined in the
Note Purchase Agreement) for any Note, Pledgor shall deliver to Secured Party in
the manner described in Section 5(c) in pledge hereunder Eligible Collateral
consisting of the Maximum Deliverable Number of shares of Common Stock (or
security entitlements in respect thereof), in the manner provided in Section
5(c) (in respect of such Note, the "INITIAL PLEDGED ITEMS").
(c) In the event that the Company at any time issues to Pledgor in respect
of any Common Stock (or security entitlements in respect thereof) constituting
Collateral hereunder any additional or substitute shares of capital stock of any
class (or any security entitlements in respect thereof), Pledgor shall
immediately pledge and deliver to Secured Party in accordance with Section 5(c)
all such shares and security entitlements as additional Collateral hereunder.
(d) The Security Interests are granted as security only and shall not
subject Secured Party to, or transfer or in any way affect or modify, any
obligation or liability of Pledgor or the Company with respect to any of the
Collateral or any transaction in connection therewith.
(e) The parties hereto expressly agree that all rights, assets and
property at any time held in or credited to the Collateral Account shall be
treated as financial assets (as defined in Section 8-102 of the UCC).
(f)The parties hereto expressly agree that the Security Interests
constitute an uninterrupted continuation of the security interests granted to
Secured Party on March 3, 2003 pursuant to the Previous Pledge Agreement.
SECTION 2. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to them in the Note Purchase Agreement.
As used herein, the following words and phrases shall have the following
meanings:
"ADDITIONS AND SUBSTITUTIONS" has the meaning provided in Section 1(a).
"AUTHORIZED OFFICER" of Pledgor means any officer or manager as to whom
Xxxxxxx shall have delivered notice to Secured Party that such officer or
manager is authorized to act hereunder on behalf of Xxxxxxx.
"BUSINESS DAY" means any day on which commercial banks are open for
business in New York City and the New York Stock Exchange is not closed.
"COLLATERAL" has the meaning provided in Section 1(a).
"COLLATERAL ACCOUNT" has the meaning provided in Section 5(c).
"COLLATERAL EVENT OF DEFAULT" means, at any time, the occurrence of either
of the following: (A) failure of the Collateral to include, as Eligible
Collateral, at least the Maximum Deliverable Number of shares of Common Stock or
(B) failure at any time of the Security Interests to constitute valid and
perfected security interests in all of the Collateral, subject to no prior or
equal Lien, and, with respect to any Collateral consisting of securities or
security entitlements (each as defined in Section 8-102 of the UCC), as to which
Secured Party has Control, or, in each case, assertion of such by Pledgor in
writing.
"CONTROL" means "control" as defined in Section 8-106 of the UCC.
"DEFAULT SETTLEMENT DATE" has the meaning provided in Section 7(a).
"ELIGIBLE COLLATERAL" means shares of the Common Stock (or security
entitlements in respect thereof), provided that Pledgor has good and marketable
title thereto, free of all Liens (other than the Security Interests) and
Transfer Restrictions (other than any Existing Transfer Restrictions applicable
to such shares) and that Secured Party has a valid, first priority perfected
security interest therein, a first lien thereon and Control with respect
thereto, provided further that to the extent the number of shares of Common
Stock or security entitlements in respect thereof pledged hereunder exceeds at
any time the Maximum Deliverable Number, such excess shares shall not be
Eligible Collateral.
"EXISTING TRANSFER RESTRICTIONs" means the Transfer Restrictions on the
shares of Common Stock pledged hereunder arising solely from the fact that
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Pledgor is an "affiliate", within the meaning of Rule 144 under the Securities
Act, of the Company.
"INITIAL PLEDGED ITEMS" has the meaning provided in Section 1(b).
"LIEN" means any lien, mortgage, security interest, pledge, charge or
encumbrance of any kind.
"LOCATION" means, with respect to any party, the place such party is
deemed located within the meaning of Section 9-307 of the UCC.
"MAXIMUM DELIVERABLE NUMBER" means, on any date, the aggregate sum, for
all Notes outstanding under the Note Purchase Agreement, of (i) if no Exchange
Date for such Note has occurred, the number of shares that would be deliverable
upon exchange of such Note if the Exchange Date for such Note were to occur on
such date; (ii) if Secured Party has elected to exercise its right to exchange
such Note pursuant to Section 7 of the Note Purchase Agreement and Pledgor has
not yet delivered to Secured Party the Exchange Shares for such Note in the
manner required by the Note Purchase Agreement, the number of Exchange Shares
for such Note; or (iii) if (x) Secured Party has elected to exercise its right
to exchange such Note pursuant to Section 7 of the Note Purchase Agreement and
Pledgor has fully satisfied its obligations under the Note Purchase Agreement in
respect thereof, or (y) the Exchange Date for such Note has occurred and Secured
Party has not elected to exercise its right to exchange such Note, zero.
"ORDINARY DIVIDENDS" has the meaning provided in Section 6(a).
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PLEDGE TERMINATION DATE" shall mean the date the Maximum Deliverable
Number is reduced to zero.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY INTERESTS" means the security interests in the Collateral
created hereby.
"TRANSFER RESTRICTION" means, with respect to any security or item of
collateral pledged under this Agreement, any condition to or restriction on the
ability of the holder thereof to sell, assign or otherwise transfer such
security or to enforce the provisions thereof or of any document related thereto
whether set forth in such security itself or in any document related thereto,
including, without limitation, (i) any requirement that any sale, assignment or
transfer or enforcement of such security 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 security, (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 security, prior to the
sale, pledge, assignment or other transfer or enforcement of such security and
(iv) any registration or qualification requirement or prospectus delivery
requirement for such security pursuant to any federal, state or foreign
securities law (including, without limitation, any such requirement arising as a
result of Rule 144 or Rule 145 under the Securities Act); provided that the
required delivery of any assignment, instruction or entitlement order from the
seller, pledgor, assignor or transferor of such security, together with any
evidence of the corporate or other authority of such Person, shall not
constitute a "TRANSFER RESTRICTION".
"UCC" means the Uniform Commercial Code as in effect in the State of New
York.
SECTION 3. Representations and Warranties of Pledgor. Pledgor hereby
represents and warrants to Secured Party that:
(a) Pledgor (i) owns and at all times prior to the release of the
Collateral pursuant to the terms of this Agreement, will own such Collateral
free and clear of any Liens (other than the Security Interests) or Transfer
Restrictions (other than any Existing Transfer Restrictions) and (ii) is not and
will not become a party to or otherwise bound by any agreement, other than this
Agreement, that (x) restricts in any manner the rights of any present or future
owner of Collateral with respect thereto or (y) provides any person other than
Pledgor, Secured Party or any securities intermediary through whom any
Collateral is held (but, in the case of any such securities intermediary, only
in respect of Collateral held through it) with Control with respect to any such
Collateral.
(b) Other than financing statements or other similar or equivalent
documents or instruments with respect to the Security Interests, no financing
statement, security agreement or similar or equivalent document or instrument
covering all or any part of the Collateral is on file or of record in any
jurisdiction in
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which such filing or recording would be effective to perfect a lien, security
interest or other encumbrance of any kind on such Collateral.
(c) All shares of Common Stock at any time pledged hereunder (or in
respect of which security entitlements are pledged hereunder) are and will be
issued by an issuer organized under the laws of the United States, any State
thereof, the District of Columbia or Canada and (i) certificated (and the
certificate or certificates in respect of such shares of Common Stock are and
will be located in the United States) and registered in the name of Pledgor or
held through a securities intermediary whose securities intermediary's
jurisdiction (within the meaning of Section 8-110(e) of the UCC) is located in
the United States or (ii) uncertificated and either registered in the name of
Pledgor or held through a securities intermediary whose securities
intermediary's jurisdiction (within the meaning of Section 8-110(e) of the UCC)
is located in the United States; provided that this representation shall not be
deemed to be breached if, at any time, any such Collateral is issued by an
issuer that is not organized under the laws of the United States, any State
thereof, the District of Columbia or Canada, and the parties hereto agree to
procedures or amendments hereto necessary to enable Secured Party to maintain a
valid and continuously perfected security interest in such Collateral, in
respect of which Secured Party will have Control, subject to no prior Lien. The
parties hereto agree to negotiate in good faith any such procedures or
amendments.
(d) (i) Upon the delivery of certificates evidencing any Common Stock to
Secured Party in accordance with Section 5(c)(A) or the registration of
uncertificated Common Stock in the name of Secured Party or its nominee in
accordance with Section 5(c)(B), and, in each case, the crediting of such
securities or financial assets to the Collateral Account, Secured Party will
have a valid and, as long as Secured Party retains possession of such
certificates or such uncertificated Common Stock remains so registered,
perfected security interest therein, in respect of which Secured Party will have
Control, subject to no prior Lien and (ii) upon the crediting of any Common
Stock to the Collateral Account, Secured Party will have a valid and, so long as
such Common Stock continues to be credited to the Collateral Account, perfected
security interest in a securities entitlement in respect thereof, in respect of
which Secured Party will have Control subject to no prior Lien.
(e) No registration, recordation or filing with any governmental body,
agency or official is required in connection with the execution and delivery of
this Agreement or necessary for the validity or enforceability hereof or thereof
or for the perfection or enforcement of the Security Interests.
(f) Pledgor has not performed and will not perform any acts that might
prevent Secured Party from enforcing any of the terms of this Agreement or that
might limit Secured Party in any such enforcement.
(g) The Location of Pledgor is the address set forth in Section 8(e), and
under the Uniform Commercial Code as in effect in such Location, no local filing
is required to perfect a security interest in collateral consisting of general
intangibles.
SECTION 4. Certain Covenants of Pledgor. Xxxxxxx agrees that, until the
Pledge Termination Date:
(a) Pledgor shall ensure at all times that a Collateral Event of Default
shall not occur, and shall pledge additional Collateral in the manner described
in Sections 5(b) and 5(c) as necessary to cause such requirement to be met.
(b) Pledgor shall, at the expense of Pledgor and in such manner and form
as Secured Party may reasonably require, give, execute, deliver, file and record
any financing statement, notice, instrument, document, agreement or other papers
that may be necessary or desirable in order (i) to create, preserve, perfect,
substantiate or validate any security interest granted pursuant hereto, (ii) to
create or maintain Control with respect to any such security interests in any
investment property (as defined in Section 9-102 of the UCC) or (iii) to enable
Secured Party to exercise and enforce its rights hereunder with respect to such
security interest. To the extent permitted by applicable law, Pledgor hereby
authorizes Secured Party to execute and file, in the name of Pledgor or
otherwise, UCC 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) that Secured Party in its sole
discretion may deem necessary or appropriate to further perfect, or maintain the
perfection of, the Security Interests.
(c) Pledgor shall warrant and defend its title to the Collateral, subject
to the rights of Secured Party, against the claims and demands of all persons.
Secured Party may elect, but without an obligation to do so, to discharge any
Lien of any third party on any of the Collateral.
(d) Pledgor agrees that it shall not change (1) its name or identity, and
if Pledgor is not a natural person, its corporate, limited liability company
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or partnership structure in any manner or (2) its Location, unless in either
case (A) it shall have given Secured Party not less than 30 days' prior notice
thereof and (B) such change shall not cause any of the Security Interests to
become unperfected, cause Secured Party to cease to have Control in respect of
any of the Security Interests in any Collateral consisting of investment
property (as defined in Section 9-102 of the UCC) or subject any Collateral to
any other Lien.
(e) Pledgor agrees that it shall not (1) create or permit to exist any
Lien (other than the Security Interests) or any Transfer Restriction (other than
any Existing Transfer Restrictions) upon or with respect to the Collateral, (2)
sell or otherwise dispose of, or grant any option with respect to, any of the
Collateral or (3) enter into or consent to any agreement pursuant to which any
person other than Pledgor, Secured Party and any securities intermediary through
whom any of the Collateral is held (but in the case of any such securities
intermediary only in respect of Collateral held through it) has or will have
Control in respect of any Collateral.
SECTION 5. Administration of the Collateral and Valuation of the
Securities.
(a) Calculation Agent shall determine on each Business Day whether a
Collateral Event of Default shall have occurred.
(b) Pledgor may pledge additional Eligible Collateral hereunder at any
time. Concurrently with the delivery of any additional Eligible Collateral,
Pledgor shall deliver to Secured Party a certificate of an Authorized Officer of
Pledgor substantially in the form of Exhibit A hereto 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 paragraphs
(a), (b), (c) and (d) of Section 3 are true and correct with respect to such
Eligible Collateral on and as of the date thereof. Pledgor hereby covenants and
agrees to take all actions required under Section 5(c) and any other actions
necessary to create for the benefit of Secured Party a valid, first priority,
perfected security interest in, and a first lien upon, such additional Eligible
Collateral, as to which Secured Party will have Control.
(c) Any delivery of Common Stock (or security entitlements in respect
thereof) as Collateral to Secured Party by Pledgor shall be effected (A) in the
case of Collateral consisting of certificated Common Stock registered in the
name of Pledgor, by delivery of certificates representing such Common Stock to
Secured Party, accompanied by any required transfer tax stamps, and in suitable
form for transfer by delivery or accompanied by duly executed instruments of
transfer or assignment in blank, with signatures appropriately guaranteed, all
in form and substance satisfactory to Secured Party, and the crediting by
Secured Party of such securities to a securities account (as defined in Section
8-501 of the UCC) (the "COLLATERAL ACCOUNT") of Secured Party maintained at Banc
of America Securities LLC, who will hold the Collateral, including such
securities, as custodian for Secured Party, (B) in the case of Collateral
consisting of uncertificated Common Stock registered in the name of Pledgor, by
transmission by Pledgor of an instruction to the issuer of such Common Stock
instructing such issuer to register such Common Stock in the name of Secured
Party or its nominee, accompanied by any required transfer tax stamps, the
issuer's compliance with such instructions and the crediting by Secured Party of
such securities to the Collateral Account, (C) in the case of Common Stock in
respect of which security entitlements are held by Pledgor through a securities
intermediary, by the crediting of such Common Stock, accompanied by any required
transfer tax stamps, to a securities account of Secured Party at such securities
intermediary or, at the option of Secured Party, at another securities
intermediary satisfactory to Secured Party and the crediting by Secured Party of
such securities to the Collateral Account or (D) in any case, by complying with
such alternative delivery instructions as Secured Party shall provide to Pledgor
in writing. Upon delivery of any such Pledged Item under this Agreement, Secured
Party shall examine such Pledged Item and any certificates delivered pursuant to
Section 5(b) or otherwise pursuant to the terms hereof in connection therewith
to determine that they comply as to form with the requirements for Eligible
Collateral.
(d) If on any Business Day Secured Party determines that a Collateral
Event of Default shall have occurred, Secured Party shall promptly notify
Pledgor of such determination by telephone call to an Authorized Officer of
Pledgor followed by a written confirmation of such call.
(e) If on any Business Day Secured Party determines that no Event of
Default or failure by Pledgor to meet any of its obligations under Sections 4 or
5 hereof has occurred and is continuing, Pledgor may obtain the release from the
Security Interests of any Collateral upon delivery to Secured Party of a written
notice from an Authorized Officer of Pledgor indicating the items of Collateral
to be released so long as, after such release, no Collateral Event of Default
shall have occurred.
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(f) If Secured Party exercises its right to exchange any Note pursuant to
Section 7 of the Note Purchase Agreement, unless Pledgor shall have otherwise
effected the deliveries required by Section 7 of the Note Purchase Agreement,
Secured Party shall have the right, at its election, to deliver or cause to be
delivered to itself from the Collateral Account, in whole or partial, as the
case may be, satisfaction of Pledgor's obligations to deliver shares of such
Common Stock on the Exchange Date pursuant to the Note Purchase Agreement,
shares of such Common Stock (or security entitlements in respect thereof) then
held by or on behalf of Secured Party hereunder representing the number of
shares of such Common Stock required to be delivered under the Note Purchase
Agreement on the Exchange Date. Upon any such delivery, Secured Party shall hold
such shares of such Common Stock (or security entitlements in respect thereof)
absolutely and free from any claim or right whatsoever (including, without
limitation, any claim or right of Pledgor).
(g) Secured Party may at any time or from time to time, in its sole
discretion, cause any or all of the Common Stock pledged hereunder (or in
respect of which security entitlements are pledged hereunder) registered in the
name of Pledgor or its nominee to be transferred of record into the name of
Secured Party or its nominee. Pledgor shall promptly give to Secured Party
copies of any notices or other communications received by Pledgor with respect
to Common Stock (or security entitlements in respect thereof) pledged hereunder
registered, or held through a securities intermediary, in the name of Pledgor or
Pledgor's nominee and Secured Party shall promptly give to Pledgor copies of any
notices and communications received by Secured Party with respect to Common
Stock (or security entitlements in respect thereof) pledged hereunder
registered, or held through a securities intermediary, in the name of Secured
Party or its nominee.
(h) Xxxxxxx agrees that Pledgor shall forthwith upon demand pay to Secured
Party:
(i) the amount of any taxes that Secured Party may have been
required to pay by reason of the Security Interests or to free any of the
Collateral from any Lien thereon, and
(ii) the amount of any and all out-of-pocket expenses, including the
reasonable fees and disbursements of counsel and of any other experts,
that Secured Party may incur in connection with (A) the enforcement of
this Agreement, including such expenses as are incurred to preserve the
value of the Collateral and the validity, perfection, rank and value of
the Security Interests, (B) the collection, sale or other disposition of
any of the Collateral, (C) the exercise by Secured Party of any of the
rights conferred upon it hereunder or (D) any Event of Default.
Any such amount not paid on demand shall bear interest (computed on the basis of
a year of 360 days and payable for the actual number of days elapsed) at a rate
per annum equal to 2% plus the prime rate as published in The Wall Street
Journal, Eastern Edition in effect from time to time during the period from the
date hereof to the date of the termination of this Agreement.
(i) Pledgor hereby acknowledges that during such time as the Collateral is
held by Secured Party pursuant to the terms of this Agreement, Pledgor will not
receive periodic account statements with respect to the value thereof.
(j) Except as set forth in Section 8(b), unless an Event of Default shall
have occurred and be continuing, Secured Party shall not sell, assign, transfer,
or otherwise dispose of, lend, borrow against, pledge, grant any option or
create any Lien (other than the Security Interests) with respect to the
Collateral, or enter into any agreement or arrangement intended to effect any of
the foregoing.
SECTION 6. Income and Voting Rights in Collateral.
(a) Pledgor shall have the right to receive dividends on and distributions
from the Collateral to the extent such dividends and distributions consist
solely of cash ("ORDINARY DIVIDENDS"). Secured Party shall have the right to
receive and retain as Collateral hereunder all proceeds (other than Ordinary
Dividends) of the Collateral, and Pledgor shall take all such action as Secured
Party shall deem necessary or appropriate to give effect to such right. All such
proceeds that are received by Pledgor shall be received in trust for the benefit
of Secured Party and, if Secured Party so directs, shall be segregated from
other assets of Pledgor and shall, forthwith upon demand by Secured Party, be
delivered over to Secured Party as Collateral in the same form as received (with
any necessary endorsement).
(b) Unless an Event of Default shall have occurred and be continuing,
Pledgor shall have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to the Collateral.
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(c) If an Event of Default shall have occurred and be continuing, Secured
Party shall have the right, to the extent permitted by law, and 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 to take any
other action with respect to any or all of the Collateral with the same force
and effect as if Secured Party were the absolute and sole owner thereof.
SECTION 7. Remedies upon Events of Default.
(a) Solely in the event an Event of Default shall have occurred and be
continuing, Secured Party may exercise all the rights of a secured party under
the Uniform Commercial Code (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 or cause to be delivered to itself from the
Collateral Account all Collateral consisting of shares of Common Stock (or
security entitlements in respect thereof) (but not in excess of the number
thereof deliverable under the Note Purchase Agreement at such time) on the
relevant acceleration date (the "DEFAULT SETTLEMENT DATE") in satisfaction of
Pledgor's obligations to deliver Common Stock under the Note Purchase Agreement,
whereupon Secured Party shall hold such shares of Common Stock (or security
entitlements in respect thereof) absolutely free from any claim or right of
whatsoever kind, including any equity or right of redemption of Pledgor that may
be waived or any other right or claim of Pledgor, and Pledgor, to the extent
permitted by law, hereby specifically waives all rights of redemption, stay or
appraisal that 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 Note Purchase Agreement or hereunder,
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 Note Purchase Agreement or hereunder, 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 Secured
Party may deem satisfactory. Pledgor covenants and agrees that it will execute
and deliver such documents and take such other action as Secured Party deems
necessary or advisable in order that any such sale may be made in compliance
with law. Upon any such sale Secured Party shall have the right to deliver,
assign and transfer to the buyer thereof the Collateral so sold. Each buyer 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 Pledgor that may be waived or any other right or claim of Pledgor, and
Xxxxxxx, to the extent permitted by law, hereby specifically waives all rights
of redemption, stay or appraisal that Pledgor has or may have under any law now
existing or hereafter adopted. The notice (if any) of such sale required by
Section 9-611 of the UCC shall (1) in 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 Secured Party 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 Secured Party may determine. Secured Party shall not be
obligated to make any such sale pursuant to any such notice. Secured Party 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 Secured Party until the selling price is paid by the buyer thereof,
but Secured Party shall not incur any liability in case of the failure of such
buyer 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. Secured Party,
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. Except as set forth in Section 8(b), unless an
Event of Default shall have occurred and be continuing, Secured Party shall not
be entitled to take any such actions as set forth in this Section 7(a) in
respect of the Collateral.
(b) Pledgor hereby irrevocably appoints Secured Party Xxxxxxx's true and
lawful attorney, with full power of substitution, in the name of Pledgor,
Secured Party or otherwise, for the sole use and benefit of Secured Party, but
at the expense of Pledgor, to the extent permitted by law, to exercise, at any
time and from time to time while an Event of Default has occurred and is
continuing, all or any of the following powers with respect to all or any of the
Collateral:
7
(i) to demand, sue for, collect, receive and give acquittance for
any and all monies due or to become due upon or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with the
same or the proceeds or avails thereof, as fully and effectually as if
Secured Party were the absolute owner thereof (including, without
limitation, the giving of instructions and entitlement orders in respect
thereof), and
(iv) to extend the time of payment of any or all thereof and to make
any allowance and other adjustments with reference thereto;
provided that Secured Party shall give Pledgor not less than five days' prior
written notice of the time and place of any sale or other intended disposition
of any of the Collateral, except any Collateral that threatens to decline
speedily in value, including, without limitation, equity securities, or is of a
type customarily sold on a recognized market. Secured Party and Pledgor agree
that such notice constitutes reasonable authenticated notification within the
meaning of Section 9-611 of the UCC.
(c) 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 Agreement, Secured Party is hereby irrevocably appointed the
true and lawful attorney of Pledgor, in the name and stead of Pledgor, to make
all necessary deeds, bills of sale, instruments of assignment, transfer or
conveyance of the property, and all instructions and entitlement orders in
respect of the property, thus delivered or sold. For that purpose Secured Party
may execute all such documents, instruments, instructions and entitlement
orders. This power of attorney shall be deemed coupled with an interest, and
Pledgor hereby ratifies and confirms that which Xxxxxxx's attorney acting under
such power, or such attorney's successors or agents, shall lawfully do by virtue
of this Agreement. If so requested by Secured Party or by any buyer of the
Collateral or a portion thereof, Pledgor shall further ratify and confirm any
such delivery or sale by executing and delivering to Secured Party or to such
buyer or buyers at the expense of Pledgor all proper deeds, bills of sale,
instruments of assignment, conveyance or transfer, releases, instructions and
entitlement orders as may be designated in any such request.
(d) In the case of an Event of Default, Secured Party may proceed to
realize upon the security interest in the Collateral against any one or more of
the types of Collateral, at any time, as Secured Party shall determine in its
sole discretion subject to the foregoing provisions of this Section 7. The
proceeds of any sale of, or other realization upon, or other receipt from, any
of the Collateral shall be applied by Secured Party in the following order of
priorities:
first, to the payment to Secured Party of the expenses of such sale
or other realization, including reasonable compensation to the agents and
counsel of Secured Party, and all expenses, liabilities and advances
incurred or made by Secured Party in connection therewith, including
brokerage fees in connection with the sale by Secured Party of any
Collateral;
second, to the payment to Secured Party of any amount due under the
Note Purchase Agreement;
finally, if all of the obligations of Pledgor hereunder and under
the Note Purchase Agreement have been fully discharged or sufficient funds
have been set aside by Secured Party, at the request of Pledgor for the
discharge thereof, any remaining proceeds shall be released to Pledgor.
SECTION 8. Miscellaneous.
(a) 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 Pledgor shall bind,
and inure to the benefit of, Xxxxxxx's respective successors and assigns whether
so expressed or not, and shall be enforceable by and inure to the benefit of
Secured Party and its successors and assigns.
(b) Secured Party may transfer or assign its rights and obligations
hereunder in whole or in part at any time to any transferee or assignee of the
Notes in connection with the transfer or assignment of any Notes pursuant to the
terms of the Note Purchase Agreement.
8
(c) To the extent permitted by law, the unenforceability or invalidity of
any provision or provisions of this Agreement shall not render any other
provision or provisions herein contained unenforceable or invalid.
(d) Any provision of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by Xxxxxxx and Secured Party or, in the case of a waiver, by the
party against whom the waiver is to be effective. No failure or delay by either
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
(e) All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
forms of telecommunication. Notices to Pledgor shall be directed to it at the
address specified on the last page hereof; notices to Secured Party shall be
directed to it care of NMS Services (Cayman) Inc., 0 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Telecopy No. 000-000-0000, Attention: Xxxx Xxx.
(f) This Agreement shall in all respects be construed in accordance with
and governed by the laws of the State of New York (without reference to choice
of law doctrine); provided that as to the Collateral located in any jurisdiction
other than the State of New York, Secured Party shall have, in addition to any
rights under the laws of the State of New York, all of the rights to which a
secured party is entitled under the laws of such other jurisdiction. The parties
hereto hereby agree that Secured Party's and Banc of America Securities LLC's
jurisdiction, within the meaning of Section 8-110(e) of the UCC, insofar as it
acts as a securities intermediary hereunder or in respect hereof, is the State
of New York.
(g) EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN THE
BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY SUIT OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(h) EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(i) This Agreement may be executed, acknowledged and delivered in any
number of counterparts and all such counterparts taken together shall be deemed
to constitute one and the same agreement.
SECTION 9. Termination of Pledge Agreement. This Agreement and the rights
hereby granted by Pledgor in the Collateral shall cease, terminate and be void
as of the Pledge Termination Date. Any Collateral remaining at the time of such
termination shall be fully released and discharged from the Security Interests
and delivered to Pledgor by Secured Party, all at the request and expense of
Pledgor.
9
*************
Date of Agreement: November 19, 2004
Pledgor: Fairfax Financial (US) LLC, a limited liability company existing under
the laws of the State of Delaware.
Xxxxxxx's Address for Notices:
0000 Xxxxx X'Xxxxxx Xxxx.
Irving, TX 75039
Telecopy No. 000-000-0000
Attention: Xxxx Xxxxxx, President
*************
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
and year first above written.
PLEDGOR:
FAIRFAX FINANCIAL (US) LLC
By: /s/ Xxxx Xxxxxx
----------------------------
Name: Xxxx Xxxxxx
Title: President
SECURED PARTY:
NMS SERVICES (CAYMAN) INC.
By: /s/ Xxxx X. Xxxxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Authorized Signatory
AGENT:
BANC OF AMERICA SECURITIES LLC
By: /s/ Xxxxxx Xxxxx Xxxxxxxxxx
----------------------------
Name: Xxxxxx Xxxxx Xxxxxxxxxx
Title: Managing Director
Exhibit A
to
Pledge Agreement
CERTIFICATE FOR ADDITIONAL
COLLATERAL
The undersigned, an Authorized Officer of Fairfax Financial (US) LLC
("PLEDGOR"), hereby certifies, pursuant to Section 5(b) of the Pledge Agreement,
dated as of November 19, 2004, among Pledgor, NMS Services (Cayman) Inc. and
Banc of America Securities LLC, as Agent (the "PLEDGE AGREEMENT"; terms defined
in the Pledge Agreement being used herein as defined therein), that:
1. Pledgor is delivering, or causing to be delivered in accordance
with Section 5(c) of the Pledge Agreement, the following securities (or
security entitlements in respect thereof) to Secured Party to be held by
or on behalf of Secured Party as additional Collateral (the "ADDITIONAL
COLLATERAL"):
2. Pledgor hereby represents and warrants to Secured Party that the
Additional Collateral is Eligible Collateral and that the representations
and warranties contained in paragraphs (a), (b), (c) and (d) of Section 3
of the Pledge Agreement are true and correct with respect to the
Additional Collateral on and as of the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
this ___ day of __________, 200_.
FAIRFAX FINANCIAL (US) LLC
By: _____________________________
Name:
Title:
A-1
