PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as
of August 24, 1998 by Xxx. Xxxxxx' Holding Company, Inc., a Delaware corporation
(the "Pledgor"), having its principal office at 0000 Xxxx Xxxxxxxxxx Xxxxxxx,
Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000, in favor of The Bank of New York, having
a principal corporate trust office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, as collateral agent (the "Collateral Agent") for the holders (the
"Holders") of the Pledgor's 14% Senior Secured Discount Notes due 2005.
Capitalized terms used and not defined herein shall have the meanings given to
such terms in the Indenture referred to below.
W I T N E S S E T H:
WHEREAS, the Pledgor is the legal and beneficial owner of (i) all of
the issued and outstanding shares of capital stock set forth on Schedule I
hereto (the "Pledged Shares") of Xxx. Xxxxxx' Original Cookies, Inc. (the
"Issuer") and (ii) those certain intercompany promissory notes (if any) set
forth on Schedule II hereto issued by the Issuer in favor of the Pledgor (the
"Pledged Notes"); and
WHEREAS, the Pledgor and The Bank of New York, as trustee, have
entered into that certain indenture dated as of August 24, 1998 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Indenture"), pursuant to which the Pledgor issued $55,000,000 in aggregate
principal amount at maturity of 14% Senior Secured Discount Notes due 2005
(together with any notes issued in replacement thereof or in exchange or
substitution therefor, the "Senior Secured Discount Notes"); and
WHEREAS, the terms of the Indenture require that the Pledgor (i)
pledge to the Collateral Agent for the ratable benefit of the Holders of Senior
Secured Discount Notes, and grant to the Collateral Agent for the ratable
benefit of the Holders of Senior Secured Discount Notes a security interest in,
the Pledged Collateral (as defined herein) and (ii) execute and deliver this
Agreement in order to secure the payment and performance by the Pledgor of all
of the Obligations of the Pledgor under the Indenture and the Senior Secured
Discount Notes (the "Obligations").
AGREEMENT
NOW, THEREFORE, in consideration of the premises, and in order to
induce the Holders of Senior Secured Discount Notes to purchase the Senior
Secured Discount Notes, the Pledgor hereby agrees with the Collateral Agent for
its benefit and the ratable benefit of the Holders of Senior Secured Discount
Notes as follows:
SECTION 1. Pledge. The Pledgor hereby pledges to the Collateral Agent for
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its benefit and for the ratable benefit of the Holders of Senior Secured
Discount Notes, and grants to the Collateral Agent for the ratable benefit of
the Holders of Senior Secured Discount Notes, a
continuing first priority security interest in all of its right, title and
interest in the following (the "Pledged Collateral"):
(a) the Pledged Shares and the certificates representing the Pledged
Shares, and all products and proceeds of any of the Pledged Shares, including,
subject to Section 6(c) hereof, without limitation, all dividends, cash,
options, warrants, rights, instruments, subscriptions and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares or any of the
foregoing; and
(b) all additional shares of, and all securities convertible into and all
warrants, options or other rights to purchase, Capital Stock of, or other
Equity Interests in, the Issuer from time to time acquired by the Pledgor in
any manner, and the certificates representing such additional shares and
Equity Interests (any such additional shares and Equity Interests and other
items shall constitute part of the Pledged Shares under and as defined in this
Agreement), and all products and proceeds of any of the foregoing, including,
without limitation, all dividends, cash, options, warrants, rights,
instruments, subscriptions, and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the foregoing; and
(c) the Pledged Notes and the instruments representing the Pledged Notes,
and all products and proceeds of the Pledged Notes, including, subject to
Section 6(b) hereof, without limitation, all interest, principal and premium
payments, and all instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for the
Pledged Notes or any of the foregoing; and
(d) all additional promissory notes of the Issuer from time to time held
by the Pledgor in any manner (any such additional promissory notes shall
constitute part of the Pledged Notes under and as defined in this Agreement)
and all products and proceeds of any of such additional Pledged Notes,
including, without limitation, all interest and principal payments,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
additional Pledged Notes or any of the foregoing.
SECTION 2. Security for Obligations. This Agreement secures the prompt and
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complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of all Obligations of the Pledgor under the Indenture
and the Senior Secured Discount Notes (including, without limitation, interest
and any other Obligations accruing after the date of any filing by the Pledgor
of any petition in bankruptcy or the commencement of any bankruptcy, insolvency
or similar proceeding with respect to the Pledgor).
SECTION 3. Delivery of Pledged Collateral. Pledgor hereby agrees that all
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certificates or instruments representing or evidencing the Pledged Collateral
shall be immediately delivered to and held at all times by the Collateral Agent
pursuant hereto in the State of New York and shall be in suitable form for
transfer by delivery, or issued in the name of Pledgor and accompanied by
instruments of transfer or assignment duly executed in blank and undated, and in
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either case having attached thereto all requisite federal or state stock
transfer tax stamps, all in form and substance satisfactory to the Collateral
Agent.
SECTION 4. Representations and Warranties. The Pledgor hereby makes all
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representations and warranties applicable to the Pledgor contained in the
Indenture. The Pledgor further represents and warrants that:
(a) The execution, delivery and performance by the Pledgor of this
Agreement are within the Pledgor's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or bylaws of the Pledgor or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Pledgor, or result in the creation or imposition of any Lien on any assets of
the Pledgor, other than the Lien contemplated hereby.
(b) The Pledged Shares have been duly authorized and validly issued and
are fully paid and non-assessable. Each Pledged Note has been duly authorized
and executed by the Issuer and constitutes a legal, valid and binding
obligation of the Issuer, enforceable against the Issuer in accordance with
its terms.
(c) The Pledged Shares constitute all of the authorized, issued and
outstanding Equity Interests of the Issuer and constitute all of the shares of
Equity Interests of the Issuer beneficially owned by the Pledgor.
(d) All intercompany indebtedness of the Issuer to the Pledgor is
evidenced by promissory notes in the form of Exhibit A hereto; the Pledged
Notes constitute all of the promissory notes of the Issuer in favor of the
Pledgor; and there are no other instruments, certificates, securities or other
writings or chattel paper, evidencing or representing any equity interest in
the Issuer.
(e) The Pledgor is the legal, record and beneficial owner of the Pledged
Collateral, free and clear of any Lien or claims of any Person except for the
security interest created by this Agreement.
(f) The Pledgor has full power and authority to enter into this Agreement
and has the right to vote, pledge and grant a security interest in the Pledged
Collateral as provided by this Agreement.
(g) This Agreement has been duly executed and delivered by the Pledgor and
constitutes a legal, valid and binding obligation of the Pledgor, enforceable
against the Pledgor in accordance with its terms.
(h) Upon the delivery to the Collateral Agent of the Pledged Collateral
and (as to certain proceeds therefrom) the filing of Uniform Commercial Code
(the "UCC") financing statements, the pledge of the Pledged Collateral
pursuant to this Agreement creates a valid and perfected first priority
security interest in the Pledged Collateral, securing the payment of
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the Obligations for the benefit of the Collateral Agent and the Holders of
Senior Secured Discount Notes, and enforceable as such against all creditors
of the Pledgor and any Persons purporting to purchase any of the Pledged
Collateral from the Pledgor.
(i) No consent of any other Person 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 the Pledgor of the Pledged Collateral pursuant to this Agreement or
for the execution, delivery or performance of this Agreement by the Pledgor or
(ii) for the exercise by the Collateral Agent of the voting or other rights
provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement (except as may be required in connection
with such disposition by laws affecting the offering and sale of securities).
(j) No litigation, investigation or proceeding of or before any arbitrator
or governmental authority is pending or, to the best knowledge of the Pledgor,
threatened by or against the Pledgor or against any of its properties or
revenues with respect to this Agreement or any of the transactions
contemplated hereby.
(k) The pledge of the Pledged Collateral pursuant to this Agreement is not
prohibited by any applicable law or governmental regulation, release,
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation, Regulations
T, U and X of the Board of Governors of the Federal Reserve System).
(l) All information set forth herein relating to the Pledged Collateral is
accurate and complete in all respects.
SECTION 5. Further Assurance. Pledgor will at all times cause the
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security interests granted pursuant to this Agreement to constitute valid
perfected first priority security interests in the Pledged Collateral,
enforceable as such against all creditors of Pledgor and (except as otherwise
specifically provided herein) any Persons purporting to purchase any Pledged
Collateral from Pledgor. The Pledgor will, promptly upon request by the
Collateral Agent, execute and deliver or cause to be executed and delivered, or
use its best efforts to procure, all stock powers, proxies, tax stamps,
assignments, instruments and other documents, all in form and substance
satisfactory to the Collateral Agent, deliver any instruments to the Collateral
Agent and take any other actions that are necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect, continue the perfection
of, or protect the first priority of the Collateral Agent's security interest
in, the Pledged Collateral, to protect the Pledged Collateral against the
rights, claims, or interests of third persons, to enable the Collateral Agent to
exercise or enforce its rights and remedies hereunder, or otherwise to effect
the purposes of this Agreement. The Pledgor also hereby authorizes the
Collateral Agent to file any financing or continuation statements with respect
to the Pledged Collateral without the signature of the Pledgor to the extent
permitted by applicable law. The Pledgor will pay all costs incurred in
connection with any of the foregoing.
SECTION 6. Voting Rights; Dividends; Etc.
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(a) So long as no Default or Event of Default shall have occurred and be
continuing, the Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Shares or any part thereof
for any purpose not inconsistent with the terms of this Agreement or the
Indenture; provided, however, that the Pledgor shall not exercise or shall
refrain from exercising any such right if such action would have a material
adverse effect on the value of the Pledged Collateral or any part thereof or
be inconsistent with or violate any provisions of this Agreement or the
Indenture.
(b) So long as no Default or Event of Default shall have occurred and be
continuing, the Pledgor shall be entitled to receive, and to utilize (subject
to the provisions of the Indenture) free and clear of the Lien of this
Agreement, all cash payments of interest paid from time to time with respect
to any Pledged Notes.
(c) So long as no Default or Event of Default shall have occurred and be
continuing, and subject to the other terms and conditions of the Indenture,
the Pledgor shall be entitled to receive, and to utilize (subject to the
provisions of the Indenture) free and clear of the Lien of this Agreement, all
regular and ordinary cash dividends paid from time to time in respect of the
Pledged Shares.
(d) Any and all (i) dividends, other distributions, interest and principal
payments paid or payable in the form of instruments and/or other property
(other than cash interest payments permitted under Section 6(b) hereof and
cash dividends permitted under Section 6(c) hereof) received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral, (ii) dividends and other distributions paid or payable in cash in
respect of any Pledged Shares in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and (iii) cash paid, payable or otherwise
distributed in redemption of, or in exchange for, any Pledged Collateral,
shall in each case be forthwith delivered to the Collateral Agent to hold as
Pledged Collateral and shall, if received by the Pledgor, be received in trust
for the benefit of the Collateral Agent and the Holders of Senior Secured
Discount Notes, be segregated from the other property and funds of the Pledgor
and be forthwith delivered to the Collateral Agent as Pledged Collateral in
the same form as so received (with any necessary endorsements).
(e) The Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other instruments
as the Pledgor may reasonably request for the purpose of enabling the Pledgor
to exercise the voting and other rights that it is entitled to exercise
pursuant to Sections 6(a) through 6(c) above.
(f) Upon the occurrence and during the continuance of a Default or an
Event of Default, (i) all rights of the Pledgor to exercise the voting and
other consensual rights that it would otherwise be entitled to exercise
pursuant to Section 6(a) shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which, to the extent permitted by law,
shall thereupon have the sole right to exercise such voting and other
consensual rights, and (ii) all cash interest payments and dividends and other
distributions payable in respect of the Pledged Collateral shall be paid to
the Collateral Agent and the Pledgor's right
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to receive such cash payments pursuant to Sections 6(b) and 6(c) hereof shall
immediately cease.
(g) Upon the occurrence and during the continuance of a Default or an
Event of Default, the Pledgor shall execute and deliver (or cause to be
executed and delivered) to the Collateral Agent all such proxies, dividend and
interest payment orders and other instruments as the Collateral Agent may
reasonably request for the purpose of enabling the Collateral Agent to
exercise the voting and other rights that it is entitled to exercise pursuant
to Section 6(f) above.
(h) All payments of interest, principal or premium and all dividends and
other distributions that are received by the Pledgor contrary to the
provisions of this Section 6 shall be received in trust for the benefit of the
Collateral Agent and the Holders, shall be segregated from the other property
or funds of the Pledgor and shall be forthwith delivered to the Collateral
Agent as Pledged Collateral in the same form as so received (with any
necessary endorsements).
SECTION 7. Covenants. The Pledgor hereby covenants and agrees with the
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Collateral Agent and the Holders of Senior Secured Discount Notes that it will
comply with all of the obligations, requirements and restrictions applicable to
the Pledgor contained in the Indenture. The Pledgor further covenants and
agrees, from and after the date of this Agreement and until the Obligations have
been paid in full, as follows:
(a) The Pledgor agrees that it will not (i) sell, assign, transfer, convey
or otherwise dispose of, or grant any option or warrant with respect to, any
of the Pledged Collateral without the prior written consent of the Collateral
Agent, (ii) create or permit to exist any Lien upon or with respect to any of
the Pledged Collateral, except for the security interest granted under this
Agreement, and at all times will be the sole beneficial owner of the Pledged
Collateral, (iii) enter into any agreement or understanding that purports to
or that may restrict or inhibit the Collateral Agent's rights or remedies
hereunder, including, without limitation, the Collateral Agent's right to sell
or otherwise dispose of the Pledged Collateral, (iv) take any action, or
permit the taking of any action by the Issuer, with respect to the Pledged
Collateral the taking of which would result in a material impairment of the
economic value of the Pledged Collateral as Collateral or a violation of the
Indenture or this Agreement, (v) without the prior written consent of the
Collateral Agent, enter into any agreement amending, modifying or
supplementing the interest, principal or maturity terms of the Pledged Notes
in a manner adverse to the interests of the Collateral Agent and the Holders
of Senior Secured Discount Notes, (vi) fail to give prompt notice to the
Collateral Agent of any notice of default given by or to the Pledgor under or
with respect to the Pledged Notes together with a complete copy of such
notice, (vii) except for the merger of Cookies USA, Inc. with and into the
Issuer, permit the Issuer to merge or consolidate with or into another person
or entity or sell or transfer all or substantially all of its assets to
another person or entity, unless (x) Pledgor shall have delivered to the
Collateral Agent an Opinion of Counsel in form and substance satisfactory to
the Collateral Agent and a certificate executed by the President and Chief
Financial Officer of Pledgor substantially in the form of Exhibit B
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hereto and (y) all outstanding capital stock of the surviving entity in such
merger or consolidation or of the entity to whom such sale or transfer was
made, together with any promissory notes issued by such entity in favor of
Pledgor are, upon such merger or consolidation, pledged hereunder to and
deposited with the Collateral Agent, or (viii) fail to pay or discharge any
tax, assessment or levy of any nature not later than five days prior to the
date of any proposed sale under any judgment, writ or warrant of attachment
with regard to the Pledged Collateral.
(b) The Pledgor agrees that immediately upon becoming the beneficial owner
of any additional shares of Capital Stock, notes, other securities or Equity
Interests of the Issuer (including as a result of the merger or consolidation
of the Issuer with or into another entity) it will pledge and deliver to the
Collateral Agent for its benefit and the ratable benefit of the Holders and
grant to the Collateral Agent for its benefit and the ratable benefit of the
Holders, a continuing first priority security interest in such shares, notes,
other securities or Equity Interests (as well as instruments of transfer or
assignment duly executed in blank and undated and any necessary stock transfer
tax stamps, all in form and substance satisfactory to the Collateral Agent).
The Pledgor further agrees that it will promptly (i) cause the Issuer upon
becoming indebted to the Pledgor to execute a promissory note in the form of
Exhibit A hereto evidencing such debt in order that such promissory note may
be promptly pledged as a Pledged Note pursuant hereto and (ii) deliver to the
Collateral Agent a certificate executed by a principal executive officer of
the Pledgor describing such additional shares, notes or other securities and
certifying that the same have been duly pledged and delivered to the
Collateral Agent hereunder.
(c) The Pledgor agrees that upon the acquisition or creation of any new
direct subsidiaries of the Pledgor, the Pledgor will promptly pledge and
deliver to the Collateral Agent for its benefit, the benefit of the Trustee
and the ratable benefit of the Holders and grant to the Collateral Agent for
its benefit, the benefit of the Trustee and the ratable benefit of the Holders
a first priority security interest in any shares, notes, other securities or
Equity Interests (as well as instruments of transfer or assignment duly
executed in blank and undated and any necessary stock transfer tax stamps, all
in form and substance satisfactory to the Collateral Agent) of such
subsidiaries.
SECTION 8. Power of Attorney. In addition to all of the powers granted to
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the Collateral Agent pursuant to Section 10.06 of the Indenture, the Pledgor
hereby appoints and constitutes the Collateral Agent as the Pledgor's attorney-
in-fact to exercise all of the following powers upon and at any time after the
occurrence of an Event of Default: (i) collection of proceeds of any Pledged
Collateral; (ii) conveyance of any item of Pledged Collateral to any purchaser
thereof; (iii) giving of any notices or recording of any Liens under Section 5
hereof; (iv) making of any payments or taking any acts under Section 9 hereof
and (v) paying or discharging taxes or Liens levied or placed upon or threatened
against the Pledged Collateral, the legality or validity thereof and the amounts
necessary to discharge the same to be determined by the Collateral Agent in its
sole discretion, and such payments made by the Collateral Agent to become the
obligations of the Pledgor to the Collateral Agent, due and payable immediately
without demand. The Collateral Agent's authority hereunder shall include,
without limitation,
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the authority to endorse and negotiate, for the Collateral Agent's own account,
any checks or instruments in the name of the Pledgor, execute and give receipt
for any certificate of ownership or any document, transfer title to any item of
Pledged Collateral, sign the Pledgor's name on all financing statements or any
other documents deemed necessary or appropriate to preserve, protect or perfect
the security interest in the Pledged Collateral and to file the same, prepare,
file and sign the Pledgor's name on any notice of Lien, and prepare, file and
sign the Pledgor's name on a proof of claim in bankruptcy or similar document
against any customer of the Pledgor, and to take any other actions arising from
or incident to the powers granted to the Collateral Agent in this Agreement.
This power of attorney is coupled with an interest and is irrevocable by the
Pledgor.
SECTION 9. Collateral Agent May Perform. If the Pledgor fails to perform
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any agreement contained herein, the Collateral Agent may itself perform, or
cause performance of, such agreement, and the reasonable expenses of the
Collateral Agent incurred in connection therewith shall be payable by the
Pledgor under Section 14 hereof.
SECTION 10. No Assumption of Duties; Reasonable Care. The rights and powers
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granted to the Collateral Agent hereunder are being granted in order to preserve
and protect the Collateral Agent's and the Holders' of Senior Secured Discount
Notes security interest in and to the Pledged Collateral granted hereby and
shall not be interpreted to, and shall not, impose any duties on the Collateral
Agent in connection therewith. The Collateral Agent 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
substantially equal to that which the Collateral Agent accords its own property,
it being understood that the Collateral Agent shall not have any 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 the Collateral Agent 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.
SECTION 11. Subsequent Changes Affecting Collateral. The Pledgor
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represents to the Collateral Agent and the Holders of Senior Secured Discount
Notes that the 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,
payments of interest and/or principal, reorganization or other exchanges, tender
offers and voting rights), and the Pledgor agrees that the Collateral Agent and
the Holders of Senior Secured Discount Notes shall have no responsibility or
liability for informing the Pledgor of any such changes or potential changes or
for taking any action or omitting to take any action with respect thereto. The
Pledgor covenants that it will not, without the prior written consent of the
Collateral Agent, vote to enable, or take any other action to permit, the Issuer
to issue any capital stock or other securities or to sell or otherwise dispose
of, or grant any option with respect to, any of the Pledged Collateral or create
or permit to exist any Lien upon or with respect to any of the Pledged
Collateral, except for the security interests granted under this Agreement. The
Pledgor will defend the right, title and interest of the Collateral Agent and
the Holders of Senior Secured Discount Notes in and to the Pledged Collateral
against the claims and demands of all Persons.
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SECTION 12. Remedies Upon Default.
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(a) If any Default or Event of Default shall have occurred and be
continuing, the Collateral Agent and the Holders of Senior Secured Discount
Notes shall have, in addition to all other rights given by law or by this
Agreement or the Indenture, all of the rights and remedies with respect to the
Pledged Collateral of a secured party under the UCC as in effect in the State
of New York at that time. The Collateral Agent may, without notice and at its
option, transfer or register, and the Pledgor shall register or cause to be
registered upon request therefor by the Collateral Agent, the Pledged
Collateral or any part thereof on the books of the Issuer into the name of the
Collateral Agent or the Collateral Agent's nominee(s), with or without any
indication that such Pledged Collateral is subject to the security interest
hereunder. In addition, with respect to any Pledged Collateral that shall then
be in or shall thereafter come into the possession or custody of the
Collateral Agent, the Collateral Agent may sell or cause the same to be sold
at any broker's board or at public or private sale, in one or more sales or
lots, at such price or prices as the Collateral Agent may deem best, for cash
or on credit or for future delivery, without assumption of any credit risk.
The purchaser of any or all Pledged Collateral so sold shall thereafter hold
the same absolutely, free from any claim, encumbrance or right of any kind
whatsoever. Unless any of the Pledged Collateral threatens to decline speedily
in value or is or becomes of a type sold on a recognized market, the
Collateral Agent will give Pledgor reasonable notice of the time and place of
any public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Pledged Collateral
conducted in conformity with reasonable commercial practices of banks,
insurance companies, commercial finance companies, or other financial
institutions disposing of property similar to the Pledged Collateral shall be
deemed to be commercially reasonable. Any requirements of reasonable notice
shall be met if such notice is mailed to the Pledgor as provided below in
Section 18.1, at least ten days before the time of the sale or disposition.
Any other requirement of notice, demand or advertisement for sale is, to the
extent permitted by law, waived. The Collateral Agent or any Holder of Senior
Secured Discount Notes may, in its own name or in the name of a designee or
nominee, buy any of the Pledged Collateral at any public sale and, if
permitted by applicable law, at any private sale. All expenses (including
court costs and reasonable attorneys' fees and disbursements) of, or incident
to, the enforcement of any of the provisions hereof shall be recoverable from
the proceeds of the sale or other disposition of the Pledged Collateral.
(b) If the Collateral Agent shall determine to exercise its right to
sell any or all of the Pledged Shares pursuant to Section 12(a) above, and if
in the opinion of counsel for the Collateral Agent it is necessary, or if in
the opinion of the Collateral Agent it is advisable, to have the Pledged
Shares or that portion thereof to be sold, registered under the provisions of
the Securities Act of 1933, as amended (the "Securities Act"), Pledgor will
cause the Issuer to (i) execute and deliver, and cause its directors and
officers to execute and deliver, all at the Issuer's expense, all such
instruments and documents, and to do or cause to be done all such other acts
and things as may be necessary or, in the opinion of the Collateral Agent,
advisable to register such Pledged Shares under the provisions of the
Securities Act, (ii) cause the registration statement relating thereto to
become effective and to remain effective for a period
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of 180 days from the date of the first public offering of such Pledged Shares,
or that portion thereof to be sold and (iii) make all amendments thereto
and/or to the related prospectus that, in the opinion of the Collateral Agent,
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. Pledgor agrees to cause the Issuer to comply
with the provisions of the securities or "Blue Sky" laws of any jurisdiction
that the Collateral Agent shall designate for the sale of the Pledged Shares
and to make available to the Issuer's security holders, as soon as
practicable, an earnings statement (which need not be audited) that will
satisfy the provisions of Section 11(a) of the Securities Act. The Pledgor
will cause such Issuer to furnish to the Collateral Agent such number of
copies as the Collateral Agent may reasonably request of each preliminary and
final prospectus, to notify the Collateral Agent promptly of the happening of
any event as a result of which any then effective prospectus includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of then existing circumstances, and to cause the
Collateral Agent to be furnished with such number of copies as the Collateral
Agent may request of such supplement to or amendment of such prospectus. The
Pledgor will cause the Issuer, to the extent permitted by law, to indemnify,
defend and hold harmless the Collateral Agent and the Holders of Senior
Secured Discount Notes from and against all losses, liabilities, expenses or
claims (including reasonable legal expenses and the reasonable costs of
investigation) that the Collateral Agent or the Holders of Senior Secured
Discount Notes may incur under the Securities Act or otherwise, insofar as
such losses, liabilities, expenses or claims arise out of or are based upon
any alleged untrue statement of a material fact contained in such registration
statement (or any amendment thereto) or in any preliminary or final prospectus
(or any amendment or supplement thereto), or arise out of or are based upon
any alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, except to the extent
that any such losses, liabilities, expenses or claims arise solely out of or
are based upon any such alleged untrue statement made or such alleged omission
to state a material fact included or excluded on the written direction of the
Collateral Agent. Pledgor will cause the Issuer to bear all costs and expenses
of carrying out its obligations hereunder.
(c) In view of the fact that federal and state securities laws may
impose certain restrictions on the method by which a sale of the Pledged
Collateral may be effected after a Default or an Event of Default, Pledgor
agrees that upon the occurrence or existence of any Default or Event of
Default, the Collateral Agent may, from time to time, attempt to sell all or
any part of the Pledged Collateral by means of a private placement,
restricting the prospective purchasers to those who will represent and agree
that they are purchasing for investment only and not for distribution. In so
doing, the Collateral Agent may solicit offers to buy the Pledged Collateral,
or any part of it, for cash, from a limited number of investors who might be
interested in purchasing the Pledged Collateral. The Pledgor acknowledges and
agrees that any such private sale may result in prices and terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Collateral Agent shall be under
no obligation to delay a sale of any of the Pledged Collateral for the period
of time necessary to permit the Issuer to register such securities for public
sale
10
under the Securities Act, or under applicable state securities laws, even if
the Issuer agrees to do so.
(d) The Pledgor further agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales
of all or any portion of the Pledged Collateral pursuant to this Section 12
valid and binding and in compliance with any and all other applicable
requirements of law. The Pledgor further agrees that a breach of any of the
covenants contained in this Section 12 will cause irreparable injury to the
Collateral Agent and the Holders of Senior Secured Discount Notes, that the
Collateral Agent and the Holders of Senior Secured Discount Notes have no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 12 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Default or Event of Default has
occurred under the Indenture.
SECTION 13. Irrevocable Authorization and Instruction to the Issuer. The
-------------------------------------------------------
Pledgor hereby authorizes and instructs the Issuer to comply with any
instruction received by the Issuer from the Collateral Agent that (i) states
that a Default or an Event of Default has occurred and (ii) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from the Pledgor, and the Pledgor agrees that the Issuer shall be
fully protected in so complying.
SECTION 14. Fees and Expenses. The Pledgor will upon demand pay to the
-----------------
Collateral Agent the amount of any and all reasonable fees and expenses
(including, without limitation, the reasonable fees and disbursements of its
counsel, of any investment banking firm, business broker or other selling agent
and of any other experts and agents retained by the Collateral Agent) that the
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of the Collateral Agent and the Holders of
Senior Secured Discount Notes hereunder or (iv) the failure by the Pledgor to
perform or observe any of the provisions hereof.
SECTION 15. Senior Secured Discount Notes Interest Absolute. All rights of
-----------------------------------------------
the Collateral Agent and the Holders of Senior Secured Discount Notes and the
security interests created hereunder, and all obligations of the Pledgor
hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or any other
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other amendment or waiver of or
any consent to any departure from the Indenture;
11
(c) any exchange, surrender, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guarantee, for all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Pledgor in respect of the Obligations or
of this Agreement.
SECTION 16. Application of Proceeds. Upon the occurrence and during the
-----------------------
continuance of a Default or an Event of Default, the proceeds of any sale of, or
other realization upon, all or any part of the Pledged Collateral and any cash
held shall be applied by the Collateral Agent in the following order of
priorities:
first, to payment of the expenses of such sale or other realization,
-----
including reasonable compensation to agents and counsel for the Collateral
Agent, and all expenses, liabilities and advances incurred or made by the
Collateral Agent in connection therewith, and any other unreimbursed fees and
expenses for which the Collateral Agent is to be reimbursed pursuant to Section
14 hereof;
second, to the ratable payment (based on the principal amount of Senior
------
Secured Discount Notes deemed by the Indenture to be outstanding at the time of
distribution) of accrued but unpaid interest on such outstanding Senior Secured
Discount Notes;
third, to the ratable payment (based on the principal amount of Senior
-----
Secured Discount Notes deemed by the Indenture to be outstanding at the time of
distribution) of unpaid principal and premium, if applicable, as to the extent
contemplated by Section 6.02 of the Indenture, of such outstanding Senior
Secured Discount Notes;
fourth, to the ratable payment (based on the principal amount of Senior
------
Secured Discount Notes deemed by the Indenture to be outstanding at the time of
distribution) of all other Obligations, until all Obligations shall have been
paid in full; and
finally, to payment to the Pledgor or its successors or assigns, or as a
-------
court of competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
SECTION 17. Uncertificated Securities. Notwithstanding anything to the
-------------------------
contrary contained herein, if any Pledged Shares (whether now owned or hereafter
acquired) are uncertificated Pledged Shares, the Pledgor shall promptly notify
the Collateral Agent, and shall promptly take all actions required to perfect
the security interest of the Collateral Agent under applicable law (including,
in any event, under Section 9-115(4) of the New York Uniform Commercial Code).
The Pledgor further agrees to take such actions as the Collateral Agent deems
necessary or desirable to effect the foregoing and to permit the Collateral
Agent to exercise any of its rights and remedies hereunder, and agrees to
provide an Opinion of Counsel satisfactory to the Collateral Agent with respect
to any such pledge of uncertificated Pledged Shares promptly upon request of the
Collateral Agent.
SECTION 18. Miscellaneous Provisions.
------------------------
12
Section 18.1. Notices. All notices, approvals, consents or other
-------
communications required or desired to be given hereunder shall be in the form
and manner as set forth in Section 11.02 of the Indenture, and delivered to the
addresses set forth in such Section, or, in the case of the Collateral Agent,
to: the Bank of New York, 000 Xxxxxxx Xxxxxx, Xxxxx 00 Xxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Corporate Trust Administration, Telecopy No. (000) 000-0000.
Section 18.2. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Pledgor to the Collateral Agent to take
any action or omit to take any action under this Agreement, the Pledgor shall
deliver to the Collateral Agent an Officers' Certificate and/or an Opinion of
Counsel in accordance with the requirements of Section 11.04 of the Indenture.
Section 18.3. No Adverse Interpretation of Other Agreements. This
---------------------------------------------
Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor, the Issuer or any subsidiary thereof. No such pledge,
security or debt agreement may be used to interpret this Agreement.
Section 18.4. Severability. The provisions of this 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 in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
Section 18.5. No Recourse Against Others. No director, officer,
--------------------------
employee, stockholder or affiliate, as such, of the Pledgor or the Issuer shall
have any liability for any obligations of the Pledgor under this Agreement or
for any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder of Senior Secured Discount Notes, by accepting a Senior
Secured Discount Note, waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Senior Secured
Discount Notes.
Section 18.6. Headings. The headings of the Articles and Sections of
--------
this Agreement have been inserted for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
Section 18.7. Counterpart Originals. This Agreement may be signed in
---------------------
two or more counterparts. Each signed copy shall be an original, but all of them
together represent one and the same agreement. Each counterpart may be executed
and delivered by telecopy, if such delivery is promptly followed by the original
manually signed copy sent by overnight courier.
Section 18.8. Benefits of Agreement. Nothing in this Agreement,
---------------------
express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder, and the Holders of Senior Secured Discount Notes,
any benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 18.9. Amendments, Waivers and Consents. Any amendment or
--------------------------------
waiver of any provision of this Agreement and any consent to any departure by
the Pledgor from any
13
provision of this Agreement shall be effective only if made or given in
compliance with all of the terms and provisions of the Indenture necessary for
amendments or waivers of, or consents to any departure by the Pledgor from any
provision of the Indenture, as applicable, and neither the Collateral Agent nor
any Holder of Senior Secured Discount Notes shall be deemed, by any act, delay,
indulgence, omission or otherwise, to have waived any right or remedy hereunder
or to have acquiesced in any Default or Event of Default or in any breach of any
of the terms and conditions hereof. Failure of the Collateral Agent or any
Holder of Senior Secured Discount Notes to exercise, or delay in exercising, any
right, power or privilege hereunder shall not operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Collateral Agent or any Holder of
Senior Secured Discount Notes of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy that the
Collateral Agent or such Holder of Senior Secured Discount Notes would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
rights or remedies provided by law.
Section 18.10. Interpretation of Agreement. Time is of the essence in
---------------------------
each provision of this Agreement of which time is an element. All terms not
defined herein or in the Indenture shall have the meaning set forth in the
applicable UCC, except where the context otherwise requires. To the extent a
term or provision of this Agreement conflicts with the Indenture and is not
dealt with herein with more specificity, the Indenture shall control with
respect to the subject matter of such term or provision. Acceptance of or
acquiescence in a course of performance rendered under this Agreement shall not
be relevant to determine the meaning of this Agreement even though the accepting
or acquiescing party had knowledge of the nature of the performance and
opportunity for objection.
Section 18.11. Continuing Security Interest; Transfer of Notes. This
-----------------------------------------------
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (i) remain in full force and effect until the payment in full of all
the Obligations and all the fees and expenses owing to the Collateral Agent,
(ii) be binding upon the Pledgor, its successors and assigns, and (iii) inure,
together with the rights and remedies of the Collateral Agent hereunder, to the
benefit of the Collateral Agent, the Holders of Senior Secured Discount Notes
and their respective successors, transferees and assigns.
Section 18.12. Reinstatement. This Agreement shall continue to be
-------------
effective or be reinstated if at any time any amount received by the Collateral
Agent or any Holder of Senior Secured Discount Notes in respect of the
Obligations is rescinded or must otherwise be restored or returned by the
Collateral Agent or any Holder of Senior Secured Discount Notes upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Pledgor or upon the appointment of any receiver, intervenor, conservator,
trustee or similar official for the Pledgor or any substantial part of its
assets, or otherwise, all as though such payments had not been made.
Section 18.13. Survival of Provisions. All representations,
----------------------
warranties and covenants of the Pledgor contained herein shall survive the
execution and delivery of this
14
Agreement, and shall terminate only upon the full and final payment and
performance by the Pledgor of the Obligations.
Section 18.14. Waivers. The Pledgor waives presentment and demand for
-------
payment of any of the Obligations, protest and notice of dishonor or default
with respect to any of the Obligations, and all other notices to which the
Pledgor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
Section 18.15. Authority of the Collateral Agent.
---------------------------------
(a) The Collateral Agent shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Collateral Agent by
the terms hereof, together with such powers as are reasonably incident
thereto. The Collateral Agent may perform any of its duties hereunder or in
connection with the Pledged Collateral by or through agents or employees
and shall be entitled to retain counsel and to act in reliance upon the
advice of counsel concerning all such matters. Neither the Collateral Agent
nor any director, officer, employee, attorney or agent of the Collateral
Agent shall be responsible for the validity, effectiveness or sufficiency
hereof or of any document or security furnished pursuant hereto. The
Collateral Agent and its directors, officers, employees, attorneys and
agents shall be entitled to rely on any communication, instrument or
document believed by it or them to be genuine and correct and to have been
signed or sent by the proper person or persons. The Pledgor agrees to
indemnify and hold harmless the Collateral Agent, the Holders of Senior
Secured Discount Notes and any other Person from and against any and all
costs, expenses (including the reasonable fees and disbursements of counsel
(including, the allocated costs of inside counsel)), claims and liabilities
incurred by the Collateral Agent, the Holders of Senior Secured Discount
Notes or such Person hereunder, unless such claim or liability shall be due
to willful misconduct or gross negligence on the part of the Collateral
Agent, the Holders of Senior Secured Discount Notes or such Person.
(b) The Pledgor acknowledges that the rights and responsibilities of
the Collateral Agent under this Agreement with respect to any action taken
by the Collateral Agent or the exercise or non-exercise by the Collateral
Agent of any option, right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Agreement shall, as
between the Collateral Agent and the Holders of Senior Secured Discount
Notes, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between
the Collateral Agent and the Pledgor, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Holders of Senior
Secured Discount Notes with full and valid authority so to act or refrain
from acting, and the Pledgor shall not be obligated or entitled to make any
inquiry respecting such authority.
Section 18.16. Resignation or Removal of the Collateral Agent. Until
----------------------------------------------
such time as the Obligations shall have been paid in full, the Collateral Agent
may at any time, by giving written notice to the Pledgor and Holders of Senior
Secured Discount Notes, resign and be discharged of the responsibilities hereby
created, such resignation to become effective upon
15
(i) the appointment of a successor Collateral Agent and (ii) the acceptance of
such appointment by such successor Collateral Agent. As promptly as practicable
after the giving of any such notice, the Holders of Senior Secured Discount
Notes shall appoint a successor Collateral Agent, which successor Collateral
Agent shall be reasonably acceptable to the Pledgor. If no successor Collateral
Agent shall be appointed and shall have accepted such appointment within 90 days
after the Collateral Agent gives the aforesaid notice of resignation, the
Collateral Agent may apply to any court of competent jurisdiction to appoint a
successor Collateral Agent to act until such time, if any, as a successor shall
have been appointed as provided in this Section 18.16. Any successor so
appointed by such court shall immediately and without further act be superseded
by any successor Collateral Agent appointed by the Holders of Senior Secured
Discount Notes, as provided in this Section 18.16. Simultaneously with its
replacement as Collateral Agent hereunder, the Collateral Agent so replaced
shall deliver to its successor all documents, instruments, certificates and
other items of whatever kind (including, without limitation, the certificates
and instruments evidencing the Pledged Collateral and all instruments of
transfer or assignment) held by it pursuant to the terms hereof. The Collateral
Agent that has resigned shall be entitled to fees, costs and expenses to the
extent incurred or arising, or relating to events occurring, before its
resignation or removal.
Section 18.17. Release; Termination of Agreement.
---------------------------------
(a) Subject to the provisions of Section 18.12 hereof, this Agreement
shall terminate (i) upon full and final payment and performance of the
Obligations (and upon receipt by the Collateral Agent of the Pledgor's
written certification that all such Obligations have been satisfied) and
payment in full of all fees and expenses owing by the Pledgor to the
Collateral Agent or (ii) on the day after the first anniversary of the
Legal Defeasance of all of the Obligations pursuant to Section 8.02 of the
Indenture (other than those surviving Obligations specified therein). At
such time, the Collateral Agent shall, at the request of the Pledgor,
reassign and redeliver to the Pledgor all of the Pledged Collateral
hereunder that has not been sold, disposed of, retained or applied by the
Collateral Agent in accordance with the terms hereof. Such reassignment and
redelivery shall be without warranty by or recourse to the Collateral
Agent, except as to the absence of any prior assignments by the Collateral
Agent of its interest in the Pledged Collateral, and shall be at the
expense of the Pledgor.
(b) The Pledgor agrees that it will not, except as permitted by the
Indenture, sell or dispose of, or grant any option or warrant with respect
to, any of the Pledged Collateral; provided, however, that if the Pledgor
shall sell any of the Pledged Collateral in accordance with the terms of
the Indenture, including the requirement that Pledgor apply the Net
Proceeds of such sale in accordance with Section 4.10 of the Indenture, the
Collateral Agent shall, at the request of the Pledgor and subject to
requirements of Section 10.03 of the Indenture, release the Pledged
Collateral subject to such sale free and clear of the Lien and security
interest under this Agreement.
Section 18.18. Final Expression. This Agreement, together with any
----------------
other agreement executed in connection herewith, is intended by the parties as a
final expression of
16
their Agreement and is intended as a complete and exclusive statement of the
terms and conditions thereof.
Section 18.19. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
----------------------------------------------------
JURY TRIAL; WAIVER OF DAMAGES.
-----------------------------
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE
LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE PLEDGOR,
THE COLLATERAL AGENT AND THE HOLDERS OF SENIOR SECURED DISCOUNT NOTES IN
CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR
OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
(ii) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH AND IN PARAGRAPH (vi)
BELOW, THE PLEDGOR, THE COLLATERAL AGENT AND THE HOLDERS OF SENIOR SECURED
DISCOUNT NOTES AGREE THAT ALL DISPUTES BETWEEN OR AMONG THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT,
TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS
LOCATED IN NEW YORK, NEW YORK, BUT THE PLEDGOR, THE COLLATERAL AGENT AND THE
HOLDERS OF SENIOR SECURED DISCOUNT NOTES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK.
THE PLEDGOR WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS.
(iii) THE PLEDGOR AGREES THAT THE COLLATERAL AGENT SHALL, IN ITS OWN
NAME OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF SENIOR SECURED DISCOUNT
NOTES, HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED
AGAINST THE PLEDGOR OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY
SELECTED IN GOOD FAITH TO ENABLE THE COLLATERAL AGENT TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE
COLLATERAL AGENT. THE PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE COLLATERAL AGENT TO REALIZE ON
SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
COLLATERAL AGENT. THE PLEDGOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH THE COLLATERAL AGENT HAS COMMENCED A
17
PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS.
(iv) THE PLEDGOR, THE COLLATERAL AGENT AND THE HOLDERS OF SENIOR
SECURED DISCOUNT NOTES EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING
OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED
IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(v) THE PLEDGOR HEREBY IRREVOCABLY DESIGNATES CT CORPORATION AS THE
DESIGNEE, APPOINTEE AND AGENT OF THE PLEDGOR TO RECEIVE, FOR AND ON BEHALF OF
THE PLEDGOR, SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT. IT IS UNDERSTOOD THAT NOTICE AND A COPY OF SUCH PROCESS
SERVED ON SUCH AGENT, WILL BE FORWARDED PROMPTLY TO THE PLEDGOR, BUT THE FAILURE
OF THE PLEDGOR TO RECEIVE SUCH NOTICE AND COPY SHALL NOT AFFECT IN ANY WAY THE
SERVICE OF SUCH PROCESS. THE PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO THE PLEDGOR AT ITS ADDRESS SET FORTH IN SECTION 11.02 OF THE
INDENTURE, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) BUSINESS DAYS AFTER SUCH
MAILING.
(vi) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT
OR ANY HOLDER OF SENIOR SECURED DISCOUNT NOTES TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE PLEDGOR IN ANY OTHER JURISDICTION.
(vii) THE PLEDGOR HEREBY AGREES THAT NEITHER THE COLLATERAL AGENT NOR
ANY HOLDER OF SENIOR SECURED DISCOUNT NOTES SHALL HAVE ANY LIABILITY TO THE
PLEDGOR (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY
THE PLEDGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR
ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON
THE COLLATERAL AGENT OR SUCH HOLDER OF SENIOR SECURED DISCOUNT NOTES, AS THE
CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART
OF THE COLLATERAL AGENT OR SUCH HOLDER OF SENIOR SECURED DISCOUNT NOTES,
18
AS THE CASE MAY BE, CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(viii) THE PLEDGOR WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY THE COLLATERAL AGENT OR ANY HOLDER OF SENIOR
SECURED DISCOUNT NOTES OF ITS RIGHTS DURING THE CONTINUANCE OF A DEFAULT OR AN
EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO
REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS. THE PLEDGOR WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF
THE COLLATERAL AGENT OR ANY HOLDER OF SENIOR SECURED DISCOUNT NOTES IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS,
TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE COLLATERAL
AGENT OR ANY HOLDER OF SENIOR SECURED DISCOUNT NOTES, OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION
THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE PLEDGOR, THE
COLLATERAL AGENT AND THE HOLDERS OF SENIOR SECURED DISCOUNT NOTES.
Section 18.20. Acknowledgments. The Pledgor hereby acknowledges that:
---------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement;
(b) neither the Collateral Agent nor any Holder of Senior Secured
Discount Notes has any fiduciary relationship to the Pledgor, and the
relationship between the Collateral Agent and the Holders of Senior Secured
Discount Notes, on the one hand, and the Pledgor, on the other hand, is
solely that of a secured party and a creditor; and
(c) no joint venture exists among the Holders of Senior Secured
Discount Notes or among the Pledgor and the Holders of Senior Secured
Discount Notes.
[Signature Page Follows]
19
[Pledge Agreement Signature Page]
IN WITNESS WHEREOF, the Pledgor and the Collateral Agent have each
caused this Agreement to be duly executed and delivered as of the date first
above written.
PLEDGOR:
Xxx. Xxxxxx' Holding Company, Inc.
a Delaware corporation
By:_________________________________
Name:
Title:
COLLATERAL AGENT:
The Bank of New York, as Collateral Agent
By:_________________________________
Name:
Title:
20
SCHEDULE I
Pledged Shares
Number of Pledged Share Certificate Percentage of
----------------- ----------------- -------------
Issuer Shares Number Outstanding
------ ------ ------ -----------
Xxx. Xxxxxx' Original
Cookies, Inc. 1 1 0.25%
Xxx. Xxxxxx' Original
Cookies, Inc. 399 2 99.75%
------
100%
====
21
SCHEDULE II
Pledged Notes
None
22
EXHIBIT A
FORM OF INTERCOMPANY NOTE
_________ __, ____
New York, New York
NOTE
----
FOR VALUE RECEIVED, Xxx. Xxxxxx' Original Cookies, Inc., a Delaware
corporation (the "Maker"), promises to pay to Xxx. Xxxxxx' Holding Company,
Inc., a Delaware corporation (the "Holding Company"), or order, the amount of
principal advanced from time to time by the Holding Company to such Maker as
reflected on the books and records of the Holding Company, together with
interest on the unpaid principal amount at a rate per annum equal to 14%, from
the date of advance to the date of payment. All principal and accrued interest
under this Note shall be due and payable on demand.
This Note may be prepaid in whole or in part at any time without
penalty or premium.
The right to plead any and all statutes of limitations as a defense to
demand hereunder is hereby waived to the extent permitted by law. The Maker, for
itself and its successors and assigns, waives presentment, demand, protest and
notice thereof or of dishonor, and waives the right to be released by reason of
any extension of time or change in the terms of payment or any change,
alteration or release of any security given for the payment hereof. The Maker
hereby acknowledges that this Note may be pledged by the Holding Company to the
Collateral Agent named below.
This Note shall be governed by and construed in accordance with the
laws of the State of New York.
XXX. XXXXXX' ORIGINAL COOKIES, INC.
By:___________________________
Title:
Pay to the Order of:
The Bank of New York, as Collateral Agent
XXX. XXXXXX' HOLDING COMPANY, INC.
By: _________________________
Title:
EXHIBIT B
FORM OF SOLVENCY CERTIFICATE
The undersigned, Xxxxx X. Xxxxxx and L. Xxx Xxxxxx, respectively the President
and Chief Financial Officer of Xxx. Xxxxxx' Holding Company, Inc., a Delaware
corporation ("Pledgor"), certify that they are authorized to execute this
Certificate in the name and on behalf of Pledgor, and further certify as follows
(capitalized terms used but not defined herein have the respective meanings
assigned to them in the Pledge Agreement, dated August 24, 1998 (the "Pledge
Agreement"), between Pledgor and Collateral Agent):
a. We are familiar with the historical and current financial condition of
Pledgor and the Issuer including, after the [merger] [consolidation] [sale
or transfer of all or substantially all assets] described in Section
7(a)(vii) of the Pledge Agreement.
b. For the purposes of this Certificate, we have reviewed other financial
information and forecasts relating to the Pledgor prepared by the Pledgor's
management, which we believe (as to the historical financial information)
fairly present the historical financial position and results of operations
of the Pledgor as of the dates and for the periods presented and (in the
case of the forecasts) were based upon reasonable assumptions and provide
reasonable estimations of future performance, although any forecasts are
necessarily uncertain of fulfillment. We know of no facts or circumstances
arising subsequent to the dates as of which such information and
projections were prepared that would materially alter such conclusions. We
have assumed that the fair saleable value of the Pledgor's assets is the
amount for which all the businesses of the Pledgor could be sold on the
date hereof either as an entirety or separately (including in any such sale
all property and assets used in the business or businesses sold) and, in
either case, on a going concern basis, without potential tax liabilities
arising on sale.
c. In addition to such review, we are familiar with and have considered
information, including the opinions of independent advisors, as to the fair
market values of the Pledgor's assets and the probable liability,
contingent or otherwise, of the Pledgor to its creditors. We have estimated
such values as reliably and as practicably as possible under the
circumstances.
Based upon the foregoing, we have reached the conclusions that, after
giving effect to the transactions contemplated by Section 7(a)(vii) of the
Pledge Agreement:
1. The Pledgor does not intend to or believe that it has incurred or will
incur, debts that will be beyond its ability to pay as they mature.
2. The present fair saleable value of the assets of the Pledgor the
amount that will be required to pay the probable liability on its existing debts
(whether matured or unmatured, liquidated or unliquidated, absolute, fixed or
contingent), as they become absolute and matured.
In determining "present fair saleable value," we utilized as a guideline amounts
we believe would be reached by a willing seller and a willing buyer under no
compulsion to make the sale.
3. The Pledgor does not have unreasonably small capital for it to carry
on its businesses as proposed to be conducted. "Unreasonably small capital" is
dependent upon the nature of the particular business or businesses conducted or
to be conducted, and the statement made in the preceding sentence is correct
based upon anticipated future conduct of the businesses of the Pledgor.
4. The Pledgor is not incurring obligations or making transfers under any
evidence of indebtedness with the intent to hinder, delay or defraud any entity
to which it is or will become indebted.
WITNESS the signatures of the undersigned, this _____ day of ______, ____.
_________________________
President
_________________________
Chief Financial Officer
