CREDIT AGREEMENT
Dated as of August 28, 1997
among
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.,
as Company
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent
and
Letter of Credit Issuing Bank,
THE SUMITOMO BANK, LIMITED,
as Senior Managing Agent
▇▇▇▇▇ FARGO BANK, N.A.,
BHF-BANK AKTIENGESELLSCHAFT,
CREDIT LYONNAIS LOS ANGELES BRANCH,
DRESDNER BANK AG,
NEW YORK BRANCH AND GRAND CAYMAN BRANCH,
AND
KEY BANK NATIONAL ASSOCIATION,
as Co-Agents
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
Arranged by
BANCAMERICA SECURITIES, INC.
TABLE OF CONTENTS
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Page
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ARTICLE I - DEFINITIONS......................................................... 1
1.01 Certain Defined Terms............................................ 1
1.02 Other Interpretive Provisions.................................... 25
1.03 Accounting Principles............................................ 26
ARTICLE II - THE CREDITS........................................................ 26
2.01 Amounts and Terms of Commitments................................. 26
2.02 Loan Accounts.................................................... 27
2.03 Procedure for Borrowing.......................................... 27
2.04 Conversion and Continuation Elections............................ 28
2.05 Voluntary Termination or Reduction of Commitments................ 29
2.06 Optional Prepayments............................................. 29
2.07 Mandatory Commitment Reductions.................................. 30
2.08 Repayment........................................................ 31
2.09 Interest......................................................... 31
2.10 Fees............................................................. 32
(a) Arrangement, Agency Fees.................................... 32
(b) Commitment Fees............................................. 32
2.11 Computation of Fees and Interest................................. 32
2.12 Payments by the Company.......................................... 32
2.13 Payments by the Banks to the Agent............................... 33
2.14 Sharing of Payments, Etc......................................... 33
ARTICLE III - THE LETTERS OF CREDIT............................................. 34
3.01 The Letter of Credit Subfacility................................. 34
3.02 Issuance, Amendment and Renewal of Letters of Credit............. 35
3.03 Risk Participations, Drawings and Reimbursements................. 37
3.04 Repayment of Participations...................................... 38
3.05 Role of the Issuing Bank......................................... 38
3.06 Obligations Absolute............................................. 39
3.07 Cash Collateral Pledge........................................... 40
3.08 Letter of Credit Fees............................................ 40
3.09 Uniform Customs and Practice..................................... 41
ARTICLE IV - TAXES, YIELD PROTECTION AND ILLEGALITY............................. 41
4.01 Taxes............................................................ 41
4.02 Illegality....................................................... 43
4.03 Increased Costs and Reduction of Return.......................... 43
4.04 Funding Losses................................................... 44
4.05 Inability to Determine Rates..................................... 44
4.06 Reserves on Offshore Rate Loans.................................. 45
4.07 Certificates of Banks............................................ 45
4.08 Substitution of Banks............................................ 45
4.09 Survival......................................................... 45
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ARTICLE V - CONDITIONS PRECEDENT..................................................... 45
5.01 Conditions of Initial Credit Extensions................................ 45
(a) Credit Agreement; Loan Documents and Notes................... 46
(b) Resolutions; Incumbency...................................... 46
(c) Organization Documents; Good Standing........................ 46
(d) Legal Opinions............................................... 46
(e) Payment of Fees.............................................. 47
(f) Certificate.................................................. 47
(g) Merger Agreement, etc........................................ 48
(h) Consummation of Merger....................................... 48
(i) Consolidated Balance Sheets.................................. 48
(j) Pro Forma Consolidated Balance Sheets........................ 48
(k) Consolidated Debt............................................ 48
(l) Indebtedness................................................. 48
(m) Replacement of Existing Bank Agreement; Release
of Liens..................................................... 48
5.02 Conditions to All Credit Extensions.................................... 49
(a) Notice, Application.......................................... 49
(b) Continuation of Representations and Warranties............... 49
(c) No Existing Default.......................................... 49
ARTICLE VI - REPRESENTATIONS AND WARRANTIES.......................................... 49
6.01 Corporate Existence and Power........................................ 49
6.02 Corporate Authorization; No Contravention............................ 50
6.03 Governmental Authorization........................................... 50
6.04 Binding Effect....................................................... 50
6.05 Litigation........................................................... 50
6.06 No Default........................................................... 51
6.07 ERISA Compliance..................................................... 51
6.08 Use of Proceeds; Margin Regulations.................................. 52
6.09 Title to Properties.................................................. 52
6.10 Taxes................................................................ 52
6.11 Financial Condition.................................................. 53
6.12 Environmental Matters................................................ 53
6.13 Regulated Entities................................................... 53
6.14 No Burdensome Restrictions........................................... 54
6.15 Copyrights, Patents, Trademarks and Licenses, etc.................... 54
6.16 Capital Stock; Subsidiaries.......................................... 54
6.17 Insurance............................................................ 54
6.18 Labor Relations...................................................... 54
6.19 Representations and Warranties in Related Documents.................. 55
6.20 Solvency............................................................. 55
6.21 Full Disclosure...................................................... 55
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ARTICLE VII - AFFIRMATIVE COVENANTS............................................... 56
7.01 Financial Statements................................................ 56
7.02 Certificates; Other Information..................................... 57
7.03 Notices............................................................. 57
7.04 Preservation of Corporate Existence, Etc............................ 58
7.05 Maintenance of Property............................................. 58
7.06 Insurance........................................................... 58
7.07 Payment of Obligations.............................................. 59
7.08 Compliance with Laws................................................ 59
7.09 Compliance with ERISA............................................... 59
7.10 Inspection of Property and Books and Records........................ 59
7.11 Environmental Laws.................................................. 60
7.12 Use of Proceeds..................................................... 60
7.13 Future Material Subsidiaries........................................ 60
7.14 Further Assurances.................................................. 60
ARTICLE VIII - NEGATIVE COVENANTS................................................... 60
8.01 Limitation on Liens................................................. 61
8.02 Negative Pledges, Restrictive Agreements, etc....................... 63
8.03 Sale of Assets...................................................... 63
8.04 Merger, Consolidations and Acquisitions............................. 64
8.05 Limitation on Indebtedness.......................................... 65
8.06 Transactions with Affiliates........................................ 66
8.07 Use of Proceeds..................................................... 66
8.08 Leverage Ratio Maintenance.......................................... 66
8.09 Interest Coverage Ratio Maintenance................................. 66
8.10 Minimum EBITDA...................................................... 67
8.11 Maintenance of Consolidated Net Worth............................... 67
8.12 Joint Ventures...................................................... 67
8.13 Restricted Investments and Restricted Payments...................... 67
8.14 Capital Expenditures, etc........................................... 68
8.15 ERISA............................................................... 68
8.16 Change in Business.................................................. 68
8.17 Stock of Material Subsidiaries...................................... 68
8.18 Sale and Leaseback.................................................. 68
8.19 Amendments.......................................................... 69
8.20 Accounting Changes.................................................. 69
ARTICLE IX - EVENTS OF DEFAULT...................................................... 69
9.01 Event of Default.................................................... 69
(a) Non-Payment..................................................... 69
(b) Representation or Warranty...................................... 69
(c) Specific Defaults............................................... 69
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(d) Other Defaults............................................. 69
(e) Cross-Default.............................................. 69
(f) Insolvency; Voluntary Proceedings.......................... 70
(g) Involuntary Proceedings.................................... 70
(h) ERISA...................................................... 70
(i) Monetary Judgments......................................... 70
(j) Non-Monetary Judgments..................................... 70
(k) Change of Control.......................................... 71
(l) Material Adverse Effect.................................... 71
(m) Guarantor Defaults......................................... 71
(n) Invalidity of Subordination Provisions..................... 71
(o) Pledge Agreements.......................................... 71
9.02 Remedies........................................................ 71
9.03 Rights Not Exclusive............................................ 72
ARTICLE X - THE AGENT.............................................................. 72
10.01 Appointment and Authorization; "Agent".......................... 72
10.02 Delegation of Duties............................................ 72
10.03 Liability of Agent.............................................. 72
10.04 Reliance by Agent............................................... 73
10.05 Notice of Default............................................... 73
10.06 Credit Decision................................................. 73
10.07 Indemnification of Agent........................................ 74
10.08 Agent in Individual Capacity.................................... 74
10.09 Successor Agent................................................. 75
10.10 Withholding Tax................................................. 75
10.11 Co-Agents; Lead Managers........................................ 76
ARTICLE XI - MISCELLANEOUS......................................................... 76
11.01 Amendments and Waivers.......................................... 76
11.02 Notices......................................................... 77
11.03 No Waiver; Cumulative Remedies.................................. 78
11.04 Costs and Expenses.............................................. 78
11.05 Company Indemnification......................................... 78
11.06 Payments Set Aside.............................................. 79
11.07 Successors and Assigns.......................................... 79
11.08 Assignments, Participations, etc................................ 79
11.09 Confidentiality................................................. 81
11.10 Set-off......................................................... 81
11.11 Notification of Addresses, Lending Offices, Etc................. 81
11.12 Counterparts.................................................... 81
11.13 Severability.................................................... 82
11.14 No Third Parties Benefited...................................... 82
11.15 Governing Law and Jurisdiction.................................. 82
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11.16 Waiver of Jury Trial.............................................. 82
11.17 Entire Agreement.................................................. 83
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ANNEXES
Annex A Pricing Grid
Annex B Applicable Commitment Fee Grid
Annex C Material Subsidiaries
Annex D Whittier Transaction
SCHEDULES
Schedule 2.01 Commitments
Schedule 5.01(l) Indebtedness of ▇▇▇▇
Schedule 6.07 ERISA
Schedule 6.09 Existing Bank Liens
Schedule 6.11 Permitted Liabilities
Schedule 6.12 Environmental Matters
Schedule 6.16(a) Capital Stock
Schedule 6.16(b) Material Subsidies and Repurchase Obligations
Schedule 6.17 Insurance Matters
Schedule 6.19 Merger Agreement
Schedule 8.01 Permitted Liens
Schedule 8.01(g) Existing Judgments
Schedule 8.05 Permitted Indebtedness
Schedule 8.13 Investments
Schedule 11.02 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D-1 Form of Legal Opinion of Company's Counsel
Exhibit D-2 Form of Legal Opinion of Company's General Counsel
Exhibit E Form of Legal Opinion of Agent's Counsel
Exhibit F Form of Assignment and Acceptance
Exhibit G Form of Note
Exhibit H Form of Guaranty
Exhibit I-1 Form of Company Pledge Agreement
Exhibit I-2 Form of CB Group Pledge Agreement
Exhibit I-3 Form of KMSC Pledge Agreement
Exhibit I-4 Form of KRES Pledge Agreement
Exhibit I-5 Form of WREAP Pledge Agreement
Exhibit I-6 Form of KVK Pledge Agreement
vi
CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT is entered into as of August 28, 1997, among CB
Commercial Real Estate Services Group, Inc., a Delaware corporation (the
"Company"), the several financial institutions from time to time party to this
--------
Agreement (collectively, the "Banks"; individually, a "Bank"), The Sumitomo
----- ----
Bank, Limited, as senior managing agent for the Banks (the "Senior Managing
---------------
Agent"), Bank of America National Trust and Savings Association, as Issuing Bank
-----
and as Agent, and ▇▇▇▇▇ Fargo Bank, N.A., BHF-Bank Aktiengesellschaft, Credit
Lyonnais Los Angeles Branch, Dresdner Bank AG, New York Branch and Grand Cayman
Branch, and Key Bank National Association, as Co-Agents.
WHEREAS, the Banks have agreed to make available to the Company a revolving
credit facility with letter of credit subfacility upon the terms and conditions
set forth in this Agreement;
WHEREAS, in addition to its inclusion as a Bank hereunder, BofA has agreed
to act as the Issuing Bank and as the Agent upon the terms and conditions set
forth in this Agreement; and
WHEREAS, in addition to its inclusion as a Bank hereunder, The Sumitomo
Bank, Limited has agreed to act as the Senior Managing Agent upon the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
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1.01 Certain Defined Terms. The following terms have the following
---------------------
meanings:
"Accumulated Funding Deficiency" means with respect to any Plan that
------------------------------
is subject to the minimum funding standards of Section 412 of the Code, an
amount described in Section 412(a) of the Code.
"Acquisition" means any transaction or series of related transactions
-----------
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the Capital
Stock, partnership interests, membership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary (including, without
limitation, any Investment in a Joint Venture), or (c) a merger or consolidation
or any other combination with another Person (other than a Person that is a
Subsidiary) provided that the Company or the Subsidiary is the surviving entity.
"Acquisition Corporation" means CBC Acquisition Corporation, a
-----------------------
Delaware corporation and a Wholly-Owned Subsidiary of the Company.
"Adjustment Date" means the second Business Day following receipt by
---------------
the Agent of both (a) the financial statements required to be delivered pursuant
to Section 7.01(a) or 7.01(b), as the case may be, for the most recently
completed fiscal period and (b) the
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Compliance Certificate required to be delivered pursuant to subsection 7.02(b)
with respect to such fiscal period; provided, however, that any increase in the
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Applicable Commitment Fee Rate or the Applicable Margin, as the
case may be, shall be retroactive to the first day of the next succeeding fiscal
period relating to such financial statements and Compliance Certificate.
"Affected Bank" has the meaning specified in Section 4.08.
-------------
"Affiliate" means, as to any Person, any other Person which, directly
---------
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, membership interests, by contract,
or otherwise.
"Agent" means BofA in its capacity as administrative agent for the
-----
Banks hereunder, and any successor agent arising under Section 10.09.
"Agent-Related Persons" means BofA and any successor agent arising
---------------------
under Section 10.09 and any successor letter of credit issuing bank hereunder,
together with their respective Affiliates (including, in the case of BofA, the
Arranger), and the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.
"Agent's Payment Office" means the address for payments set forth on
----------------------
Schedule 11.02 or such other address as the Agent may from time to time specify.
"Agreement" means this Credit Agreement.
---------
"Amortization Expense" means, for any fiscal period, without
---------------------
duplication, the total expense of the Company and its Subsidiaries during such
fiscal period for amortization of Intangible Assets all calculated in accordance
with GAAP.
"Applicable Commitment Fee Rate" means, from the Closing Date until
------------------------------
March 31, 1998, a rate per annum equal to 0.25%; provided, that on and after
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March 31, 1998, the Applicable Commitment Fee Rate will be adjusted, on each
Adjustment Date, to the applicable rates per annum set forth in the Applicable
Commitment Fee Grid attached hereto as Annex B opposite the Leverage Ratio
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determined from the financial statements and the Compliance Certificate relating
to such Adjustment Date; and provided, further, that in the event that the
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financial statements required to be delivered pursuant to Section 7.01(a) and
7.01(b), as applicable, and the related Compliance Certificate required pursuant
to Section 7.02(b), are not delivered when due (without giving effect to any
grace period), then from such due date until the date the Agent receives such
financial statements and the related Compliance Certificate, the Applicable
Commitment Fee Rate shall conclusively equal the highest Applicable Commitment
Fee Rate as set forth on Annex B hereto.
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"Applicable Margin" means for each Base Rate Loan and Offshore Rate
-----------------
Loan, from the Closing Date until March 31, 1998, the applicable rate per annum
set forth under the relevant column heading below:
Base Rate Loans Offshore Rate Loans
------------------ --------------------
0.00% 1.00%
; provided, that, on and after March 31, 1998, the Applicable Margin for all
--------
Revolving Loans will be adjusted, on each Adjustment Date, to the applicable
rates per annum set forth in the Pricing Grid attached hereto as Annex A
-------
opposite the Leverage Ratio determined from the financial statements and the
Compliance Certificate relating to such Adjustment Date; and provided, further,
-------- -------
that in the event that the financial statements required to be delivered
pursuant to Section 7.01(a) and 7.01(b), as applicable, and the related
Compliance Certificate required pursuant to Section 7.02(b), are not delivered
when due (without giving effect to any grace period), then from such due date
until the date the Agent receives such financial statements and the related
Compliance Certificate, the Applicable Margin (as adjusted on such Adjustment
Date) shall conclusively equal the highest Applicable Margin with respect to
such Type of Revolving Loan as set forth on Annex A attached hereto.
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Notwithstanding anything herein to the contrary, if as of any fiscal period as
determined from the financial statements and the Compliance Certificate relating
to any Adjustment Date, the Company shall maintain a Leverage Ratio in excess of
2.50:1.0 and the Combined Commitments are greater than fifty percent (50%)
utilized (as calculated in accordance with Section 2.10(b)), then the Applicable
Margin for all Revolving Loans will be increased by an amount equal to ten (10)
basis points above the then current rates set forth in the Pricing Grid attached
hereto as Annex A.
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"Arranger" means BancAmerica Securities, Inc., a Delaware corporation.
--------
"Assignee" has the meaning specified in Section 11.08(a).
--------
"Attorney Costs" means and includes all reasonable fees and
--------------
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all disbursements of internal
counsel.
"Bank" has the meaning specified in the introductory clause hereto.
----
References to the "Banks" shall include BofA, including in its capacity as
Issuing Bank; for purposes of clarification only, to the extent that BofA may
have any rights or obligations in addition to those of the Banks due to its
status as Issuing Bank, its status as such will be specifically referenced.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
---------------
U.S.C. (S)101, et seq.).
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"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
---------
above the latest Federal Funds Rate; and (b) the rate of interest in effect for
such day as publicly announced from time to time by BofA in San Francisco,
California, as its "reference rate." (The "reference rate" is a rate set by BofA
based upon various factors including BofA's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced
rate.)
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Any change in the reference rate announced by BofA shall take effect
at the opening of business on the day specified in the public announcement of
such change.
"Base Rate Loan" means a Revolving Loan, or an L/C Advance, that bears
--------------
interest based on the Base Rate.
"BofA" means Bank of America National Trust and Savings Association, a
----
national banking association.
"Board" means, with respect to any Person, its board of directors or,
-----
if it does not have a board of directors, its governing body which performs the
same duties as a board of directors. Unless the context otherwise clearly
requires, references herein to the "Board" shall refer to the Board of the
Company and shall (except with respect to the definition of "Change of Control")
include the executive committee of the Board of the Company.
"Borrowing" means a borrowing hereunder consisting of Revolving Loans
---------
of the same Type made to the Company on the same day by the Banks under Article
II, and, other than in the case of Base Rate Loans, having the same Interest
Period.
"Borrowing Date" means any date on which a Borrowing occurs under
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Section 2.03.
"Business Day" means any day other than a Saturday, Sunday or other
------------
day on which commercial banks in New York City or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in the
applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or
---------------------------
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means, with respect to any Person, all payments
--------------------
or accruals (including Capitalized Lease Obligations) of such Person for any
fixed assets or improvements or for replacements, substitutions or additions
thereto, that are required to be capitalized under GAAP; provided, that "Capital
--------
Expenditures" shall not include costs which represent any part of Total
Consideration incurred in connection with any Permitted Acquisition.
"Capital Lease" means any lease or other agreement for the use of
-------------
property which is required to be capitalized on a balance sheet of the lessee or
other user of property in accordance with GAAP.
"Capitalized Lease Obligations" with respect to any Person, means the
-----------------------------
aggregate amount which, in accordance with GAAP, is required to be reported as a
liability on the balance sheet of such Person at such time in respect of such
Person's interest as lessee under a Capital Lease.
"Capital Stock" means, as to any Person, all shares, interests,
-------------
partnership interests, limited liability company interests, participations,
rights in or other equivalents
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(however designated) of such Person's equity (however designated) and any
rights, warrants or options exchangeable for or convertible into such shares,
interests, participations, rights or other equity.
"Cash Collateralize" means to pledge and deposit with or deliver to
------------------
the Agent, for the benefit of the Agent, the Issuing Bank and the Banks, as
additional collateral for the L/C Obligations, cash or deposit account balances
pursuant to documentation in form and substance satisfactory to the Agent and
the Issuing Bank (which documents are hereby consented to by the Banks).
Derivatives of such term shall have the corresponding meaning. The Company
hereby grants the Agent, for the benefit of the Agent, the Issuing Bank and the
Banks, a security interest in all such cash and deposit account balances. Cash
collateral shall be maintained in blocked, interest bearing deposit accounts at
BofA.
"CB Group" means CB Commercial Real Estate Group, Inc., a Delaware
--------
corporation.
"CB Group Pledge Agreement" means the Pledge Agreement dated as of the
-------------------------
date hereof from CB Group to the Agent, for the benefit of the Banks,
substantially in the form annexed hereto as Exhibit I-2.
-----------
"CB Group Pledged Shares" means the shares of Melody pledged by CB
-----------------------
Group to Agent, for the benefit of the Banks, pursuant to the CB Group Pledge
Agreement.
"Change of Control" means the point in time at which (i) any Person
-----------------
(as defined in Section 13(d) and Section 14(d)(2) under the Securities Exchange
Act of 1934, as amended) (A) acquires all or substantially all of the properties
and assets of the Company or (B) shall have (directly or indirectly) acquired
beneficial ownership of fifty percent (50%) or more of the issued and
outstanding Voting Stock of the Company or (ii) less than a majority of the
members of the Company's Board shall be persons who either (A) were serving as
directors on the date of this Agreement or (B) were nominated as directors by
the vote of a majority of the directors who are directors referred to in clause
(ii)(A) above or this clause (ii)(B).
"Closing Date" means the date on which all conditions precedent set
------------
forth in Section 5.01 are satisfied or waived by all Banks (or, in the case of
Section 5.01(e), waived by the Person entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986 and regulations
----
promulgated thereunder, as amended from time to time.
"Combined Commitments" means, at any time, the sum at such time of the
--------------------
Commitments of all the Banks.
"Commitment" as to each Bank, has the meaning specified in Section
----------
2.01.
"Common Stock" has the meaning specified in Section 6.16(a).
------------
"Company" has the meaning specified in the introductory clause hereto.
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"Company Pledge Agreement" means the Pledge Agreement dated as of the
------------------------
date hereof from the Company to the Agent, for the benefit of the Banks,
substantially in the form annexed hereto as Exhibit I-1.
-----------
"Company Pledged Shares" means the shares of CB Group, pledged by the
----------------------
Company to the Agent, for the benefit of the Banks, pursuant to the Company
Pledge Agreement.
"Compliance Certificate" means a certificate substantially in the form
----------------------
of Exhibit C.
---------
"Consolidated EBITDA" means for any period for which the amount
-------------------
thereof is to be determined, the Consolidated Net Income of such Person for such
period plus (A) the aggregate amounts deducted in determining such Consolidated
----
Net Income in respect of (i) Interest Expense for such period, (ii) income and
other taxes measured by income or profits for such period, (iii) Depreciation
Expense for such period, and (iv) Amortization Expense for such period, plus (B)
----
only with respect to any determination thereof on or prior to December 31, 1997,
the lesser of (i) the amount deducted in determining such Consolidated Net
Income of such Person representing transaction fees incurred by the Company with
respect to the Merger and this Agreement, and (ii) $21,000,000, plus (C) any
----
noncash losses on the sale or other disposition of investments or fixed or
capital assets and minus any gains on the sale or other disposition of
-----
investments or fixed or capital assets and noncash extraordinary income, in each
case in accordance with GAAP.
"Consolidated Indebtedness" means, as of any date of determination,
-------------------------
the total of all Indebtedness of the Company and its Subsidiaries outstanding on
such date, after eliminating all offsetting debits and credits between the
Company and its Subsidiaries and all other items required to be eliminated in
the course of the preparation of consolidated financial statements of the
Company and its Subsidiaries in accordance with GAAP.
"Consolidated Net Income" means, with reference to any period, the net
-----------------------
income (or loss) of the Company and its Subsidiaries for such period (taken as a
cumulative whole), as determined in accordance with GAAP, after eliminating all
offsetting debits and credits between the Company and its Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its subsidiaries in
accordance with GAAP; provided, that there shall be excluded:
--------
(a) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary or is merged into or consolidated with the Company or
a Subsidiary, and the income (or loss) of any Person, substantially all of
the assets of which have been acquired in any manner, realized by such
other Person prior to the date of acquisition;
(b) the income (or loss) of any Person (other than a Subsidiary) in
which the Company or any Subsidiary has an ownership interest, except to
the extent that any such income has been actually received by the Company
or such Subsidiary in the form of cash dividends or similar cash
distributions;
(c) the undistributed earnings of any Subsidiary to the extent that
the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of its charter or any
agreement, instrument,
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judgment, decree, order, statute, rule or governmental regulation
applicable to such Subsidiary;
(d) any net income or gain (but not any net loss) during such period
from (i) any change in accounting principles in accordance with GAAP, (ii)
any prior period adjustments resulting from any change in accounting
principles in accordance with GAAP, (iii) any extraordinary items, or (iv)
any discontinued operations or the disposition thereof;
(e) any deferred credit representing the excess of equity in any
Subsidiary at the date of acquisition over the cost of the investment in
such Subsidiary;
(f) in the case of a successor to the Company by consolidation or
merger or as a transferee of its assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets; and
(g) any portion of such net income that cannot be freely converted
into Dollars.
"Consolidated Net Worth" means, at any time, (a) the total assets of
----------------------
the Company and its Subsidiaries which would be shown as assets on a
consolidated balance sheet of the Company and its Subsidiaries as of such time
prepared in accordance with GAAP, minus (b) (i) all amounts properly
-----
attributable to Minority Interests, if any, and (ii) the total liabilities of
the Company and its Subsidiaries which would be shown as liabilities on a
consolidated balance sheet of the Company and its Subsidiaries as of such time
prepared in accordance with GAAP.
"Contingent Obligation" means, as to any Person, any direct or
---------------------
indirect liability of that Person, whether or not contingent, (a) with respect
to any Indebtedness, lease, dividend, letter of credit or other obligation (the
"primary obligations") of another Person (the "primary obligor"), including any
obligation of that Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any security therefor, (ii) to advance or provide funds
for the payment or discharge of any such primary obligation, or to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of income or
financial condition of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the holder
of any such primary obligation against loss in respect thereof (each, a
"Guaranty Obligation"); (b) with respect to any Surety Instrument (other than
--------------------
any Letter of Credit) issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings or payments; (c) to
purchase any materials, supplies or other property from, or to obtain the
services of, another Person if the relevant contract or other related document
or obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether delivery of
such materials, supplies or other property is ever made or tendered, or such
services are ever performed or tendered, or (d) in respect of any Swap Contract.
The amount of any Contingent Obligation shall, in the case of Guaranty
Obligations, be deemed equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made or, if not
stated or if indeterminable, the maximum reasonably anticipated liability in
respect thereof, and in the case of other Contingent Obligations other than in
-7-
respect of Swap Contracts, shall be equal to the maximum reasonably anticipated
liability in respect thereof and, in the case of Contingent Obligations in
respect of Swap Contracts, shall be equal to the Swap Termination Value.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under Section
----------------------------
2.04, the Company (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"Credit Extension" means and includes (a) the making of any Revolving
----------------
Loans hereunder, and (b) the Issuance of any Letters of Credit hereunder.
"Debt" means, with respect to any Person, all items (other than
----
capital stock, capital surplus, retained earnings, deferred revenues and
deferred credits), which in accordance with GAAP would be included in
determining Indebtedness of such Person as shown on the liability side of a
balance sheet of such Person as at the date on which Debt is to be determined.
"Default" means any event or circumstance which, with the giving of
-------
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Depreciation Expense" means, for any fiscal period, without
--------------------
duplication, the total expense of the Company and its Subsidiaries during such
fiscal period for depreciation, calculated in accordance with GAAP.
"Dollars", "dollars" and "$" each mean lawful money of the United
------- ------- -
States.
"EBITDA" means for any period for which the amount thereof is to be
------
determined, the consolidated net income of such Person for such period plus the
----
aggregate amounts deducted in determining such consolidated net income in
respect of (i) consolidated interest expense of such Person for such period,
(ii) income and other taxes measured by income or profits of such Person for
such period, and (iii) depreciation and amortization for such period, in each
case in accordance with GAAP; provided, however, that consolidated net income
-------- -------
shall be computed for these purposes without giving effect to extraordinary
losses or extraordinary gains.
"Effective Amount" means (i) with respect to any Revolving Loans on
----------------
any date, the aggregate outstanding principal amount thereof after giving effect
to any Borrowings and prepayments or repayments of Revolving Loans occurring on
such date; and (ii) with respect to any outstanding L/C Obligations on any date,
the amount of such L/C Obligations on such date after giving effect to any
Issuances of Letters of Credit occurring on such date and any other changes in
the aggregate amount of the L/C Obligations as of such date, including as a
result of any reimbursements of outstanding unpaid drawings under any Letters of
Credit or any reductions in the maximum amount available for drawing under
Letters of Credit taking effect on such date. For purposes of Section 2.07(c)
the Effective
-8-
Amount shall be determined without giving effect to any mandatory
prepayments to be made under Section 2.07.
"Eligible Assignee" means (a) a commercial bank organized under the
-----------------
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100,000,000; (b) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least the equivalent of
$100,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of the OECD; or (c) a Person that is primarily engaged in the business
of commercial banking and that is (i) a Subsidiary of a Bank, (ii) a Subsidiary
of a Person of which a Bank is a Subsidiary, or (iii) a Person of which a Bank
is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
--------------------
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
------------------
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
-----
regulations promulgated thereunder, as amended from time to time.
"ERISA Affiliate" means each trade or business, whether or not
---------------
incorporated, which together with the Company would be treated as a single
employer under Title IV of ERISA.
"Eurodollar Reserve Percentage" has the meaning specified in the
-----------------------------
definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances specified
----------------
in Section 9.01.
"Excess Subordinated Debt Issuance" means, any issuance or issuances
---------------------------------
of Subordinated Debt which exceed in the aggregate at any time the principal
amount of $25,000,000, after giving effect to the amount of any unused portion
of Indebtedness permitted under Section 8.05(c).
-9-
"Existing Bank Agreements" means each of (i) the Third Amended and
------------------------
Restated Senior Credit Agreement dated as of November 25, 1996 among CB
Commercial Real Estate Group, Inc., the lenders from time to time party thereto
and The Sumitomo Bank, Limited, as agent; (ii) the Amended and Restated Senior
Subordinated Credit Agreement dated as of November 25, 1996 among CB Commercial
Real Estate Group, Inc., the guarantors from time to time party thereto and
Sumitomo Finance (Dublin) Limited, (iii) the Senior Subordinated Credit
Agreement dated as of June 30, 1995, as amended, between 399 Venture Partners,
Inc. and Westmark Real Estate Acquisition Partnership, L.P., and (iv) the
Amended and Restated Credit Agreement dated as of January 9, 1997 among ▇▇▇▇
Management Services, Inc, as borrower, the lenders listed therein, Bankers Trust
Company, as agent thereunder and The First National Bank of Boston and BHF-Bank
Aktiengesellschaft, as co-agents for the lenders thereunder.
"Existing Bank Liens" means any and all Liens granted to any lender
-------------------
under the Existing Bank Agreements.
"Exchange Act" means the Securities Exchange Act of 1934, and
------------
regulations promulgated thereunder, as amended from time to time.
"FDIC" means the Federal Deposit Insurance Corporation, and any
----
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
------------------
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Agent.
"Fee Letter" has the meaning specified in Section 2.10(a).
----------
"FRB" means the Board of Governors of the Federal Reserve System, and
---
any Governmental Authority succeeding to any of its principal functions.
"Further Taxes" means any and all present or future taxes, levies,
-------------
assessments, imposts, duties, deductions, fees, withholdings or similar charges
(including, without limitation, net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account of
amounts payable or paid pursuant to Section 4.01.
"GAAP" means generally accepted accounting principles set forth from
----
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
-10-
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to,
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guarantor" means each Material Subsidiary party to the Guaranty.
---------
"Guaranty" shall mean the Guaranty dated as of the date hereof
--------
executed by each Material Subsidiary in favor of the Agent for the benefit of
the Banks, substantially in the form attached hereto as Exhibit H, as the same
---------
may be amended from time to time and any supplement or additional guaranty
entered into pursuant to Section 7.13.
"Guaranty Obligation" has the meaning specified in the definition of
-------------------
"Contingent Obligation."
"Honor Date" has the meaning specified in Section 3.03(b).
----------
"Indebtedness" of any Person means, without duplication, (a) all
------------
indebtedness for borrowed money (including, without limitation, the obligations
evidenced by the Inventory Property Loan); (b) all obligations issued,
undertaken or assumed as the deferred purchase price of property or services
(other than trade payables entered into or commissions or bonuses payable in the
ordinary course of business on ordinary terms); (c) all non-contingent
reimbursement or payment obligations with respect to Surety Instruments; (d) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses; (e) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the Person (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property); (f) all
obligations with respect to capital leases; (g) all indebtedness referred to in
clauses (a) through (f) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contracts rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; and (h) all Contingent Obligations.
For all purposes of this Agreement, the Indebtedness of any Person shall include
all obligations of such Person of the character described in clauses (a) through
(h) above to the extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be extinguished under
GAAP, and the Indebtedness of any Person shall include all recourse Indebtedness
of any partnership or joint venture or limited liability company in which such
Person is a general partner or a joint venturer or a member.
"Indemnified Liabilities" has the meaning specified in Section 11.05.
-----------------------
"Indemnified Person" has the meaning specified in Section 11.05.
------------------
"Independent Auditor" has the meaning specified in Section 7.01(a).
-------------------
-11-
"Insolvency Proceeding" means, with respect to any Person, (a) any
---------------------
case, action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors, or (b)
any general assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
"Intangible Assets", with respect to any Person, means that portion of
-----------------
the book value of the assets of such Person which would be treated as
intangibles under generally accepted accounting principles, including all items
such as goodwill, trademarks, trade names, brands, trade secrets, customer
lists, computer software, copyrights, patents, licenses, franchise conversion
rights and rights with respect to any of the foregoing and all unamortized debt
or equity discount and expenses.
"Interest Expense" means, for any period, without duplication, the
----------------
aggregate of all interest paid or accrued of the Company and its Subsidiaries as
determined on a consolidated basis in accordance with GAAP (including without
limitation the interest portion of Capitalized Lease Obligations of such Person
and capitalized interest), other than deferred financing costs not paid in cash.
"Interest Coverage Ratio" means, as of the date of any determination
-----------------------
thereof, the ratio of Consolidated EBITDA for the period of the four (4) most
recently ended consecutive fiscal quarters of the Company to Interest Expense
for the period of the four (4) most recently ended consecutive fiscal quarters
of the Company. With respect to any Person acquired by the Company in accordance
with the terms of Section 8.04(d), such Person's EBITDA for the period of the
four (4) most recently ended consecutive fiscal quarters of such Person may be
included in the determination of Consolidated EBITDA for purposes of compliance
with the Interest Coverage Ratio; provided, that (i) such Person, if a Material
--------
Subsidiary, is a Guarantor and is not subject to any restrictions on upstreaming
cash to the Company; and (ii) with respect to any includable fiscal quarters
preceding the Acquisition of such Person, the actual EBITDA of such Person for
such prior fiscal quarters will be used so long as audited financial statements
of such Person for each of the preceding four (4) most recently ended
consecutive fiscal quarters have been made available to the Agent and the
Required Banks; provided, that unaudited financial statements of such Person may
--------
be used during interim fiscal periods so long as such unaudited financial
statements are prepared in conformity with GAAP applied on a basis consistent
with prior years and audited financial statements of such Person are delivered
at the end of such applicable fiscal year.
"Interest Payment Date" means, as to any Loan other than a Base Rate
---------------------
Loan, the last day of each Interest Period applicable to such Loan and, as to
any Base Rate Loan, the last Business Day of each calendar quarter and each date
such Loan is converted into another Type of Loan; provided, however, that if any
-------- -------
Interest Period for an Offshore Rate Loan exceeds three (3) months, the date
that falls three (3) months after the beginning of such Interest Period and
after each Interest Payment Date thereafter is also an Interest Payment Date.
"Interest Period" means, as to any Offshore Rate Loan, the period
---------------
commencing on the Borrowing Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as an Offshore Rate Loan,
and ending on
-12-
the date one (1), two (2), three (3) or six (6) months thereafter as selected
by the Company in its Notice of Borrowing or Notice of Conversion/Continuation;
provided, that:
--------
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following Business Day unless, in the case of an Offshore Rate Loan,
the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall
end on the preceding Business Day;
(ii) any Interest Period pertaining to an Offshore Rate Loan
that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period;
and
(iii) no Interest Period for any Loan shall extend beyond the
Revolving Termination Date.
"Inventory Property Loan" means the obligations as evidenced by each
-----------------------
of the Second Amended and Restated Promissory Note One dated as of December 4,
1996, as amended, and the Second Amended and Restated Promissory Note Two dated
as of December 4, 1996, as amended, each between CB Commercial Warehouse
Property Corp., a Delaware corporation and General Electric Capital Corporation,
a New York corporation.
"Investment" means any loan, advance, extension of credit (except for
----------
accounts and notes receivable for merchandise sold or services furnished in the
ordinary course of business, and amounts paid in advance on account of the
purchase price of merchandise to be delivered to the payor within one year of
the date of the advance), or purchase of stock, notes, bonds, other securities
or evidences of Indebtedness of any Person or capital contribution to any
Person, whether in cash or other property. The amount of any Investment shall be
its cost (the amount of cash or the fair market value of other property given in
exchange therefor).
"IRS" means the Internal Revenue Service, and any Governmental
---
Authority succeeding to any of its principal functions under the Code.
"Issuance Date" has the meaning specified in Section 3.01(a).
-------------
"Issue" means, with respect to any Letter of Credit, to issue or to
-----
extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
------ ------- --------
meanings.
"Issuing Bank" means BofA in its capacity as issuer of one or more
------------
Letters of Credit hereunder, together with any replacement letter of credit
issuer arising under Section 10.01(b) or Section 10.09.
"Joint Venture" means a corporation, partnership, limited liability
-------------
company, joint venture or other similar legal arrangement (whether created by
contract or conducted through a separate legal entity) now or hereafter formed
by the Company or any of its
-13-
Subsidiaries with another Person in order to conduct a common venture or
enterprise with such Person.
"▇▇▇▇" means ▇▇▇▇ Real Estate Services, Inc., a Delaware corporation.
----
"KMSC Pledge Agreement" means the Pledge Agreement dated as of the
---------------------
date hereof from ▇▇▇▇ Management Services, Inc., a Delaware corporation to the
Agent, for the benefit of the Banks, substantially in the form annexed hereto as
Exhibit I-3.
-----------
"KMSC Pledged Shares" means (A) the shares of each of (i) ▇▇▇▇
-------------------
Corporate Services, Inc., (ii) ▇▇▇▇ Investment Management, Inc., (iii) ▇▇▇▇ ▇▇▇▇
Realty Advisors, Inc., (iv) CBS Investment Realty, Inc., and (v) ▇▇▇▇
Partnerships II, Inc. and (B) the partnership interests of ▇▇▇▇/CC&F Management
Services, a California general partnership each pledged pursuant to the KMSC
Pledge Agreement.
"KRES Pledge Agreement" means the Pledge Agreement dated as of the
---------------------
date hereof from ▇▇▇▇ Real Estate Services, a Delaware corporation to the Agent,
for the benefit of the Banks, substantially in the form annexed hereto as
Exhibit I-4.
-----------
"KRES Pledged Shares" means the shares of ▇▇▇▇ Management Services,
-------------------
Inc., a Delaware corporation, pledged to the Agent for the benefit of the Banks,
pursuant to the KRES Pledge Agreement.
"KVK Pledge Agreement" means the Pledge Agreement dated and the date
--------------------
hereof from ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, Inc., a California corporation to the Agent, for
the benefit of the Banks, substantially in the form annexed hereto as Exhibit I-
---------
6.
-
"KVK Pledged Shares" means the partnership interests of ▇▇▇▇/CC&F
------------------
Management Services, a California general partnership pledged by ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, Inc., a California corporation to the Agent, for the benefit of the
Banks pursuant to the KVK Pledge Agreement.
"L/C Advance" means each Bank's participation in any L/C Borrowing in
-----------
accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for amendment of
-------------------------
outstanding standby or commercial documentary letters of credit as shall at any
time be in use at the Issuing Bank, as the Issuing Bank shall request.
"L/C Application" means an application form for issuances of standby
---------------
or commercial documentary letters of credit as shall at any time be in use at
the Issuing Bank, as the Issuing Bank shall request.
"L/C Borrowing" means an extension of credit resulting from a drawing
-------------
under any Letter of Credit which shall not have been reimbursed on the date when
made nor converted into a Borrowing of Revolving Loans under Section 3.03(b).
"L/C Commitment" means the commitment of the Issuing Bank to Issue,
--------------
and the commitment of the Banks severally to participate in, Letters of Credit
from time to time Issued or outstanding under Article III, in an aggregate
amount not to exceed on any date the amount of $10,000,000 with respect to
standby letters of credit and in an aggregate amount not to exceed on any date
the amount of $5,000,000 with respect to commercial documentary
-14-
letters of credit, as the same may be reduced as a result of a reduction in the
L/C Commitment pursuant to Section 2.05 or as the same shall be reduced as a
result of a reduction in the L/C Commitment pursuant to Section 2.07; provided
--------
that the L/C Commitment is a part of the Combined Commitments, rather than a
separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the aggregate
---------------
undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of
all unreimbursed drawings under all Letters of Credit, including all outstanding
L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C
---------------------
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including any of the Issuing Bank's standard form
documents for letter of credit issuances.
"Lending Office" means, as to any Bank, the office or offices of such
--------------
Bank specified as its "Lending Office" or "Domestic Lending Office" or "Offshore
Lending Office", as the case may be, on Schedule 11.02, or such other office or
--------------
offices as such Bank may from time to time notify the Company and the Agent.
"Letters of Credit" means any letters of credit (whether standby
-----------------
letters of credit or commercial documentary letters of credit) Issued by the
Issuing Bank pursuant to Article III.
"Leverage Ratio" means, as of the date of any determination thereof,
--------------
the ratio of Consolidated Indebtedness existing as of such date to Consolidated
EBITDA for the period of the four (4) most recently ended consecutive fiscal
quarters of the Company. Notwithstanding anything to the contrary contained
above, during the first three (3) fiscal quarters of the Company following the
Closing Date, the "Leverage Ratio" shall be calculated, as of the date of any
determination thereof, by including the consolidated EBITDA of ▇▇▇▇ and its
Subsidiaries for such recently ended consecutive fiscal quarters, to the extent
not duplicative of Consolidated EBITDA after giving effect to the Merger. With
respect to any Person acquired by the Company in accordance with the terms of
Section 8.04(d), such Person's EBITDA for the period of the four (4) most
recently ended consecutive fiscal quarters of such Person may be included in the
determination of Consolidated EBITDA for purposes of compliance with the
Leverage Ratio; provided, that (i) such Person, if a Material Subsidiary, is a
--------
Guarantor and is not subject to any restrictions on upstreaming cash to the
Company; and (ii) with respect to any includable fiscal quarters preceding the
Acquisition of such Person, the actual EBITDA of such Person for such prior
fiscal quarters will be used so long as audited financial statements of such
Person for each of the preceding four (4) most recently ended consecutive fiscal
quarters have been made available to the Agent and the Required Banks; provided,
--------
that unaudited financial statements of such Person may be used during interim
fiscal periods so long as such unaudited financial statements are prepared in
conformity with GAAP applied on a basis consistent with prior years and audited
financial statements of such Person are delivered at the end of such applicable
fiscal year.
"Lien" means any security interest, mortgage, deed of trust, pledge,
----
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease, any financing
-15-
lease having substantially the same economic effect as any of the foregoing, or
the filing of any financing statement naming the owner of the asset to which
such lien relates as debtor, under the Uniform Commercial Code or any comparable
law) and any contingent or other agreement to provide any of the foregoing, but
not including the interest of a lessor under an operating lease.
"Loan" means an extension of credit by a Bank to the Company under
----
Article II or Article III in the form of a Revolving Loan or L/C Advance.
"Loan Documents" means this Agreement, any Notes, the Guaranty, the
--------------
Pledge Agreements, the Fee Letter, the L/C-Related Documents and all other
documents delivered to the Agent or any Bank in connection herewith.
"Margin Stock" means "margin stock" as such term is defined in
------------
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or a
-----------------------
material adverse effect upon, the operations, business, properties or condition
(financial or otherwise) of the Company or the Company and its Subsidiaries
taken as a whole; (b) a material impairment of the ability of the Company or any
Subsidiary to perform under any Loan Document to which it is a party and to
avoid any Event of Default; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against the Company or any Subsidiary
of any Loan Document to which it is a party.
"Material Sale of Assets" has the meaning specified in Section 8.03.
-----------------------
"Material Subsidiary" means the Persons listed on Annex C hereto and
------------------- -------
thereafter any other Subsidiary which has achieved, at any time, either (i)
total (gross) revenues for the preceding four (4) fiscal quarter period in
excess of $10,000,000, (ii) EBITDA for the preceding four (4) fiscal quarter
period in excess of $1,000,000 or (iii) total assets, as of the last day of the
preceding fiscal quarter, having a net book value in excess of $5,000,000, in
each case, based upon the Company's most recent annual or quarterly financial
statements delivered to the Agent under Section 7.01.
"Melody" means ▇.▇. ▇▇▇▇▇▇ & Company, a Texas corporation.
------
"Melody Acquisition" means collectively, (i) the purchase by CB
------------------
Commercial Mortgage Company, Inc., a California corporation ("CB Mortgage"), of
(x) all of the issued and outstanding capital stock of Melody pursuant to and in
accordance with the terms of the Melody Stock Purchase Agreement and (y) all of
the issued and outstanding capital stock of Melody California pursuant to and in
accordance with the terms of the Melody California Stock Purchase Agreement, and
(ii) consummation of the merger (the "Melody Merger") of CB Mortgage with and
into Melody, a wholly-owned Subsidiary of CB Mortgage, pursuant to and in
accordance with the terms of the Melody Merger Agreement and the subsequent
merger of Melody California with and into Melody.
"Melody California" means ▇.▇. ▇▇▇▇▇▇ & Company of California, a Texas
-----------------
corporation and a Wholly-Owned Subsidiary of Melody.
"Melody Loan Arbitrage Facility" means a credit facility provided to
------------------------------
Melody by any depository bank in which Melody deposits payments made on mortgage
loans for
-16-
which Melody is servicer prior to distribution of such payments to or for the
benefit of the holders of such loans, so long as (i) Melody applies all proceeds
of loans made under such credit facility to purchase Permitted Investments, and
(ii) all Permitted Investments purchased by Melody with the proceeds of loans
thereunder (and proceeds thereof and distributions thereon) are pledged to the
depository bank providing such credit facility, and such bank has a first
priority perfected security interest therein, to secure loans made under such
credit facility.
"Melody Mortgage Warehousing Facility" means the credit facility
------------------------------------
provided by Residential Funding Corporation ("RFC") or any substantially similar
---
facility, pursuant to which RFC or another lender makes loans to Melody, the
proceeds of which loans are applied by Melody to fund commercial mortgage loans
originated and owned by Melody subject to an unconditional, irrevocable
commitment to purchase such mortgage loans by the Federal Home Loan Mortgage
Corporation, so long as loans made by RFC or such other lender to Melody
thereunder are secured by a pledge of commercial mortgage loans made by Melody
with the proceeds of such loans, and RFC or such other lender has a perfected
first priority security interest therein, to secure loans made under such credit
facility.
"Melody Permitted Indebtedness" means Indebtedness of Melody under the
-----------------------------
Melody Loan Arbitrage Facility, the Melody Mortgage Warehousing Facility and the
Melody Working Capital Facility, and in respect of the Melody Seller Senior
Notes and the Melody Seller Contingent Notes.
"Melody Seller Contingent Notes" means the Contingent Promissory Notes
------------------------------
due July 1, 2001 issued by CB Mortgage to the Melody Stockholders, in
substantially the form attached as Exhibit B to the Melody Stock Purchase
Agreement, in an aggregate principal amount not in excess, at any time, of
$3,000,000 less the aggregate amount of payments of principal thereof required
----
to be made in respect thereof at or prior to such time in accordance with the
terms thereof.
"Melody Seller Senior Notes" means the Senior Promissory Notes due
--------------------------
July 1, 1998 issued by CB Mortgage, to the Melody Stockholders, in substantially
the form attached as Exhibit A to the Melody Stock Purchase Agreement, in an
aggregate principal amount not in excess, at any time, of $3,000,000 less the
----
aggregate amount of payments of principal required to be made in respect thereof
at or prior to such time in accordance with the terms thereof.
"Melody Stockholders" means, together, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇.
-------------------
▇▇▇▇▇▇▇.
"Melody Working Capital Facility" means a credit facility provided by
-------------------------------
a financial institution to Melody, so long as (i) the proceeds of loans
thereunder are applied only to provide working capital to Melody, (ii) loans
under such credit facility are unsecured, and (iii) the aggregate principal
amount of loans outstanding under such credit facility at no time exceeds
$1,000,000.
"Merger" means the merger of Acquisition Corporation into ▇▇▇▇ as
------
contemplated by the Merger Agreement.
-17-
"Merger Agreement" means the Agreement and Plan of Reorganization
-----------------
dated as of May 13, 1997 among the Company and the Acquisition Corporation, on
the one hand, and ▇▇▇▇, certain shareholders of ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇, on the
other hand.
"Minority Interests" means any shares of stock of any class of any of
------------------
the Subsidiaries (other than directors' qualifying shares as required by law)
that are not owned by the Company or another Subsidiary. "Minority Interests"
------------------
shall be valued by valuing "Minority Interests" constituting preferred stock at
------------------
the voluntary or involuntary liquidation value of such preferred stock,
whichever is greater, and by valuing "Minority Interests" constituting common
------------------
stock at the book value of capital and surplus applicable thereto adjusted, if
necessary, to reflect any changes from the book value of such common stock
required by the foregoing method of valuing "Minority Interests" in preferred
------------------
stock.
"Mortgage Banking Activities" means the origination by a Mortgage
---------------------------
Banking Subsidiary of mortgage loans in respect of commercial and multi-family
residential real property, and the sale or assignment of such mortgage loans and
the related mortgages to another Person (other than the Company or another of
its Subsidiaries) within 60 days after the origination thereof; provided,
--------
however, that in each case prior to origination of any mortgage loan, the
-------
Company or a Mortgage Banking Subsidiary, as the case may be, shall have entered
into a legally binding and enforceable purchase and sale agreement with respect
to such mortgage loan with a Person that purchases such loans in the ordinary
course of its business.
"Mortgage Banking Subsidiary" means Melody and its Subsidiaries that
---------------------------
are engaged in Mortgage Banking Activities.
"Net Proceeds" shall mean, with respect to any Excess Subordinated
------------
Debt Issuance, the proceeds resulting therefrom net of (x) cash expenses of
issuance (including brokerage fees, if any, and payment of principal, premium
and interest of Indebtedness), and (y) incremental income taxes paid or payable
as a result thereof.
"Note" means a promissory note executed by the Company in favor of a
----
Bank pursuant to Section 2.02(b), in substantially the form of Exhibit G.
---------
"Notice of Borrowing" means a notice in substantially the form of
-------------------
Exhibit A.
---------
"Notice of Conversion/Continuation" means a notice in substantially
---------------------------------
the form of Exhibit B.
---------
"Obligations" means all advances, debts, liabilities, obligations,
-----------
covenants and duties arising under any Loan Document owing by the Company to any
Bank, the Agent, or any Indemnified Person, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising.
-18-
"Offshore Rate" means, for any Interest Period, with respect to
-------------
Offshore Rate Loans comprising part of the same Borrowing, the rate of interest
per annum (rounded upward to the next 1/16th of 1%) determined by the Agent as
follows:
Offshore Rate = LIBOR
-----------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest
-----------------------------
Period the maximum reserve percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on such day (whether or not applicable to any
Bank) under regulations issued from time to time by the FRB for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"); and
"LIBOR" means the rate calculated by the Agent on the basis of the
-----
offered rates for deposits in Dollars for a period equal to the relevant
Interest Period which appear on the Reuters Screen LIBO Page (excluding Bank of
Tokyo-Mitsubishi) as of 11:00 a.m. London time, on the day that is two London
Business Days preceding the Borrowing Date or the Conversion/Continuation Date,
as the case may be, for the relevant Offshore Rate Loan. If at least two such
offered rates appear on the Reuters Screen LIBO Page, LIBOR with respect to such
Offshore Rate Loan will be the arithmetic mean of such offered rates (rounded to
the nearest 0.0001 percentage point). If fewer than two offered rates appear,
the rate will be the arithmetic mean (rounded to the nearest 0.0001 percentage
point) of the rates quoted by the Reference Banks at approximately 11:00 a.m.,
New York time, two (2) London Business Days prior to the Borrowing Date or
Conversion/Continuation Date for the relevant Offshore Rate Loan, as the case
may be.
The Offshore Rate shall be adjusted automatically as to all Offshore
Rate Loans then outstanding as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on the
------------------
Offshore Rate.
"Organization Documents" means, for any corporation, the certificate
----------------------
or articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the Board
(or any committee thereof) of such corporation.
"Other Taxes" means any present or future stamp, court or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents.
"Participant" has the meaning specified in Section 11.08(d).
-----------
"PBGC" means the Pension Benefit Guaranty Corporation established
----
under Section 4002 of ERISA, and any successor thereto.
-19-
"Permitted Acquisition" means any Acquisition permitted by Section
---------------------
8.04 hereof.
"Permitted Investments" means any one of the following Investments:
---------------------
(a) Investments held by the Company or Subsidiary in the form of cash
equivalents or short term marketable securities;
(b) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the
ordinary course of business;
(c) Investments or extensions of credit by the Company to any of its
Material Subsidiaries or by any of its Material Subsidiaries to another of
its Material Subsidiaries;
(d) Investments incurred in order to consummate Permitted
Acquisitions; provided, that (i) such Acquisitions are undertaken in
--------
accordance with all applicable Requirements of Law; (ii) the prior,
effective written consent or approval to such Acquisition of the Board or
equivalent governing body of the acquiree is obtained; and (c) all other
requirements of Section 8.04 have been satisfied;
(e) Investments in the Whittier Transaction in an amount not to
exceed $8,000,000 in the aggregate;
(f) Investments incurred in connection with the Melody Loan Arbitrage
Facility or the Melody Mortgage Warehousing Facility;
(g) Investments in Joint Ventures not exceeding $15,000,000 in any
fiscal year as to all such Investments in the aggregate; provided, that
--------
Investments in any Joint Ventures in excess of $5,000,000 during any
consecutive twelve (12) month period as to all such Investments in the
aggregate shall be included as an "Acquisition" for all purposes of Section
8.04(d); and
(h) Other Investments existing on the Closing Date and set forth in
Schedule 8.13 hereto.
-------------
"Permitted Liens" has the meaning specified in Section 8.01.
---------------
"Person" means an individual, partnership, corporation, limited
------
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
----
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"Pledge Agreements" shall mean collectively, each of the Company
-----------------
Pledge Agreement, the CB Group Pledge Agreement, the WREAP Pledge Agreement, the
KRES
-▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, the KMSC Pledge Agreement and the KVK Pledge Agreement,
as each of the same may be amended from time to time, and any supplement to any
Pledge Agreement or any additional Pledge Agreement entered into pursuant to
Section 7.13.
"Pledged Shares" means all of the Company Pledged Shares, the CB Group
--------------
Pledged Shares, the WREAP Pledged Shares, the KRES Pledged Shares, the KMSC
Pledged Shares, the KVK Pledged Shares and any additional pledged shares,
partnership interests or membership interests pledged pursuant to a Pledge
Agreement.
"Projections" has the meaning specified in Section 6.11(b).
-----------
"Pro Rata Share" means, as to any Bank at any time, the percentage
--------------
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Bank's Commitment divided by the Combined Commitments.
"Prohibited Transaction" means, with respect to any Plan, a
----------------------
transaction described in (i) Section 406 of ERISA which is not exempt pursuant
to Section 408 of ERISA, or (ii) Section 4957(c)(1) of the Code which is not
exempt pursuant to Section 4975(c)(2) or Section 4975(d) of the Code.
"Reference Banks" means The Sumitomo Bank, Limited, ▇▇▇▇▇ Fargo Bank,
---------------
N.A. and the Agent or such other leading banks as shall be designated from time
to time by the Company and which shall be reasonably satisfactory to the Agent
and the Required Banks.
"Replacement Bank" has the meaning specified in Section 4.08.
----------------
"Required Banks" means at any time Banks then holding at least 51% of
--------------
the then aggregate unpaid principal amount of the Loans, or, if no amounts are
outstanding, Banks then having at least 51% of the aggregate amount of the
Commitments.
"Requirement of Law" means, as to any Person, any law (statutory or
------------------
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Responsible Officer" means the chief executive officer, the president
-------------------
or any executive vice president of such Person, or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants, the chief financial officer or the
treasurer of the Company, or any other officer having substantially the same
authority and responsibility.
"Restricted Investment" means any Investment other than a Permitted
---------------------
Investment.
"Restricted Payment" means, (a) any dividend or other distribution,
------------------
direct or indirect, in respect of any shares of the Capital Stock of the Company
or any of its Subsidiaries, other than dividends or other distributions payable
solely in shares of its Capital Stock, or warrants, rights, or options therefor,
and dividends or other distributions by any of its Subsidiaries to the Company
or another Subsidiary; and (b) any purchase, redemption, retirement or other
acquisition of any shares of Capital Stock of the Company or any of its
-21-
Subsidiaries, now or hereafter outstanding (except for any purchase, redemption,
retirement or other acquisition of any shares of Capital Stock of any Subsidiary
by the Company), or of any warrants, rights or options evidencing a right to
purchase or acquire any such shares (except in exchange for other shares of
Capital Stock or warrants, rights or options evidencing a right to purchase or
acquire any such shares).
"Revolving Loan" has the meaning specified in Section 2.01, and may be
--------------
a Base Rate Loan or an Offshore Rate Loan (each, a "Type" of Revolving Loan).
----
"Revolving Termination Date" means the earlier to occur of:
--------------------------
(a) the fifth anniversary following the Closing Date; and
(b) the date on which the Commitments terminate in accordance
with the provisions of this Agreement; provided, that in no event
--------
shall the Revolving Termination Date be later than October 31, 2002.
"Sale" has the meaning specified in Section 8.03 hereof.
----
"SEC" means the Securities and Exchange Commission, or any
---
Governmental Authority succeeding to any of its principal functions.
"Senior Managing Agent" has the meaning specified in the introductory
---------------------
clause hereto.
"Solvent" means, with respect to any Person that:
-------
(i) the total present fair value and fair salable value of such
Person's assets on a going concern basis is in excess of the total amount of
such Person's liabilities, including contingent liabilities;
(ii) such Person is able to pay its liabilities and contingent
liabilities as they become due; and
(iii) such Person does not have unreasonably small capital with which
to engage in such Person's business as theretofore operated and as proposed to
be operated.
"Subordinated Debt" means any Indebtedness that is in any manner
-----------------
subordinated in right of payment or security in any respect to Indebtedness
evidenced by the Notes under this Agreement.
"Subsidiary" of a Person means any corporation, association,
----------
partnership, limited liability company, joint venture or other business entity
of which more than 50% of the voting stock, membership interests or other equity
interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Company.
-22-
"Surety Instruments" means all letters of credit (including standby
------------------
and commercial), banker's acceptances, bank guaranties, shipside bonds, surety
bonds and similar instruments.
"Swap Contract" means any agreement, whether or not in writing,
-------------
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap or
option, bond, note or ▇▇▇▇ option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap, cross-
currency rate swap, swaption, currency option or any other, similar transaction
(including any option to enter into any of the foregoing) or any combination of
the foregoing, and, unless the context otherwise clearly requires, any master
agreement relating to or governing any or all of the foregoing.
"Swap Termination Value" means, in respect of any one or more Swap
----------------------
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
▇▇▇▇-to-market value(s) for such Swap Contracts, as determined by the Company
based upon one or more mid-market or other readily available quotations provided
by any recognized dealer in such Swap Contracts (which may include any Bank).
"Taxes" means any and all present or future taxes, levies,
-----
assessments, imposts, duties, deductions, fees, withholdings or similar charges,
and all liabilities with respect thereto, excluding, in the case of each Bank
and the Agent, respectively, taxes imposed on or measured by its net income by
the jurisdiction (or any political subdivision thereof) under the laws of which
such Bank or the Agent, as the case may be, is organized or maintains its
lending office hereunder.
"Termination Event" means with respect to a Plan included in clause
-----------------
(i) of the definition of the term "Plan" hereunder,
(i) the occurrence of a reportable event described in Section 4043(b)
of ERISA, including any failure to satisfy the minimum funding standard of
Section 412 of the Code of Section 302 of ERISA regardless of any waiver
issued under Section 412(d) of the Code or Section 303 of ERISA, other than
a reportable event occurring with response to a Plan as to which the PBGC
has waived the 30-day notice requirement;
(ii) a cessation of operations as described in Section 4062(e) of
ERISA by the Company or any ERISA Affiliate;
(iii) the filing of a notice under Section 4041 of ERISA of intent to
terminate a Plan which is a single-employer plan or the termination of such
Plan;
(iv) the receipt of notice by the Company or an ERISA Affiliate of the
occurrence of an event described in Section 4041A of ERISA which
constitutes a termination of a Plan which is a multiemployer plan;
(v) the institution of proceedings by the PBGC under Section 4042 of
ERISA to terminate a Plan or to appoint a trustee to administer a Plan, or
the receipt of
-23-
notice by the Company or an ERISA Affiliate that such action
has been taken with respect to a Plan which is a multiemployer plan;
(vi) a withdrawal by the Company or an ERISA Affiliate from a Plan
which is a single-employer plan with respect to which the Company or such
ERISA Affiliate was a "substantial employer" under Section 4001(a)(2) of
ERISA;
(vii) a complete or partial withdrawal by the Company or an ERISA
Affiliate from a Plan which is a multiemployer plan as described in Section
4203 or 4205 of ERISA;
(viii) the receipt of notice by the Company or an ERISA Affiliate that
a Plan which is a multiemployer plan is in reorganization or is insolvent
under Sections 4241 or 4245 of ERISA; and
(ix) the entering into of a transaction by the Company or an ERISA
Affiliate a principal purpose of which is to evade or avoid liability under
Title IV of ERISA and that could be subject to Section 4069(a) or 42 ERISA.
"Total Consideration" means, with respect to any Acquisition by any
-------------------
Person, (a) the sum of (i) all cash consideration paid or agreed to be paid by
such Person to make such Acquisition (inclusive of payments by such Person of
the seller's professional fees and expenses and other out-of-pocket expenses in
connection therewith), plus (ii) the fair market value of all non-cash
----
consideration paid by such Person in connection therewith, plus (iii) an amount
----
equal to the principal or stated amount of all liabilities assumed or incurred
by such Person in connection therewith excluding trade payables and accruals
incurred in the ordinary course, minus (b) cash, if any, acquired as part of
-----
such Acquisition. The principal or stated amount of any liability assumed or
incurred by a Person in connection with an Acquisition which is a contingent
liability shall be an amount equal to the stated amount of such liability or, if
the same is not stated, such contingent liability shall be an amount equal to
(i) if such contingent liability is required to be reflected on a balance sheet
of such Person in accordance with GAAP, the amount required to be so reflected
and (ii) if such contingent liability is not required to be reflected on a
balance sheet of such Person in accordance with GAAP, the maximum reasonably
anticipated amount payable by such Person in respect thereof as determined by
such Person in good faith. Notwithstanding anything herein to the contrary, the
present value of any liability assumed in connection with any covenants not to
compete shall be discounted by a rate equal to the Base Rate.
"Type" has the meaning specified in the definition of "Revolving
----
Loan."
"Unfunded Current Liability" means, with respect to all Plans included
--------------------------
in clause (i) of the definition of the term "Plan" hereunder (other than any
such Plan referred to in the definition of the term "Withdrawal Liability"
hereunder), an amount equal to the sum of the amounts (none of which shall be
less than zero), if any, by which the current liability of each such Plan under
Section 412(c)(7)(B) of the Code, as most recently determined (which
determination shall be made no less frequently than annually), exceeds the value
of the assets of each such Plan, as determined under Section 412(c)(2) of the
Code and the regulations thereunder as of the same date for which the current
liability of the Plan is determined.
"United States" and "U.S." each means the United States of America.
------------- ----
-24-
"Voting Stock" with respect to a corporation, means the stock of such
------------
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect members of the Board (or other governing body)
of such corporation, and with respect to any partnership, shall mean the
partnership interests in such partnership the owners of which are entitled to
manage the affairs of such partnership, or vote in connection with the
management of the affairs of such partnership or the designation of another
Person as the Person entitled to manage the affairs of such partnership (it
being understood that, in the case of any partnership, "shares" of Voting Stock
shall refer to such partnership interests).
"Withdrawal Liability" means, with respect to all Plans included in
--------------------
clause (i) of the definition of the term "Plan" hereunder which are single-
employer plans having two or more contributing sponsors at least two of whom are
not common control or which are multiemployer plans, an amount equal to the sum
of the liabilities to all such Plans of the Company and all ERISA Affiliates
under Sections 4063, 4064, and 4211 of ERISA if the Company and all such ERISA
Affiliates were to withdraw from all such Plans or if all such Plans were to
terminate.
"Whittier Transaction" means the transaction described on Annex D
-------------------- -------
hereto.
"Wholly-Owned Subsidiary" means any corporation in which (other than
-----------------------
directors' qualifying shares required by law) 100% of the Capital Stock of each
class having ordinary voting power, and 100% of the Capital Stock of every other
class, in each case, at the time as of which any determination is being made, is
owned, beneficially and of record, by the Company, or by one or more of the
other Wholly-Owned Subsidiaries, or both.
"WREAP Pledge Agreement" means the Pledge Agreement dated as of the
----------------------
date hereof from each of Hold Par A, a Delaware general partnership ("Hold Par
A"), Hold Par B, a Delaware general partnership ("Hold Par B") and Westmark Real
Estate Acquisition Partnership, L.P. ("WREAP") to the Agent, for the benefit of
the Banks, substantially in the form annexed hereto as Exhibit I-6.
-----------
"WREAP Pledged Shares" means the membership units of Westmark Realty
--------------------
Advisors LLC pledged by each of Hold Par A, Hold Par B and WREAP to the Agent,
for the benefit of the Banks, pursuant to the WREAP Pledge Agreement.
1.02 Other Interpretive Provisions. (a) The meanings of defined terms are
-----------------------------
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and Section, Annex, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including";
the words "to" and
-25-
"until" each mean "to but excluding", and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Company
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Banks, the Agent or the Arranger merely
because of the Agent's, Banks' or Arranger's involvement in their preparation.
1.03 Accounting Principles. (a) Unless the context otherwise clearly
---------------------
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
ARTICLE II
THE CREDITS
-----------
2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on the
--------------------------------
terms and conditions set forth herein, to make loans to the Company (each such
loan, a "Revolving Loan") from time to time on any Business Day during the
--------------
period from the Closing Date to the Revolving Termination Date, in an aggregate
amount not to exceed at any time outstanding the amount set forth on Schedule
--------
2.01 (such amount, as the same may be reduced under Sections 2.05 or 2.07 or as
----
a result of one or more assignments under Section 11.08, the Bank's
"Commitment"); provided, however, that, after giving effect to any Borrowing of
---------- -------- -------
Revolving Loans, the Effective Amount of all outstanding Revolving Loans, and
the Effective Amount of all L/C Obligations, shall not at any time exceed the
Combined Commitments; and provided further, that the Effective Amount of the
--- -------- -------
Revolving Loans of any Bank plus the participation of such Bank in the Effective
Amount of all L/C Obligations shall not at any time exceed such Bank's
Commitment. Within the limits of each Bank's Commitment, and subject to the
other terms and conditions hereof, the Company may
-26-
borrow under this Section 2.01, prepay under Section 2.06 and reborrow under
this Section 2.01.
2.02 Loan Accounts. (a) The Loans made by each Bank and the Letters of
-------------
Credit Issued by the Issuing Bank shall be evidenced by one or more accounts or
records maintained by such Bank or Issuing Bank, as the case may be, in the
ordinary course of business. The accounts or records maintained by the Agent,
the Issuing Bank and each Bank shall be conclusive absent manifest error of the
amount of the Loans made by the Banks to the Company and the Letters of Credit
Issued for the account of the Company, and the interest and payments thereon.
Any failure so to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Company hereunder to pay any amount owing
with respect to the Loans or any Letter of Credit.
(b) Upon the request of any Bank made through the Agent, the Loans
made by such Bank may be evidenced by one or more Notes, instead of or in
addition to loan accounts. Each such Bank shall endorse on the schedules
annexed to its Note(s) the date, amount and maturity of each Loan made by it and
the amount of each payment of principal made by the Company with respect
thereto. Each such Bank is irrevocably authorized by the Company to endorse its
Note(s) and each Bank's record shall be conclusive absent manifest error;
provided, however, that the failure of a Bank to make, or an error in making, a
-------- -------
notation thereon with respect to any Loan shall not limit or otherwise affect
the obligations of the Company hereunder or under any such Note to such Bank.
2.03 Procedure for Borrowing. (a) Each Borrowing of Revolving Loans shall
-----------------------
be made upon the Company's irrevocable written notice delivered to the Agent in
the form of a Notice of Borrowing (which notice must be received by the Agent
(i) prior to 10:00 a.m. (San Francisco time) three Business Days prior to the
requested Borrowing Date, in the case of Offshore Rate Loans; and (ii) prior to
9:00 A.M. (San Francisco time) on the requested Borrowing Date, in the case of
Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $5,000,000 or any multiple of $1,000,000
in excess thereof;
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) the Type of Loans comprising the Borrowing; and
(D) with respect to Offshore Rate Loans; the duration of the
Interest Period applicable to such Loans included in such notice. If
the Notice of Borrowing fails to specify the duration of the Interest
Period for any Borrowing comprised of Offshore Rate Loans, such
Interest Period shall be one (1) month;
provided, however, that with respect to the Borrowing to be made on the Closing
-------- -------
Date, the Notice of Borrowing shall be delivered to the Agent not later than
10:00 a.m. (San Francisco time) one Business Day before the Closing Date and
such Borrowing will consist of Base Rate Loans only.
-27-
(b) The Agent will promptly notify each Bank of its receipt of any
Notice of Borrowing and of the amount of such Bank's Pro Rata Share of that
Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Agent for the account of the Company at the Agent's
Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing Date
requested by the Company in funds immediately available to the Agent. The
proceeds of all such Loans will then be made available to the Company by the
Agent at such office by crediting the account of the Company on the books of
BofA with the aggregate of the amounts made available to the Agent by the Banks
and in like funds as received by the Agent or by wire transfer in accordance
with written instructions provided to the Agent by the Company of like funds as
received by the Agent.
(d) After giving effect to any Borrowing, unless the Agent shall
otherwise consent, there may not be more than five (5) different Interest
Periods in effect.
2.04 Conversion and Continuation Elections. (a) The Company may, upon
-------------------------------------
irrevocable written notice to the Agent in accordance with Section 2.04(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the case
of any other Type of Revolving Loans, to convert any such Loans (or any
part thereof in an amount not less than $5,000,000, or that is in an
integral multiple of $1,000,000 in excess thereof) into Loans of any other
Type; or
(ii) elect as of the last day of the applicable Interest Period,
to continue any Offshore Rate Loans (or any part thereof in an amount not
less than $5,000,000, or that is in an integral multiple of $1,000,000 in
excess thereof) with Interest Periods identical to the then expiring
Offshore Rate Loan or with different Interest Periods as specified in the
Notice of Conversion/Continuation.
provided, that if at any time the aggregate amount of Offshore Rate Loans in
--------
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $5,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Company to continue such Loans as Offshore Rate Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation to
be received by the Agent (i) not later than 10:00 a.m. (San Francisco time) at
least three Business Days in advance of the Conversion/Continuation Date, if the
Loans are to be converted into or continued as Offshore Rate Loans; and (ii) not
later than 9:00 a.m. (San Francisco time) on the Conversion/Continuation Date,
if the Loans are to be converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the Type of Loans resulting from the proposed
conversion or continuation; and
-28-
(D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans, or if any Default or Event
of Default then exists, the Company shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuations, or, if no timely notice is provided by the
Company, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Bank.
(e) Unless the Required Banks otherwise consent, during the existence
of a Default or Event of Default, the Company may not elect to have a Loan
converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
unless the Agent shall otherwise consent, there may not be more than five (5)
different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of Commitments. Subject to Section
-------------------------------------------------
4.04, the Company may, upon not less than three (3) Business Days' prior notice
to the Agent (and upon receipt of such notice the Agent shall promptly notify
the Banks thereof), terminate the Commitments, or permanently reduce the
Commitments by an aggregate minimum amount of $5,000,000 or any multiple of
$1,000,000 in excess thereof; unless, after giving effect thereto and to any
------
prepayments of Loans made on the effective date thereof, (a) the Effective
Amount of all Revolving Loans and L/C Obligations together would exceed the
amount of the Combined Commitments then in effect, or (b) the Effective Amount
of all L/C Obligations then outstanding would exceed the L/C Commitment. Once
reduced in accordance with this Section, the Commitments may not be increased.
Any reduction of the Commitments shall be applied to each Bank according to its
Pro Rata Share. If and to the extent specified by the Company in the notice to
the Agent, some or all of the reduction in the Combined Commitments shall be
applied to reduce the L/C Commitment. All accrued commitment and letter of
credit fees to, but not including, the effective date of any reduction or
termination of Commitments, shall be paid on the effective date of such
reduction or termination.
2.06 Optional Prepayments. Subject to Section 4.04, the Company may, at any
--------------------
time or from time to time, upon not less than three (3) Business Days'
irrevocable notice to the Agent with respect to Offshore Rate Loans and upon not
less than one (1) Business Days' irrevocable notice to the Agent with respect to
Base Rate Loans, ratably prepay Loans in whole or in part, in minimum amounts of
$5,000,000 or any multiple of $1,000,000 in excess thereof. Such notice of
prepayment shall specify the date (which shall be a Business Day) and amount of
such prepayment and the Type(s) of Loans to be prepaid. The Agent will promptly
notify each Bank of its receipt of any such notice, and of such Bank's Pro Rata
Share of such prepayment. If such notice is given by the Company, the Company
shall make such prepayment and the payment amount specified in such notice shall
be due
-29-
and payable on the date specified therein, together with accrued interest
to each such date on the amount prepaid and any amounts required pursuant to
Section 4.04.
2.07 Mandatory Commitment Reductions; Mandatory Prepayments of Loans.
---------------------------------------------------------------
(a) The Combined Commitments shall be automatically and permanently
reduced on each reduction date set forth below by the amount set forth opposite
such date as follows:
Reduction Date Reduction Amount
-------------- ----------------
December 31, 1999 $30,000,000
December 31, 2000 $60,000,000
December 31, 2001 $60,000,000
Revolving Termination Date Balance of Combined Commitments
In the event that on any date the Combined Commitments are reduced pursuant to
clause (a) or (b) of this Section 2.07 the Effective Amount of all outstanding
Revolving Loans, and the Effective Amount of all L/C Obligations exceeds the
Combined Commitments in effect on such date after giving effect to such
reduction, the Company shall, on such date, make a mandatory prepayment of the
Loans in a principal amount equal to such excess, so that after giving effect to
such prepayment, the Effective Amount of all outstanding Revolving Loans, and
the Effective Amount of all L/C Obligations, shall not exceed the Combined
Commitments as of such date and the Effective Amount of the Revolving Loans of
any Bank plus the participation of such Bank in the Effective Amount of all L/C
Obligations shall not exceed such Bank's Commitment as of such date.
(b) Upon consummation of any Excess Subordinated Debt Issuance, a
portion of the Combined Commitments equal to the amount of Net Proceeds of such
Excess Subordinated Debt Issuance shall be permanently reduced by an amount
equal to the sum of such Net Proceeds.
(c) If on any date the Effective Amount of L/C Obligations exceeds the
L/C Commitment, the Company shall Cash Collateralize on such date the
outstanding Letters of Credit in an amount equal to the excess of the maximum
amount then available to be drawn under the Letters of Credit over the Aggregate
L/C Commitment. Subject to Section 4.04, if on any date after giving effect to
any Cash Collateralization made on such date pursuant to the preceding sentence,
the Effective Amount of all Revolving Loans then outstanding plus the Effective
Amount of all L/C Obligations exceeds the Combined Commitments, the Company
shall immediately, and without notice or demand, prepay the outstanding
principal amount of the Revolving Loans and L/C Advances by an amount equal to
the applicable excess.
(d) Each reduction in the Combined Commitments hereunder shall be made
ratably among the Banks in accordance with their respective Commitments. The
Company shall pay to the Agent for the account of the Banks on the date of each
termination or reduction in the Combined Commitments, the commitment fees on the
amount of the Combined Commitments so terminated or reduced accrued to the date
of such termination or reduction.
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(e) On any date when the outstanding Loans (after giving effect to any
Borrowings effected on such date) exceeds the Combined Commitments, the Company
shall make a mandatory prepayment of the Loans in such amount as may be
necessary so that the aggregate amount of outstanding Loans after giving effect
to such prepayment does not exceed the Combined Commitments then in effect.
(f) Simultaneously with each prepayment of a Loan, the Company shall
prepay all accrued interest on the amount prepaid through the date of
prepayment. Unless otherwise specified by the Company, each prepayment of
Revolving Credit Loans shall first be applied to Base Rate Loans. If any
prepayment is made in respect of any of Offshore Rate Loans, in whole or in
part, prior to the last day of the applicable Interest Period, the Company
agrees to indemnify the Banks in accordance with Section 4.04.
2.08 Repayment. The Company shall repay to the Banks on the Revolving
---------
Termination Date the aggregate principal amount of Revolving Loans, and subject
to Section 3.01 hereof, the aggregate principal amount of L/C Advances, each
outstanding on such date.
2.09 Interest. (a) Each Revolving Loan shall bear interest on the
--------
outstanding principal amount thereof from the applicable Borrowing Date at a
rate per annum equal to the Offshore Rate or the Base Rate, as the case may be
(and subject to the Company's right to convert to other Types of Loans under
Section 2.04), plus the Applicable Margin.
----
(b) Interest on each Revolving Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any
prepayment of Loans under Section 2.06 or 2.07 for the portion of the Loans so
prepaid and upon payment (including prepayment) in full thereof and, during the
existence of any Event of Default, interest shall be paid on demand of the Agent
at the request or with the consent of the Required Banks.
(c) Notwithstanding clause (a) of this Section 2.09, while any Event of
Default exists or after acceleration of any of the Obligations hereunder, the
Company shall pay interest (after as well as before entry of judgment thereon to
the extent permitted by law) on the principal amount of all outstanding Loans,
at a rate per annum which is determined by adding 2% per annum to the Applicable
Margin then in effect for such Loans and, in the case of Obligations not subject
to an Applicable Margin, at a rate per annum which is determined by adding 2%
per annum to the Base Rate; provided, however, that, on and after the expiration
-------- -------
of any Interest Period applicable to any Offshore Rate Loan outstanding on the
date of occurrence of such Event of Default or acceleration, the principal
amount of such Loan shall, during the continuation of such Event of Default or
after acceleration, bear interest at a rate per annum which is determined by
adding 2% per annum to the Base Rate.
(d) Anything herein to the contrary notwithstanding, the obligations
of the Company to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
the Company shall pay such Bank interest at the highest rate permitted by
applicable law.
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2.10 Fees. In addition to certain fees described in Section 3.08:
----
(a) Arrangement, Agency Fees. The Company shall pay an arrangement fee
------------------------
to the Arranger for the Arranger's own account, and shall pay an agency fee to
the Agent for the Agent's own account, as required by the letter agreement ("Fee
---
Letter") between the Company and the Arranger and Agent dated July 23, 1997.
------
(b) Commitment Fees. The Company shall pay to the Agent for the
---------------
account of each Bank a commitment fee on the average daily unused portion of
such Bank's Commitment, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon the daily utilization for that
quarter as calculated by the Agent, equal to the Applicable Commitment Fee Rate.
For purposes of calculating utilization under this Section, the Commitments
shall be deemed used to the extent of the Effective Amount of Revolving Loans
then outstanding, plus the Effective Amount of L/C Obligations then outstanding.
Such commitment fee shall accrue from the Closing Date to the Revolving
Termination Date and shall be due and payable quarterly in arrears on the last
Business Day of each calendar year quarter commencing on September 30, 1997
through the Revolving Termination Date, with the final payment to be made on the
Revolving Termination Date; provided that, in connection with any reduction or
--------
termination of Commitments under Section 2.05 or Section 2.07, the accrued
commitment fee calculated for the period ending on such date shall also be paid
on the date of such reduction or termination, with the following quarterly
payment being calculated on the basis of the period from such reduction or
termination date to such quarterly payment date. The commitment fees provided
in this Section shall accrue at all times after the above-mentioned commencement
date, including at any time during which one or more conditions in Article V are
not met.
2.11 Computation of Fees and Interest. (a) All computations of interest for
--------------------------------
Base Rate Loans when the Base Rate is determined by BofA's "reference rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year). Interest
and fees shall accrue during each period during which interest or such fees are
computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate and any fees referenced in
Section 2.10 by the Agent shall be conclusive and binding on the Company and the
Banks in the absence of manifest error. The Agent will, at the request of the
Company or any Bank, deliver to the Company or the Bank, as the case may be, a
statement showing the quotations used by the Agent in determining any interest
rate and the resulting interest rate.
2.12 Payments by the Company. (a) All payments to be made by the Company
-----------------------
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company shall be made to the
Agent for the account of the Banks at the Agent's Payment Office, and shall be
made in dollars and in immediately available funds, no later than 11:00 A.M.
(San Francisco time) on the date specified herein. The Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any
payment received by the Agent later than 11:00 A.M. (San Francisco time) shall
be deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
-32-
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Agent receives notice from the Company prior to the date
on which any payment is due to the Banks that the Company will not make such
payment in full as and when required, the Agent may assume that the Company has
made such payment in full to the Agent on such date in immediately available
funds and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Company has not made such
payment in full to the Agent, each Bank shall repay to the Agent on demand such
amount distributed to such Bank, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such Bank
until the date repaid.
2.13 Payments by the Banks to the Agent. (a) Unless the Agent receives
----------------------------------
notice from a Bank on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one Business Day prior to the date of
such Borrowing, that such Bank will not make available as and when required
hereunder to the Agent for the account of the Company the amount of that Bank's
Pro Rata Share of the Borrowing, the Agent may assume that each Bank has made
such amount available to the Agent in immediately available funds on the
Borrowing Date and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Bank shall not have made its full amount
available to the Agent in immediately available funds as and when required and
the Agent in such circumstances has made available to the Company such amount,
that Bank shall on the Business Day following such Borrowing Date make such
amount available to the Agent, together with interest at the Federal Funds Rate
for each day during such period. A notice of the Agent submitted to any Bank
with respect to amounts owing under this Section (a) shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the Agent
shall constitute such Bank's Loan on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to the Agent on the
Business Day following the Borrowing Date, the Agent will notify the Company of
such failure to fund and, upon demand by the Agent, the Company shall pay such
amount to the Agent for the Agent's account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per annum equal to
the interest rate applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly provided
-------------------------
elsewhere herein, any Bank shall obtain on account of the Obligations in its
favor any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder), such Bank shall immediately (a) notify the Agent of
such fact, and (b) purchase from the other Banks such participations in the
Loans made by them as shall be necessary to cause such purchasing Bank to share
the excess payment pro rata with each of them; provided, however, that if all
-------- -------
-33-
or any portion of such excess payment is thereafter recovered from the
purchasing Bank, such purchase shall to that extent be rescinded and each other
Bank shall repay to the purchasing Bank the purchase price paid therefor,
together with an amount equal to such paying Bank's ratable share (according to
the proportion of (i) the amount of such paying Bank's required repayment to
(ii) the total amount so recovered from the purchasing Bank) of any interest or
other amount paid or payable by the purchasing Bank in respect of the total
amount so recovered. The Company agrees that any Bank so purchasing a
participation from another Bank may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 11.10) with respect to such participation as fully as if such Bank
were the direct creditor of the Company in the amount of such participation. The
Agent will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations purchased under this Section and will in each
case notify the Banks following any such purchases or repayments.
ARTICLE III
THE LETTERS OF CREDIT
---------------------
3.01 The Letter of Credit Subfacility. (a) On the terms and conditions set
--------------------------------
forth herein (i) the Issuing Bank agrees, (A) from time to time on any Business
Day during the period from the Closing Date to the Revolving Termination Date to
issue Letters of Credit for the account of the Company, and to amend or renew
Letters of Credit previously issued by it, in accordance with Sections 3.02(c)
and 3.02(d), and (B) to honor drafts under the Letters of Credit; and (ii) the
Banks severally agree to participate in Letters of Credit Issued for the account
of the Company; provided, that the Issuing Bank shall not be obligated to Issue,
--------
and no Bank shall be obligated to participate in, any Letter of Credit if upon
the Issuance of such Letter of Credit (the "Issuance Date") (1) the Effective
-------------
Amount of all L/C Obligations plus the Effective Amount of all Revolving Loans
would exceed the Combined Commitments, (2) the participation of any Bank in the
Effective Amount of all L/C Obligations plus the Effective Amount of the
Revolving Loans of such Bank would exceed such Bank's Commitment, or (3) the
Effective Amount of L/C Obligations would exceed the L/C Commitment. Within the
foregoing limits, and subject to the other terms and conditions hereof, the
Company's ability to obtain Letters of Credit shall be fully revolving, and,
accordingly, the Company may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit which have expired or which have been drawn
upon and reimbursed.
(b) The Issuing Bank is under no obligation to Issue any Letter of
Credit if:
(i) any order, judgment or decree of any Governmental Authority
or arbitrator shall by its terms purport to enjoin or restrain the Issuing
Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction
over the Issuing Bank shall prohibit, or request that the Issuing Bank
refrain from, the Issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the Issuing Bank with respect to
such Letter of Credit any restriction, reserve or capital requirement (for
which the Issuing Bank is not otherwise compensated hereunder) not in effect
on the Closing Date, or shall impose upon the Issuing Bank any unreimbursed
loss, cost or
-34-
expense which was not applicable on the Closing Date and which
the Issuing Bank in good ▇▇▇▇▇ ▇▇▇▇▇ material to it;
(ii) the Issuing Bank has received written notice from any Bank,
the Agent or the Company, on or prior to the Business Day prior to the
requested date of Issuance of such Letter of Credit, that one or more of the
applicable conditions contained in Article V is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is (A)
more than 360 days after the date of Issuance, in the case of any commercial
Letter of Credit, or more than 365 or 366 days after the date of Issuance,
in the case of any standby Letter of Credit, unless, in either case, the
Required Banks have approved such expiry date in writing, or (B) after the
Revolving Termination Date, unless all of the Banks have approved such
expiry date in writing;
(iv) the expiry date of any requested Letter of Credit is prior
to the maturity date of any financial obligation to be supported by the
requested Letter of Credit;
(v) any requested Letter of Credit does not provide for drafts,
or is not otherwise in form and substance acceptable to the Issuing Bank, or
the Issuance of a Letter of Credit shall violate any applicable policies of
the Issuing Bank;
(vi) any standby Letter of Credit is for the purpose of
supporting the issuance of any letter of credit by any other Person; or
(vii) such Letter of Credit is in a face amount less than
$250,000 or denominated in a currency other than Dollars.
3.02 Issuance, Amendment and Renewal of Letters of Credit. (a) Each Letter
----------------------------------------------------
of Credit shall be issued upon the irrevocable written request of the Company
received by the Issuing Bank (with a copy sent by the Company to the Agent) at
least four days (or such shorter time as the Issuing Bank may agree in a
particular instance in its sole discretion) prior to the proposed date of
issuance. Each such request for issuance of a Letter of Credit shall be by
facsimile, confirmed immediately in an original writing, in the form of an L/C
Application, and shall specify in form and detail satisfactory to the Issuing
Bank: (i) the proposed date of issuance of the Letter of Credit (which shall be
a Business Day); (ii) the face amount of the Letter of Credit; (iii) the expiry
date of the Letter of Credit; (iv) the name and address of the beneficiary
thereof; (v) the documents to be presented by the beneficiary of the Letter of
Credit in case of any drawing thereunder; (vi) the full text of any certificate
to be presented by the beneficiary in case of any drawing thereunder; and (vii)
such other matters as the Issuing Bank may require.
(b) At least two Business Days prior to the Issuance of any Letter of
Credit, the Issuing Bank will confirm with the Agent (by telephone or in
writing) that the Agent has received a copy of the L/C Application or L/C
Amendment Application from the Company and, if not, the Issuing Bank will
provide the Agent with a copy thereof. Unless the Issuing Bank has received
notice on or before the Business Day immediately preceding the date the Issuing
Bank is to issue a requested Letter of Credit from the Agent (A) directing the
Issuing Bank not to issue such Letter of Credit because such issuance is not
then permitted under Section 3.01(a) as a result of the limitations set forth in
clauses (1)
-35-
through (3) thereof or Section 3.01(b)(ii); or (B) that one or more conditions
specified in Article V are not then satisfied; then, subject to the terms and
conditions hereof, the Issuing Bank shall, on the requested date, issue a Letter
of Credit for the account of the Company in accordance with the Issuing Bank's
usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and prior
to the Revolving Termination Date, the Issuing Bank will, upon the written
request of the Company received by the Issuing Bank (with a copy sent by the
Company to the Agent) at least five days (or such shorter time as the Issuing
Bank may agree in a particular instance in its sole discretion) prior to the
proposed date of amendment, amend any Letter of Credit issued by it. Each such
request for amendment of a Letter of Credit shall be made by facsimile,
confirmed immediately in an original writing, made in the form of an L/C
Amendment Application and shall specify in form and detail satisfactory to the
Issuing Bank: (i) the Letter of Credit to be amended; (ii) the proposed date of
amendment of the Letter of Credit (which shall be a Business Day); (iii) the
nature of the proposed amendment; and (iv) such other matters as the Issuing
Bank may require. The Issuing Bank shall be under no obligation to amend any
Letter of Credit if: (A) the Issuing Bank would have no obligation at such time
to issue such Letter of Credit in its amended form under the terms of this
Agreement; or (B) the beneficiary of any such letter of Credit does not accept
the proposed amendment to the Letter of Credit. The Agent will promptly notify
the Banks of the receipt by it of any L/C Application or L/C Amendment
Application.
(d) The Issuing Bank and the Banks agree that, while a Letter of Credit
is outstanding and prior to the Revolving Termination Date, at the option of the
Company and upon the written request of the Company received by the Issuing Bank
(with a copy sent by the Company to the Agent) at least five days (or such
shorter time as the Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of notification of renewal, the Issuing
Bank shall be entitled to authorize the renewal of any Letter of Credit issued
by it. Each such request for renewal of a Letter of Credit shall be made by
facsimile, confirmed immediately in an original writing, in the form of an L/C
Amendment Application, and shall specify in form and detail satisfactory to the
Issuing Bank: (i) the Letter of Credit to be renewed; (ii) the proposed date of
notification of renewal of the Letter of Credit (which shall be a Business Day);
(iii) the revised expiry date of the Letter of Credit; and (iv) such other
matters as the Issuing Bank may require. The Issuing Bank shall be under no
obligation so to renew any Letter of Credit if: (A) the Issuing Bank would have
no obligation at such time to issue or amend such Letter of Credit in its
renewed form under the terms of this Agreement; or (B) the beneficiary of any
such Letter of Credit does not accept the proposed renewal of the Letter of
Credit. If any outstanding Letter of Credit shall provide that it shall be
automatically renewed unless the beneficiary thereof receives notice from the
Issuing Bank that such Letter of Credit shall not be renewed, and if at the time
of renewal the Issuing Bank would be entitled to authorize the automatic renewal
of such Letter of Credit in accordance with this Section 3.02(d) upon the
request of the Company but the Issuing Bank shall not have received any L/C
Amendment Application from the Company with respect to such renewal or other
written direction by the Company with respect thereto, the Issuing Bank shall
nonetheless be permitted to allow such Letter of Credit to renew, and the
Company and the Banks hereby authorize such renewal, and, accordingly, the
Issuing Bank shall be deemed to have received an L/C Amendment Application from
the Company requesting such renewal.
(e) The Issuing Bank may, at its election (or as required by the Agent
at the direction of the Required Banks), deliver any notices of termination or
other
-36-
communications to any Letter of Credit beneficiary or transferee, and take any
other action as necessary or appropriate, at any time and from time to time, in
order to cause the expiry date of such Letter of Credit to be a date not later
than the Revolving Termination Date.
(f) This Agreement shall control in the event of any conflict with any
L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Bank will also deliver to the Agent, concurrently or
promptly following its delivery of a Letter of Credit, or amendment to or
renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and
complete copy of each such Letter of Credit or amendment to or renewal of a
Letter of Credit.
3.03 Risk Participations, Drawings and Reimbursements.
------------------------------------------------
(a) Immediately upon the Issuance of each Letter of Credit, each Bank
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Issuing Bank a participation in such Letter of Credit and each
drawing thereunder in an amount equal to the product of (i) the Pro Rata Share
of such Bank, times (ii) the maximum amount available to be drawn under such
Letter of Credit and the amount of such drawing, respectively. For purposes of
Section 2.01, each Issuance of a Letter of Credit shall be deemed to utilize the
Commitment of each Bank by an amount equal to the amount of such participation.
(b) In the event of any request for a drawing under a Letter of Credit
by the beneficiary or transferee thereof, the Issuing Bank will promptly notify
the Company. The Company shall reimburse the Issuing Bank prior to 11:00 a.m.
(San Francisco time) on each date that any amount is paid by the Issuing Bank
under any Letter of Credit (each such date, an "Honor Date"), in an amount equal
----------
to the amount so paid by the Issuing Bank. In the event the Company fails to
reimburse the Issuing Bank for the full amount of any drawing under any Letter
of Credit by 11:00 a.m. (San Francisco time) on the Honor Date, the Issuing Bank
will promptly notify the Agent and the Agent will promptly notify each Bank
thereof, and the Company shall be deemed to have requested that Base Rate Loans
be made by the Banks to be disbursed on the Honor Date under such Letter of
Credit, subject to the amount of the unutilized portion of the Revolving
Commitment and subject to the conditions set forth in Section 5.02. Any notice
given by the Issuing Bank or the Agent pursuant to this Section 3.03(b) may be
oral if immediately confirmed in writing (including by facsimile); provided that
--------
the lack of such an immediate confirmation shall not affect the conclusiveness
or binding effect of such notice.
(c) Each Bank shall upon any notice pursuant to Section 3.03(b) make
available to the Agent for the account of the relevant Issuing Bank an amount in
Dollars and in immediately available funds equal to its Pro Rata Share of the
amount of the drawing, whereupon the participating Banks shall (subject to
Section 3.03(d)) each be deemed to have made a Revolving Loan consisting of a
Base Rate Loan to the Company in that amount. If any Bank so notified fails to
make available to the Agent for the account of the Issuing Bank the amount of
such Bank's Pro Rata Share of the amount of the drawing by no later than 12:00
noon (San Francisco time) on the Honor Date, then interest shall accrue on such
Bank's obligation to make such payment, from the Honor Date to the date such
Bank makes such payment, at a rate per annum equal to the Federal Funds Rate in
effect from time to time during such period. The Agent will promptly give
notice of the occurrence of the Honor Date, but failure of the Agent to give any
such notice on the
-37-
Honor Date or in sufficient time to enable any Bank to effect such payment on
such date shall not relieve such Bank from its obligations under this Section
3.03.
(d) With respect to any unreimbursed drawing that is not converted into
Revolving Loans consisting of Base Rate Loans to the Company in whole or in
part, because of the Company's failure to satisfy the conditions set forth in
Section 5.02 or for any other reason, the Company shall be deemed to have
incurred from the Issuing Bank an L/C Borrowing in the amount of such drawing,
which L/C Borrowing shall be due and payable on demand (together with interest)
and shall bear interest at a rate per annum determined by adding 2% per annum to
the Applicable Margin assuming such L/C Borrowing were a Base Rate Loan plus the
Base Rate, and each Bank's payment to the Issuing Bank pursuant to Section
3.03(c) shall be deemed payment in respect of its participation in such L/C
Borrowing and shall constitute an L/C Advance from such Bank in satisfaction of
its participation obligation under this Section 3.03.
(e) Each Bank's obligation in accordance with this Agreement to make
the Revolving Loans or L/C Advances, as contemplated by Sections 3.03(c) and
(d), as a result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to the Issuing Bank and shall not be affected
by any circumstance, including (i) any set-off, counterclaim, recoupment,
defense or other right which such Bank may have against the Issuing Bank, the
Company or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default, an Event of Default or a Material Adverse Effect; or
(iii) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing; provided, however, that each Bank's obligation
--------
to make Revolving Loans under Section 3.03(c) is subject to the conditions set
forth in Section 5.02.
3.04 Repayment of Participations. (a) Upon (and only upon) receipt by the
---------------------------
Agent for the account of the Issuing Bank of immediately available funds from
the Company (i) in reimbursement of any payment made by the Issuing Bank under
the Letter of Credit with respect to which any Bank has paid the Agent for the
account of the Issuing Bank for such Bank's participation in the Letter of
Credit pursuant to Section 3.03 or (ii) in payment of interest thereon, the
Agent will pay to each Bank, in the same funds as those received by the Agent
for the account of the Issuing Bank, the amount of such Bank's Pro Rata Share of
such funds, and the Issuing Bank shall receive the amount of the Pro Rata Share
of such funds of any Bank that did not so pay the Agent for the account of the
Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any time to return
to the Company, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by the
Company to the Agent for the account of the Issuing Bank pursuant to Section
3.04(a) in reimbursement of a payment made under the Letter of Credit or
interest or fee thereon, each Bank shall, on demand of the Agent, forthwith
return to the Agent or the Issuing Bank the amount of its Pro Rata Share of any
amounts so returned by the Agent or the Issuing Bank plus interest thereon from
the Honor Date to the date such amounts are returned by such Bank to the Agent
or the Issuing Bank, at a rate per annum equal to the Federal Funds Rate in
effect from time to time.
3.05 Role of the Issuing Bank. (a) Each Bank and the Company agree that, in
------------------------
paying any drawing under a Letter of Credit, the Issuing Bank shall not have any
responsibility to obtain any document (other than any sight draft and any other
documentation expressly required by the Letter of Credit) or to ascertain or
inquire as to
-38-
the validity or accuracy of any such document or the authority of the Person
executing or delivering any such document.
(b) No Agent-Related Person nor any of the respective correspondents,
participants or assignees of the Issuing Bank shall be liable to any Bank for:
(i) any action taken or omitted in connection herewith at the request or with
the approval of the Banks (including the Required Banks, as applicable); (ii)
any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) The Company hereby assumes all risks of the acts or omissions of
any beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
--------
preclude the Company's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. No Agent-
Related Person, nor any of the respective correspondents, participants or
assignees of the Issuing Bank, shall be liable or responsible for any of the
matters described in clauses (i) through (vii) of Section 3.06; provided,
--------
however, anything in such clauses to the contrary notwithstanding, that the
Company may have a claim against the Issuing Bank, and the Issuing Bank may be
liable to the Company, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Company which the
Company proves were caused by the Issuing Bank's willful misconduct or gross
negligence or the Issuing Bank's willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing: (i) the Issuing
Bank may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) the Issuing Bank shall not be responsible
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.
3.06 Obligations Absolute. The obligations of the Company under this
--------------------
Agreement and any L/C-Related Document to reimburse the Issuing Bank for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing
under a Letter of Credit converted into Revolving Loans, shall be unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all circumstances,
including the following:
(i) any lack of validity or enforceability of this Agreement or
any L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of the Company in respect
of any Letter of Credit or any other amendment or waiver of or any consent
to departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other right
that the Company may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with this
-39-
Agreement, the transactions contemplated hereby or by the L/C-Related
Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Letter of Credit;
(v) any payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly comply
with the terms of any Letter of Credit; or any payment made by the Issuing
Bank under any Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of any Letter of Credit, including any arising
in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from any
other guarantee, for all or any of the obligations of the Company in respect
of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Company or a guarantor.
3.07 Cash Collateral Pledge. Upon (i) the request of the Agent, (A) if the
----------------------
Issuing Bank has honored any full or partial drawing request on any Letter of
Credit and such drawing has resulted in an L/C Borrowing hereunder, or (B) if,
as of the Revolving Termination Date, any Letters of Credit may for any reason
remain outstanding and partially or wholly undrawn, or (ii) the occurrence of
the circumstances described in Section 2.07(a) requiring the Company to Cash
Collateralize Letters of Credit, then, the Company shall immediately Cash
Collateralize the L/C Obligations in an amount equal to L/C Obligations.
3.08 Letter of Credit Fees. The Company agrees to pay to the Agent, for the
---------------------
account of the Banks in accordance with each Bank's Commitment, fees (the
"Letter of Credit Fees") with respect to the Letters of Credit for the period
----------------------
from and including the date of issuance of each thereof to and including the
expiration date thereof, at a rate per annum equal to (i) with respect to
standby Letters of Credit, the Applicable Margin for Offshore Rate Loans in
effect on the date of issuance thereof on the average daily maximum amount
available under any contingency to be drawn under such standby Letters of Credit
and (ii) with respect to commercial Letters of Credit, 0.125% on the average
daily maximum amount available under any contingency to be drawn under such
commercial Letters of Credit. The Letter of Credit Fees shall be (i) calculated
on the basis of a 360-day year for the actual number of days elapsed and (ii)
payable on the Issuance Date and on the date of each drawing under a commercial
Letter of Credit, in the case of commercial Letters of Credit, and payable
quarterly in arrears on the last Business Day of each March, June, September and
December of each year and on the date that the Commitments shall expire (or such
later date upon which the outstanding letters of credit shall expire), in the
case of standby Letters of Credit. In addition to the Letter of Credit Fees, the
Company agrees to pay to the Issuing Bank, for its own account, its standard
fees
-40-
and charges customarily charged to customers similar to the Company with respect
to any Letter of Credit.
(b) The Company shall pay to the Issuing Bank a letter of credit
fronting fee for each Letter of Credit Issued by the Issuing Bank equal to 0.15%
of the face amount (or increased face amount, as the case may be) of such Letter
of Credit. Such Letter of Credit fronting fee shall be due and payable on each
date of Issuance of a Letter of Credit.
(c) The Company shall pay to the Issuing Bank from time to time on
demand the normal issuance, presentation, amendment and other processing fees,
and other standard costs and charges, of the Issuing Bank relating to letters of
credit as from time to time in effect.
3.09 Uniform Customs and Practice. The Uniform Customs and Practice for
----------------------------
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit shall (unless otherwise
expressly provided in the Letters of Credit) apply to the Letters of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
4.01 Taxes. (a) Any and all payments by the Company to each Bank or the
-----
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for, any Taxes. In addition, the
Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or withhold any
Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank or the Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section),
such Bank or the Agent, as the case may be, receives and retains an amount
equal to the sum it would have received and retained had no such deductions
or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) the Company shall also pay to each Bank or the Agent for
the account of such Bank, at the time interest is paid, Further Taxes in the
amount that the respective Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each Bank and the
Agent for the full amount of i) Taxes, ii) Other Taxes, and iii) Further Taxes
in the
-41-
amount that the respective Bank specifies as necessary to preserve the after-tax
yield the Bank would have received if such Taxes, Other Taxes or Further Taxes
had not been imposed, and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes, Other Taxes or Further Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within thirty
(30) days after the date the Bank or the Agent makes written demand therefor.
(d) Within thirty (30) days after the date of any payment by the
Company of Taxes, Other Taxes or Further Taxes, the Company shall furnish to
each Bank or the Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to such Bank or the
Agent.
(e) If the Company is required to pay any amount to any Bank or the
Agent pursuant to Section (b) or (c) of this Section 4.01, then such Bank shall
use reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Company which may thereafter accrue, if such change in
the sole judgment of such Bank is not otherwise disadvantageous to such Bank.
(f) Notwithstanding anything herein to the contrary in Section 10.10
and in furtherance of such Section, each Bank organized under the laws of a
jurisdiction outside the United States, before it signs and delivers this
Agreement in the case of each Bank listed on the signature pages hereof and
before it becomes a Bank in the case of each other Bank, and from time to time
thereafter (unless such Bank can no longer do so due to a change in treaty, law
or regulation), before the date that any such form expires or becomes obsolete
or invalid, shall provide each of the Company and the Agent with IRS from 1001
or 4224 in duplicate, as appropriate, or any successor form prescribed by the
IRS, certifying that such Bank is entitled to benefits under an income tax
treaty to which the United States is a party which exempts the Bank from United
States withholding tax on payments of interest for the account of such Bank or
certifying that the income receivable pursuant to this Agreement is effectively
connected with the conduct of such Bank's trade or business in the United States
and exempt from United States withholding tax. Each such Bank that so delivers
a form 1001 or 4224 (or applicable successor forms) agrees to deliver to the
Company undated or modified forms, or other manner of certification acceptable
to the Company, at any time that any such form is required to be resubmitted or
modified, as a result of any action taken by Bank, as a condition to obtaining
an exemption from withholding tax. In addition, each Bank that so delivers a
form 1001 shall thereby be deemed to have made a representation to the effect
that the fees to be received by such Bank pursuant to this Agreement will not be
received in connection with the active conduct of a trade or business in the
United States by such Bank.
(g) For any period with respect to which a Bank has failed to provide
the Company and the Agent with the appropriate form referred to in Section
4.01(f) (whether or not such Bank is lawfully able to do so, unless such failure
is due to a change in treaty, law or regulation occurring after the date on
which such form originally was required to be provided), such Bank shall not be
entitled to any additional payment under Section 4.01(b) or any indemnification
under Section 4.01(c); provided, that if such Bank shall have satisfied such
--------
requirements on the Closing Date (in the case of each Bank listed on the
signature pages hereof) or on the effective date of the Assignment and
Acceptance Agreement or other document pursuant to which it became a Bank (in
the case of each
-42-
other Bank), nothing in this subsection shall relieve the Company of its
obligation to pay any additional amounts pursuant to Section 4.01(b) or Section
4.01(c) in the event that, as a result of any change in applicable law or
treaty, such Bank is no longer properly entitled to deliver certificates,
documents or other evidence at a subsequent date establishing the fact that such
Bank is entitled to such exemption or reduced rate.
4.02 Illegality. (a) If any Bank determines that the introduction of any
----------
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Bank to the Company through
the Agent, any obligation of that Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies the Agent and the Company that the
circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any Offshore
Rate Loan, the Company shall, upon its receipt of notice of such fact and demand
from such Bank (with a copy to the Agent), prepay in full such Offshore Rate
Loans of that Bank then outstanding, together with interest accrued thereon and
amounts required under Section 4.04, either on the last day of the Interest
Period thereof, if the Bank may lawfully continue to maintain such Offshore Rate
Loans to such day, or immediately, if the Bank may not lawfully continue to
maintain such Offshore Rate Loan. If the Company is required to so prepay any
Offshore Rate Loan, then concurrently with such prepayment, the Company shall
borrow from the affected Bank, in the amount of such repayment, a Base Rate
Loan.
(c) If the obligation of any Bank to make or maintain Offshore Rate
Loans has been so terminated or suspended, the Company may elect, by giving
notice to the Bank through the Agent that all Loans which would otherwise be
made by the Bank as Offshore Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent under this Section, the
affected Bank shall designate a different Lending Office with respect to its
Offshore Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Bank, be
illegal or otherwise disadvantageous to the Bank.
4.03 Increased Costs and Reduction of Return. (a) If any Bank determines
---------------------------------------
that, due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation or (ii) the compliance by that Bank with
any guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to such Bank of agreeing to make or making, funding or maintaining any
Offshore Rate Loans or participating in Letters of Credit, or, in the case of
the Issuing Bank, any increase in the cost to the Issuing Bank of agreeing to
issue, issuing or maintaining any Letter of Credit or of agreeing to make or
making, funding or maintaining any unpaid drawing under any Letter of Credit,
then the Company shall be liable for, and shall from time to time, upon demand
(with a copy of such demand to be sent to the Agent), pay to the Agent for the
account of such Bank, additional amounts as are sufficient to compensate such
Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any
-43-
change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or its
Lending Office) or any corporation controlling the Bank with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitments, loans, credits or obligations under this Agreement, then, upon
demand of such Bank to the Company through the Agent, the Company shall pay to
the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.
4.04 Funding Losses. The Company shall reimburse each Bank and hold each
--------------
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Company to make on a timely basis any payment of
principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or convert a Loan
after the Company has given (or is deemed to have given) a Notice of Borrowing
or a Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment in accordance
with any notice delivered under Section 2.06;
(d) the prepayment (including pursuant to Section 2.07) or other
payment (including after acceleration thereof) of an Offshore Rate Loan on a day
that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any Offshore Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Company to the Banks under this Section and
under Section 4.03(a), each Offshore Rate Loan made by a Bank (and each related
reserve, special deposit or similar requirement) shall be conclusively deemed to
have been funded at the LIBOR used in determining the Offshore Rate for such
Offshore Rate Loan by a matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Offshore Rate Loan is in fact so funded.
4.05 Inability to Determine Rates. If the Agent determines that for any
----------------------------
reason adequate and reasonable means do not exist for determining the Offshore
Rate for any requested Interest Period with respect to a proposed Offshore Rate
Loan, or that the Offshore Rate applicable pursuant to Section 2.09(a) for any
requested Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to the Banks of funding such Loan, the
Agent will promptly so notify the Company and each Bank. Thereafter, the
obligation of the Banks to make or maintain Offshore Rate Loans
-44-
hereunder shall be suspended until the Agent, upon the instruction of the
Required Banks, revokes such notice in writing. Upon receipt of such notice, the
Company may revoke any Notice of Borrowing or Notice of Conversion/Continuation
then submitted by it. If the Company does not revoke such Notice, the Banks
shall make, convert or continue the Loans, as proposed by the Company, in the
amount specified in the applicable notice submitted by the Company, but such
Loans shall be made, converted or continued as Base Rate Loans instead of
Offshore Rate Loans.
4.06 Reserves on Offshore Rate Loans. The Company shall pay to each Bank,
-------------------------------
as long as such Bank shall be required under regulations of the FRB to maintain
reserves with respect to liabilities or assets consisting of or including
Eurocurrency funds or deposits (currently known as "Eurocurrency liabilities"),
additional costs on the unpaid principal amount of each Offshore Rate Loan equal
to the actual costs of such reserves allocated to such Loan by the Bank (as
determined by the Bank in good faith, which determination shall be conclusive),
payable on each date on which interest is payable on such Loan, provided the
Company shall have received at least 15 days' prior written notice (with a copy
to the Agent) of such additional interest from the Bank. If a Bank fails to
give notice 15 days prior to the relevant Interest Payment Date, such additional
interest shall be payable 15 days from receipt of such notice.
4.07 Certificates of Banks. Any Bank claiming reimbursement or compensation
---------------------
under this Article IV shall deliver to the Company (with a copy to the Agent) a
certificate setting forth in reasonable detail the computations in determining
the amount payable to the Bank hereunder and such certificate shall be
conclusive and binding on the Company in the absence of manifest error.
4.08 Substitution of Banks. Upon the receipt by the Company from any Bank
---------------------
(an "Affected Bank") of a claim for compensation under Sections 4.01 and 4.03,
-------------
the Company may: (i) request the Affected Bank to use commercially reasonable
efforts to obtain a replacement bank or financial institution satisfactory to
the Company to acquire and assume all or a ratable part of all of such Affected
Bank's Loans and Commitment (a "Replacement Bank"); (ii) request one more of the
----------------
other Banks to acquire and assume all or part of such Affected Bank's Loans and
Commitment; or (iii) designate a Replacement Bank. Any such designation of a
Replacement Bank under clause (i) or (iii) shall be subject to the prior written
consent of the Agent (which consent shall not be unreasonably withheld).
4.09 Survival. The agreements and obligations of the Company in this
--------
Article IV shall survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
--------------------
5.01 Conditions of Initial Credit Extensions. The obligation of each Bank
---------------------------------------
to make its initial Credit Extension hereunder is subject to the condition that
the Agent shall have received on or before the Closing Date all of the
following, in form and substance satisfactory to the Agent and each Bank, and in
sufficient copies for each Bank:
-45-
(a) Credit Agreement; Loan Documents and Notes.
------------------------------------------
(i) This Agreement, the Guaranty, the Pledge Agreements and the
Notes executed by each party thereto;
(ii) Evidence that each of the Pledge Agreements has been duly
authorized by all necessary corporate action and has been duly executed and
delivered by the parties thereto. Evidence that all of the Pledged Shares
have been delivered to the Agent, accompanied by stock powers duly executed
in blank by the Person executing such Pledge Agreement pursuant to each
respective Pledge Agreement.
(iii) Evidence that the Guaranty has been duly authorized by
necessary corporation action. Evidence that each Guarantor has duly
executed and delivered the Guaranty.
(b) Resolutions; Incumbency.
-----------------------
(i) Copies of the resolutions of the Board of the Company and
each Material Subsidiary that may become party to a Loan Document
authorizing the transactions contemplated hereby, certified as of the
Closing Date by the Secretary or an Assistant Secretary of such Person; and
(ii) A certificate of the Secretary or Assistant Secretary of the
Company, and each Material Subsidiary that may become party to a Loan
Document certifying the names and true signatures of the officers of the
Company or such Subsidiary authorized to execute, deliver and perform, as
applicable, this Agreement, and all other Loan Documents to be delivered by
it hereunder;
(c) Organization Documents; Good Standing. Each of the following
-------------------------------------
documents:
(i) the articles or certificate of incorporation and the bylaws
of the Company and each Material Subsidiary party to any Loan Document as in
effect on the Closing Date, certified by the Secretary or Assistant
Secretary of the Company or such Subsidiary as of the Closing Date; and
(ii) a good standing and tax good standing certificate for the
Company and each Material Subsidiary party to any Loan Document from the
Secretary of State (or similar, applicable Governmental Authority) of its
state of incorporation and each state where the Company or such Material
Subsidiary is qualified to do business as a foreign corporation as of a
recent date; provided, that, the Company shall deliver tax good standing
--------
certificates for the Company and each Material Subsidiary party to any Loan
Document only from the Secretary of State of each of California, Delaware,
Illinois, Texas and Arizona, respectively;
(d) Legal Opinions.
--------------
(i) (A) an opinion of Pillsbury Madison & Sutro LLP, counsel to
the Company and addressed to the Agent and the Banks, substantially in the
form of Exhibit D-1; and (B) an opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., general
-----------
counsel to the
-46-
Company and addressed to the Agent and the Banks, substantially in the form
of Exhibit D-2; and
-----------
(ii) a favorable opinion of Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP, special counsel to the Agent and addressed to the Agent and the Banks,
substantially in the form of Exhibit E;
---------
(e) Payment of Fees. Evidence of payment by the Company of all fees,
---------------
costs and expenses hereunder or under the Fee Letter to the extent then due and
payable on the Closing Date, including any such costs, fees and expenses arising
under or referenced in Sections 2.10 and 11.04;
(f) Certificate. A certificate signed by a Responsible Officer, dated
-----------
as of the Closing Date, stating that:
(i) the representations and warranties contained in Article VI
are true and correct on and as of such date, as though made on and as of
such date;
(ii) no Default or Event of Default exists or would result from
the Credit Extension;
(iii) any necessary consents, waivers, approvals, authorizations,
registrations, filings and notifications of the character referred to in
Section 6.03 have been obtained or made and are in full force and effect;
(iv) except as otherwise disclosed in the Projections, there has
occurred since December 31, 1996, no event or circumstance that has resulted
or could reasonably be expected to result in a Material Adverse Effect;
(v) except as otherwise disclosed in the Projections, there has
occurred since December 31, 1996, no event or circumstance that has resulted
or could reasonably be expected to result in a material adverse effect upon,
the operations, business, properties, condition (financial or otherwise), or
prospects of ▇▇▇▇ or ▇▇▇▇ and its Subsidiaries taken as a whole;
(vi) the Merger Agreement and all other agreements, instruments
and arrangements between ▇▇▇▇ and the Company are true, correct and complete
copies thereof, that such documents are the only agreements between such
parties relating to the transactions contemplated by the Merger Agreement or
the business or assets of the Company or ▇▇▇▇, as the case may be, that each
such document is in full force and effect without any term or condition
thereof having been amended, modified or waived or any exercise of rights
with respect thereto forborne without the prior written consent of the Agent
and the Required Banks, that there is no default thereunder and that each of
the conditions set forth in the Merger Agreement to be satisfied prior to or
on the Closing Date shall have been satisfied (without having been waived);
and
(vii) the Debt of the Company and its Subsidiaries (other than
with respect to Indebtedness under the Melody Arbitrage Facility),
outstanding as of the Closing Date, after giving effect to the transactions
contemplated hereby, is not greater than $210,000,000 in the aggregate.
-47-
(g) Merger Agreement, etc. Copies of the Merger Agreement and all
----------------------
other agreements, instruments and arrangements between ▇▇▇▇ and the Company
together with a certificate signed by a Responsible Officer dated the Closing
Date attaching copies of the fully executed Merger Agreement and each of such
other agreements and certifying that each such document is a true, correct and
complete copy thereof, that such documents are the only agreements between such
parties relating to the transactions contemplated by the Merger Agreement or the
business or assets of the Company or ▇▇▇▇, as the case may be, that each such
document is in full force and effect without any term or condition thereof
having been amended, modified or waived or any exercise of rights with respect
thereto forborne without the prior written consent of the Agent and the Required
Banks, that there is no default thereunder and that each of the conditions set
forth in the Merger Agreement to be satisfied prior to or on the Closing Date
shall have been satisfied (without having been waived).
(h) Consummation of Merger. Evidence that the Merger has been, or is
----------------------
concurrently being, consummated in accordance with the terms of the Merger
Agreement and with all applicable Requirements of Law.
(i) Consolidated Balance Sheets. Copies of unaudited consolidated
---------------------------
financial statements as of June 30, 1997 for each of the Company and its
Subsidiaries and ▇▇▇▇ and its Subsidiaries, respectively, together with the most
recent financial Projections which shall not differ in any material adverse
respect from the Projections previously delivered to the Agent and each of the
Banks.
(j) Pro Forma Consolidated Balance Sheets. Copies of pro forma
-------------------------------------
consolidated balance sheets of the Company and its Subsidiaries as of December
31, 1996 and as of June 30, 1997, fairly presenting the financial condition of
the Company and its Subsidiaries as of December 31, 1996 and as of June 30,
1997, in each case, giving effect to the Merger and the transactions
contemplated hereby and on the Closing Date, evidence that outstanding Debt of
the Company and its Subsidiaries (other than with respect to the Loans and
Indebtedness under the Melody Arbitrage Facility) shall not exceed in the
aggregate $51,000,000, after giving effect to the transactions contemplated
hereby.
(k) Consolidated Debt. Evidence that Debt of the Company and its
-----------------
Subsidiaries (other than with respect to Indebtedness under the Melody Arbitrage
Facility), outstanding as of the Closing Date, after giving effect to the
transactions contemplated hereby, shall not be greater than $210,000,000 in the
aggregate.
(l) Indebtedness. On the Closing Date, evidence that all Indebtedness
------------
of ▇▇▇▇ and its Subsidiaries other than that listed in Schedule 5.01(l) hereto
----------------
shall be extinguished, and the holders thereof shall have concurrently agreed to
effect the release of all Liens and mortgages on the assets of ▇▇▇▇ and its
Subsidiaries securing such Indebtedness.
(m) Replacement of Existing Bank Agreement; Release of Liens. Evidence
--------------------------------------------------------
that the Company, its Subsidiaries and the other parties to the Existing Bank
Agreement and their agents each have or shall have concurrently entered into
such agreements, and have executed such termination statements or releases, as
shall be necessary to replace the Existing Bank Agreements, terminate any
guarantees of Indebtedness thereunder and terminate or release all Existing Bank
Liens, and copies of such replacements, terminations or releases.
-48-
(n) Other Documents. Such other approvals, opinions, documents or
---------------
materials as the Agent or any Bank may request.
5.02 Conditions to All Credit Extensions. The obligation of each Bank to
-----------------------------------
make any Revolving Loan to be made by it (including its initial Revolving Loan)
or to continue or convert any Revolving Loan under Section 2.04 and the
obligation of the Issuing Bank to Issue any Letter of Credit (including the
initial Letter of Credit) is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date, Conversion/Continuation
Date or Issuance Date:
(a) Notice, Application. The Agent shall have received (with, in the
-------------------
case of the initial Revolving Loan only, a copy for each Bank) a Notice of
Borrowing or a Notice of Conversion/Continuation, as applicable or in the case
of any Issuance of any Letter of Credit, the Issuing Bank and the Agent shall
have received an L/C Application or L/C Amendment Application, as required under
Section 3.02;
(b) Continuation of Representations and Warranties. The
----------------------------------------------
representations and warranties in Article VI shall be true and correct on and as
of such Borrowing Date or Conversion/Continuation Date or Issuance Date with the
same effect as if made on and as of such Borrowing Date or
Conversion/Continuation Date or Issuance Date (except to the extent such
representations and warranties expressly refer to an earlier date, in which case
they shall be true and correct as of such earlier date); and
(c) No Existing Default. No Default or Event of Default shall exist or
-------------------
shall result from such Borrowing or continuation or conversion or Issuance.
Each Notice of Borrowing, Notice of Conversion/Continuation and L/C Application
or L/C Amendment Application submitted by the Company hereunder shall constitute
a representation and warranty by the Company hereunder, as of the date of each
such notice and as of each Borrowing Date, Conversion/Continuation Date, or
Issuance Date, as applicable, that the conditions in this Section 5.02 are
satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants to the Agent and each Bank, at and as of
the date of execution of this Agreement, after giving effect to the transactions
contemplated hereby including the Merger, that:
6.01 Corporate Existence and Power. The Company and each of its Material
-----------------------------
Subsidiaries:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents,
to which it is a
-49-
party, except to the extent that the failure to have such licenses,
authorizations, consents and approvals would not reasonably be expected to have
a Material Adverse Effect;
(c) is duly qualified as a foreign corporation and is licensed and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
or license, except to the extent where the failure to be so qualified or
licensed would not reasonably be expected to have a Material Adverse Effect; and
(d) is in compliance with all Requirements of Law, except to the extent
that the failure to be in compliance with any particular Requirement of Law
would not reasonably be expected to have a Material Adverse Effect.
6.02 Corporate Authorization; No Contravention. The execution, delivery and
-----------------------------------------
performance by the Company and its Material Subsidiaries of this Agreement and
each other Loan Document to which such Person is party, have been duly
authorized by all necessary corporate action, and do not and will not:
(a) contravene the terms of any of that Person's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which such Person is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is subject; or
(c) violate any Requirement of Law.
6.03 Governmental Authorization. No approval, consent, exemption,
--------------------------
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company or
any of its Material Subsidiaries of this Agreement or any other Loan Document,
to which such Person is a party.
6.04 Binding Effect. This Agreement and each other Loan Document to which
--------------
the Company or any of its Material Subsidiaries is a party constitute the legal,
valid and binding obligations of the Company and any of its Material
Subsidiaries to the extent it is a party thereto, enforceable against such
Person in accordance with their respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles relating
to enforceability.
6.05 Litigation. There are no actions, suits, proceedings at law or in
----------
equity, claims, investigations or disputes pending, or to the best knowledge of
the Company, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against the Company or its Subsidiaries or
any of their respective properties:
(a) which purport to affect or pertain to this Agreement or any other
Loan Document, or any of the transactions contemplated hereby or thereby,
including the Merger; or
-50-
(b) as to which there exists a substantial likelihood of an adverse
determination, which determination would reasonably be expected to have a
Material Adverse Effect. No injunction, writ, temporary restraining order or
any order of any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the execution, delivery or
performance of this Agreement or any other Loan Document, or directing that the
transactions provided for herein or therein, including the Merger, not be
consummated as herein or therein provided.
6.06 No Default. No Default or Event of Default exists or would result from
----------
the incurring of any Obligations by the Company. As of the Closing Date,
neither the Company nor any Material Subsidiary is in default under or with
respect to any Contractual Obligation in any respect which, individually or
together with all such defaults, could reasonably be expected to have a Material
Adverse Effect, or that would, if such default had occurred after the Closing
Date, create an Event of Default under Section 9.01(e).
6.07 ERISA Compliance. Schedule 6.07 hereto sets forth a list of all Plans.
---------------- -------------
Except as set forth in Schedule 6.07,
-------------
(i) no Plan, and neither the Company nor any ERISA Affiliate or
Subsidiary of the Company is in violation in any material respect with any
applicable provisions of ERISA and the Code, including, without limitation,
the reporting and disclosure requirements of Part 1, and the fiduciary
responsibility requirements of Part 4, of Subtitle B of Title I of ERISA,
(ii) no Plan which is intended to qualify under Sections 401 or 403 of
the Code fails to meet applicable qualification requirements of the Code,
(iii) no Prohibited Transaction has occurred which could result in any
material liability to the Company, an ERISA Affiliate, or a Subsidiary of
the Company,
(iv) there are no pending or, to the best knowledge of the Company,
threatened claims or actions (other than routine claims for benefits in the
normal and ordinary course) asserted against any Plan, the Company, an ERISA
Affiliate, a Subsidiary of the Company, or any Person for which the Company
may be directly or indirectly liable through indemnification arrangements or
otherwise,
(v) no material Accumulated Funding Deficiency has been incurred or is
reasonably expected to be incurred, no waiver of any material Accumulated
Funding Deficiency or permitted increase or decrease in the funding standard
account under Section 412 of the Code has been obtained or is reasonably
expected to be requested, and no event described in Sections 302(f)
(imposing a Lien for failure to make required contributions) or 307(a)
(requiring the provision of security on adoption of certain amendments
resulting in underfunding) of ERISA has occurred or is reasonably expected
to occur,
(vi) no material Unfunded Current Liability or Withdrawal Liability
exists,
(vii) no Termination Event has occurred or is reasonably expected to
occur which might result in any material liability for the Company or any
ERISA Affiliate,
-51-
(viii) no proceeding has been instituted or is reasonably expected to
be instituted under Section 515 of ERISA to collect delinquent contributions
to a Plan,
(ix) neither the Company nor any ERISA Affiliate or Subsidiary of the
Company has failed to pay all premiums or make all contributions, if any,
required of it with respect to any Plan which is a "welfare plan" under
Section 3(1) of ERISA,
(x) no Plan provides medical or other welfare benefits or extends
coverage relating to such benefits beyond the date of a Plan participant's
termination of employment, except to the extent required by Section 4980B of
the Code and at the sole expense of such participant or the participant's
beneficiary to the fullest extent permitted under such Code Section, and
(xi) no event has occurred which could subject any Plan, the Company,
an ERISA Affiliate, or a Subsidiary of the Company to any material liability
under any statute, regulation, or governmental order relating to any Plan or
pursuant to any obligation of the Company or any ERISA Affiliate or
Subsidiary of the Company to indemnify any Person against liability incurred
under any such statute, regulation, or order.
6.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
-----------------------------------
be used solely for the purposes set forth in and permitted by Section 7.12 and
Section 8.07. Neither the Company nor any Subsidiary is generally engaged in
the business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
6.09 Title to Properties. The Company and each Material Subsidiary have
-------------------
good record and marketable title in fee simple to, or valid leasehold interests
in, all real property and good title to, or a valid leasehold interest in, all
its personal property, necessary or used in the ordinary conduct of their
respective businesses, except for such defects in title as could not reasonably
be expected to, individually or in the aggregate, have a Material Adverse
Effect. As of the Closing Date, the property of the Company and its Material
Subsidiaries is subject to no Liens, other than Permitted Liens and the Existing
Bank Liens. The security agreements, pledge agreements and other security
documents evidencing the Existing Bank Liens will be terminated on the Closing
Date, and the Uniform Commercial Code financing statements filed to perfect any
such Liens will be terminated. Schedule 6.09 hereto lists as of August 15,
-------------
1997, (i) each material financing statement, deed, agreement or other instrument
which has been filed, recorded or registered pursuant to any United States or
federal, state or local law or regulation that names the Company or any of the
Material Subsidiaries as debtor or lessee or as the grantor or the transferor of
the interest created thereby, and (ii) as to each such financing statement,
deed, agreement or other instrument, the names of the debtor, lessee, grantor or
transferor and the secured party, lessor, grantee or transferee and the name of
the jurisdiction in which such financing statement, deed, agreement or other
instrument has been filed, recorded or registered. Except as contemplated
hereby, neither the Company nor any of its Material Subsidiaries has signed any
agreement or instrument authorizing any secured party thereunder to file any
such financing statement, deed, agreement or other instrument.
6.10 Taxes. The Company and its Material Subsidiaries have filed all
-----
Federal and other material tax returns and reports required to be filed, and
have paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed
-52-
upon them or their properties, income or assets otherwise due and payable,
except those which are being contested in good faith by appropriate proceedings
and for which adequate reserves have been provided in accordance with GAAP.
There is no proposed tax assessment against the Company or any Material
Subsidiary that would, if made, have a Material Adverse Effect.
6.11 Financial Condition. (a) The audited consolidated financial statements
-------------------
of the Company and its Material Subsidiaries dated December 31, 1996, together
with any notes thereto, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for the fiscal year ended on
that date:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein;
(ii) fairly present the financial condition of the Company and
its Material Subsidiaries as of the date thereof and results of operations
for the period covered thereby; and
(iii) except as specifically disclosed in Schedule 6.11, show all
-------------
material indebtedness and other liabilities, direct or contingent, of the
Company and its consolidated Material Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Contingent
Obligations.
(b) The forward-looking financial information delivered to the Agent
(the "Projections") has been prepared on the basis of reasonable assumptions
-----------
made in good faith by the Company, and as of the date on which such assumptions
were made, no relevant facts known to the Company existed that were not taken
into account that were, individually or in the aggregate, reasonably likely to
have a material effect on the reasonableness of such assumptions as they relate
to the Company or any of its Material Subsidiaries, and no events have occurred
subsequent thereto that are, individually or in the aggregate, reasonably likely
to have a material effect on the reasonableness of such assumptions as they
relate to the Company. There are no facts known to the Company that are
inconsistent in any material respect with the Projections taken as a whole or
such assumptions.
(c) Since December 31, 1996 there has been no Material Adverse Effect.
6.12 Environmental Matters. The Company conducts in the ordinary course of
---------------------
business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof the Company has reasonably concluded that, except as specifically
disclosed in Schedule 6.12, such Environmental Laws and Environmental Claims
-------------
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
6.13 Regulated Entities. None of the Company, any Person controlling the
------------------
Company, or any Subsidiary, is an "Investment Company" within the meaning of the
Investment Company Act of 1940. The Company is not subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
-53-
6.14 No Burdensome Restrictions. Neither the Company nor any Material
--------------------------
Subsidiary is a party to or bound by any Contractual Obligation, or subject to
any restriction in any Organization Document, or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.
6.15 Copyrights, Patents, Trademarks and Licenses, etc. The Company and its
-------------------------------------------------
Material Subsidiaries own or are licensed or otherwise have the right to use all
of the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Company, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Company or any Material
Subsidiary infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Company,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
6.16 Capital Stock; Subsidiaries. (a) The authorized Capital Stock of the
---------------------------
Company, after giving effect to the Merger, is disclosed on Schedule 6.16(a)
----------------
hereto. All such outstanding shares have been duly authorized, validly issued
and are fully paid, nonassessable and free of preemptive rights. There are no
subscriptions, options, warrants or calls relating to the issuance by the
Company of any shares of its common stock ("Common Stock"), including any right
------------
of conversion or exchange under any outstanding security or other instrument,
except for options granted to employees of the Company under employee stock
option plans and except as otherwise disclosed on Schedule 6.16(a) hereto. The
----------------
Company is not subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its Capital Stock or any security
convertible into or exchangeable for any of its Common Stock except as set forth
in Schedule 6.16(b) hereto.
----------------
(b) The Company has no Material Subsidiaries other than as set forth in
Item I of Schedule 6.16(b) hereto. Item I of Schedule 6.16(b) correctly sets
---------------- ----------------
forth as to each Material Subsidiary its name, the jurisdiction of its
formation, if a partnership, or incorporation, if a corporation, its parent
corporation and the value of the investment in it as carried on the books of the
Company or such parent corporation. All of the outstanding shares of the
Capital Stock of each class of each corporate Material Subsidiary have been
validly issued and are fully paid and nonassessable and, except as otherwise
indicated in Item I of Schedule 6.16(b) are owned, beneficially and of record,
----------------
by the Company or such parent corporation, free and clear of any Liens other
than the Existing Bank Liens. The pledge agreements evidencing such Existing
Bank Liens will be terminated on the Closing Date in accordance with Section
6.09.
6.17 Insurance. Except as specifically disclosed in Schedule 6.17, the
--------- -------------
properties of the Company and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Company, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Company or such Subsidiary operates.
6.18 Labor Relations. None of the Company or its Material Subsidiaries is
---------------
engaged in any unfair labor practice which could reasonably be expected to have
a Material
-▇▇-
▇▇▇▇▇▇▇ ▇▇▇▇▇▇. There is (a) no unfair labor practice complaint pending or, to
the best knowledge of the Company, threatened against the Company or any of its
Material Subsidiaries before the National Labor Relations Board or any court or
labor board, and no grievance or arbitration proceedings arising out of or under
collective bargaining agreements is so pending or, to the best knowledge of the
Company, threatened; (b) no strike, lock-out, labor dispute, slowdown or work
stoppage pending or, to the best knowledge of the Company, threatened against
the Company or any of its Material Subsidiaries; and (c) no union representation
or certification question existing or pending with respect to the employees of
the Company or any of its Material Subsidiaries and, to the best knowledge of
the Company, no union organization activity taking place, which unfair labor
practice complaint, grievance or arbitration proceedings, strike, lock-out,
labor dispute, slowdown or work stoppage or union representation or
certification question could reasonably be expected to have a Material Adverse
Effect. True and correct copies of each collective bargaining agreement, to
which the Company or any of its Material Subsidiaries is a party, have been
provided to the Agent.
6.19 Representations and Warranties in Related Documents. On the Closing
---------------------------------------------------
Date, the representations of the Company and of its Material Subsidiaries
contained in the Guaranty, each of the Pledge Agreements and in any document,
certificate or instrument delivered pursuant to this Agreement will be true and
correct in all material respects and each of the Agent and the Banks may rely on
such representations and warranties, if not made directly to each of the Agent
and the Banks, as if such representations and warranties were made directly to
each of the Agent and the Banks. The representations with respect to the
Company and/or ▇▇▇▇ contained in the Merger Agreement and in any document,
certificate or instrument delivered pursuant to the Merger Agreement are true
and correct in all material respects and each of the Agent and the Banks shall
be entitled to rely on such representations and warranties as if they were made
to each of the Agent and the Banks in this Agreement as of the Closing Date.
The Merger Agreement is in full force and effect and no event of default or
event which with the giving of notice or the passage of time would become an
event of default has occurred under such agreement. Except as set forth in
Schedule 6.19 hereto, such agreement or any portion thereof has not been
-------------
amended, modified, supplemented or waived by any party thereto. A true,
complete and correct copy of the Merger Agreement as currently in effect has
been delivered to each of the Agent and the Banks prior to the date hereof and
constitutes the entire agreement among the parties thereto.
6.20 Solvency. Each of the Company and its Material Subsidiaries is Solvent
--------
and, immediately after giving effect to the consummation of the transactions
contemplated by this Agreement and the Merger Agreement, each of the Company and
its Material Subsidiaries will be Solvent.
6.21 Full Disclosure. None of the representations or warranties made by the
---------------
Company, ▇▇▇▇ or any Material Subsidiary in the Loan Documents and the Merger
Agreement as of the date such representations and warranties are made or deemed
made, and none of the statements contained in any exhibit, report, statement or
certificate furnished by or on behalf of the Company or any Material Subsidiary
in connection with the Loan Documents and the Merger Agreement (including the
offering and disclosure materials delivered by or on behalf of the Company to
the Banks prior to the Closing Date), contains any untrue statement of a
material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the
-55-
circumstances under which they are made, not misleading as of the time when made
or delivered.
ARTICLE VII
AFFIRMATIVE COVENANTS
---------------------
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Required Banks waive compliance in writing:
7.01 Financial Statements. The Company shall deliver to the Agent, in form
--------------------
and detail satisfactory to the Agent and the Required Banks, with sufficient
copies for each Bank:
(a) as soon as available, but not later than one hundred (100) days
after the end of each fiscal year (commencing with the fiscal year ended
December 31, 1997) a copy of the audited consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP or another nationally-recognized independent public accounting firm
("Independent Auditor") which report shall state that such consolidated
---------------------
financial statements present fairly the financial position for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years. Such opinion shall not be qualified or limited because of a restricted
or limited examination by the Independent Auditor of any material portion of the
Company's or any Subsidiary's records;
(b) as soon as available, but not later than fifty-five (55) days after
the end of each of the first three fiscal quarters of each fiscal year
(commencing with the fiscal quarter ended September 30, 1997), a copy of the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
the end of such quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, and certified by a Responsible
Officer as fairly presenting, in accordance with GAAP (subject to ordinary, good
faith year-end audit adjustments), the financial position and the results of
operations of the Company and the Subsidiaries;
(c) and as soon as available, but not later than one hundred (100) days
after the end of each fiscal year (commencing with the fiscal year ended
December 31, 1997), a copy of an unaudited consolidating balance sheet of the
Company and its Material Subsidiaries as at the end of such year and the related
consolidating statement of income, shareholders' equity and cash flows for such
year, certified by a Responsible Officer as having been developed and used in
connection with the preparation of the financial statements referred to in
Section 7.01(a); provided, that financial information for all Subsidiaries of
--------
the Company which are not deemed to be "Material Subsidiaries" hereunder shall
be consolidated and reflected under one column in such consolidating financial
statements; and
-56-
(d) as soon as available, but not later than fifty-five (55) days after
the end of each of the first three fiscal quarters of each fiscal year
(commencing with the fiscal quarter ended September 30, 1997, a copy of the
unaudited consolidating balance sheets of the Company and its Material
Subsidiaries, and the related consolidating statements of income, shareholders'
equity and cash flows for such quarter, all certified by a Responsible Officer
as having been developed and used in connection with the preparation of the
financial statements referred to in Section 7.01(b); provided, that financial
--------
information for all Subsidiaries of the Company which are not deemed to be
"Material Subsidiaries" hereunder shall be consolidated and reflected under one
column in such consolidating financial statements.
7.02 Certificates; Other Information. The Company shall furnish to the
-------------------------------
Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements referred
to in Section 7.01(a), a certificate of the Independent Auditor stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default (other than with respect to a Default or Event of
Default pursuant to Section 9.01(l)), except as specified in such certificate;
(b) concurrently with the delivery of the financial statements referred
to in Sections 7.01(a) and (b), a Compliance Certificate executed by a
Responsible Officer;
(c) concurrently with the delivery of the financial statements referred
to in Section 7.01(a), a copy of the annual budget of the Company and its
Subsidiaries for the then current fiscal year;
(d) promptly, copies of all financial statements and reports that the
Company sends to its shareholders, and copies of all financial statements and
regular, periodical or special reports (including Forms 10K, 10Q and 8K) that
the Company or any Subsidiary may make to, or file with, the SEC; and
(e) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the Agent, at
the request of any Bank, may from time to time reasonably request.
7.03 Notices. The Company shall promptly notify the Agent and each Bank:
-------
(a) of the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that with the giving of
notice, the lapse of time, or both, is reasonably likely to (if not cured or
otherwise remedied during such time) constitute a Default or an Event of
Default;
(b) of any matter that has resulted or may result in a Material Adverse
Effect, including (i) breach or non-performance of, or any default under, a
Contractual Obligation of the Company or any Subsidiary; (ii) any dispute,
litigation, investigation, proceeding or suspension between the Company or any
Subsidiary and any Governmental Authority; or (iii) the commencement of, or any
material development in, any litigation or proceeding affecting the Company or
any Subsidiary; including pursuant to any applicable Environmental Laws;
-57-
(c) as soon as possible and, in any event, within five (5) Business
Days after the Company or an ERISA Affiliate or Subsidiary of the Company knows
or has reason to know that any event or condition described in Section 6.07 has
occurred or exists, or is reasonably likely to occur or exist, the Company will
deliver to the Agent and each Bank a certificate of the Company's chief
financial officer setting forth the details of the event or condition and the
action, if any, which the Company or such ERISA Affiliate or Subsidiary is
required or proposes to take, together with copies of all relevant notices or
other documents received or required or proposed to be given or filed by the
Company or such ERISA Affiliate or Subsidiary in connection with such event or
condition; and
(d) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated Subsidiaries.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under Section 7.03(a) shall describe with particularity any and all clauses or
provisions of this Agreement or other Loan Document that have been (or
foreseeably will be) breached or violated.
7.04 Preservation of Corporate Existence, Etc. The Company shall, and shall
----------------------------------------
cause each Material Subsidiary to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business except as necessary in
connection with transactions permitted by Section 8.04 and sales of assets
permitted by Section 8.03;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks, trade
names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
7.05 Maintenance of Property. The Company shall maintain, and shall cause
-----------------------
each Subsidiary to maintain, and preserve all its property which is used or
useful in its business in good working order and condition, ordinary wear and
tear excepted, except as permitted by Section 8.03. The Company and each
Subsidiary shall use the standard of care typical in the industry in the
operation and maintenance of its facilities.
7.06 Insurance. The Company shall maintain, and shall cause each Subsidiary
---------
to maintain, with financially sound and reputable independent insurers,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.
-58-
7.07 Payment of Obligations. The Company shall, and shall cause each
----------------------
Subsidiary to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or levies
upon it or its properties or assets, unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien upon
its property; and
(c) all indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
7.08 Compliance with Laws. The Company shall comply, and shall cause each
--------------------
Subsidiary to comply, in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
7.09 Compliance with ERISA. (a) The Company shall, and shall cause each of
---------------------
its ERISA Affiliates to: (i) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (ii) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (iii) make all required contributions
to any Plan subject to Section 412 of the Code;
(b) Within five (5) Business Days after the annual report (Form 5500)
of each Plan included in the definition of clause (i) of the definition of the
term "Plan" hereunder is filed with the Internal Revenue Service, the Company
shall deliver a complete copy thereof (including schedules and attachments) to
the Agent and each Bank; and
(c) The Company shall furnish to the Agent and each Bank such
additional information concerning any Plan as the Agent and each Bank may
reasonably request.
7.10 Inspection of Property and Books and Records. The Company shall
--------------------------------------------
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Company and such Subsidiary. The
Company shall permit, and shall cause each Subsidiary to permit, representatives
and independent contractors of the Agent or any Bank to visit and inspect any of
their respective properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Company; provided, however, when an Event
-------- -------
of Default exists the Agent or any Bank may do any of the foregoing at the
expense of the Company at any time during normal business hours and without
advance notice.
-59-
7.11 Environmental Laws. The Company shall, and shall cause each Subsidiary
------------------
to, conduct its operations and keep and maintain its property in compliance with
all Environmental Laws.
7.12 Use of Proceeds. The Company shall use the proceeds of the Loans (i) to
---------------
refinance a portion of outstanding indebtedness of the Company to The Sumitomo
Bank, Limited and certain other creditors in an aggregate amount up to
$165,000,000; (ii) to prepay a portion of outstanding Indebtedness of ▇▇▇▇ in an
aggregate amount up to $55,000,000 in connection with the Merger; (iii) to pay
expenses and costs associated with the Loans and the Merger; and (iv) to provide
for general corporate purposes including funding working capital needs, issuing
letters of credit, and financing future acquisitions not in contravention of any
Requirement of Law or of any Loan Document.
7.13 Future Material Subsidiaries. After the Closing Date, upon any Person
----------------------------
becoming a Material Subsidiary of the Company, or upon the Company or any
Subsidiary acquiring additional Capital Stock of any existing Subsidiary whose
Capital Stock has been pledged pursuant to a Pledge Agreement, the Company shall
notify the Agent of such acquisition, and
(a) the Company shall promptly cause such Material Subsidiary to
execute and deliver to the Agent, with counterparts for each party, a
supplement to the Guaranty; and
(b) the Company or any Subsidiary, as the case may be, shall promptly
deliver, or cause to be delivered, to the Agent under a Pledge Agreement (or
a supplement thereto) certificates (if any) representing all of the issued
and outstanding shares of Capital Stock of such Subsidiary owned by the
Company or any other Subsidiary of the Company, as the case may be, along
with undated stock powers for such certificates, executed in blank, or, if
any securities subject thereto are uncertificated securities, confirmation
and evidence satisfactory to the Agent that appropriate book entries have
been made in the relevant books or records of a financial intermediary or
the issuer of such securities, as the case may be, under applicable law
resulting in the perfection of the security interest granted in favor of the
Agent pursuant to the terms of a Pledge Agreement;
together, in each case, with such opinions, in form and substance and from
counsel satisfactory to the Agent and the Required Banks, as the Agent and the
Required Banks may reasonably require.
7.14 Further Assurances. The Company will, and will cause each Subsidiary
------------------
to, promptly execute and deliver all further instruments and documents and take
all further action that may be necessary in order to give effect to the
provisions of this Agreement, any of the Pledge Agreements (including any
supplements thereto), the Guaranty and the Notes.
-60-
ARTICLE VIII
NEGATIVE COVENANTS
------------------
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Required Banks waive compliance in writing:
8.01 Limitation on Liens. The Company shall not, and shall not suffer or
-------------------
permit any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("Permitted
---------
Liens"):
-----
(a) any Lien existing on property of the Company or any Subsidiary on
the Closing Date and set forth in Schedule 8.01 securing Indebtedness
-------------
outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 7.07; provided, that no notice
--------
of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of pledges
or deposits required in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on the property of the Company or its Subsidiary securing (i)
the non-delinquent performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, (ii) contingent obligations on surety and
appeal bonds, and (iii) other non-delinquent obligations of a like nature; in
each case, incurred in the ordinary course of business; provided, that all such
--------
Liens in the aggregate would not (even if enforced) cause a Material Adverse
Effect;
(g) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
liens in the aggregate at any time outstanding for the Company and its
Subsidiaries do not exceed $5,000,000 and the Liens listed on Schedule 8.01(g)
----------------
hereto.
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company and its Subsidiaries;
-61-
(i) Liens on assets of corporations which become Subsidiaries after
the date of this Agreement; provided, however, that such Liens existed at the
-------- -------
time the respective corporations became Subsidiaries and were not created in
anticipation thereof; provided, that all such Liens in the aggregate at any time
--------
outstanding for such Subsidiaries do not exceed $5,000,000;
(j) purchase money security interests on any property acquired or held
by the Company or its Subsidiaries in the ordinary course of business, securing
Indebtedness incurred or assumed for the purpose of financing all or any part of
the cost of acquiring such property; provided, that (i) any such Lien attaches
-------- ----
to such property concurrently with or within 20 days after the acquisition
thereof, (ii) such Lien attaches solely to the property so acquired in such
transaction, (iii) the principal amount of the debt secured thereby does not
exceed 100% of the cost of such property, and (iv) the principal amount of the
Indebtedness secured by any and all such purchase money security interests shall
not at any time exceed $5,000,000;
(k) Liens securing obligations in respect of capital leases on assets
subject to such leases, provided that such capital leases are otherwise
permitted hereunder;
(l) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided, that (i) such deposit account is not a
-------- ----
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution;
(m) Liens on Permitted Investments owned by Melody, to secure
Indebtedness under the Melody Loan Arbitrage Facility, if such Permitted
Investments were acquired by Melody with the proceeds of incurrence of such
Indebtedness;
(n) Liens on commercial mortgage loans originated and owned by Melody
subject to an irrevocable, unconditional commitment to purchase such commercial
mortgage loans, to secure Indebtedness of Melody under the Melody Mortgage
Warehousing Facility; and
(o) Liens on the assets of any direct or indirect Subsidiary of the
Company created or acquired in connection with a Permitted Acquisition and Liens
on assets acquired by such Subsidiary in a Permitted Acquisition, which Liens
secure Indebtedness permitted by Section 8.05(c) in connection with such
Permitted Acquisition (but not including any refinancing thereof), in an amount
not to exceed $10,000,000 in the aggregate;
provided, that if, notwithstanding this Section 8.01, any Lien which this
--------
Section 8.01 prohibits shall be created or arise without the prior written
consent of the Agent and the Required Banks (including with respect to this
proviso), the Obligations shall be secured by such Lien equally and ratably with
the other Indebtedness secured thereby, the Company will take or cause to be
taken all such action as may be requested by the Agent and the Required Banks to
confirm and protect such Lien in favor of the Agent and the holder of such other
Indebtedness, by accepting such Lien, shall be deemed to have agreed thereto and
to share ratably with the Agent on that basis, the proceeds of such Lien,
whether or not the Agent's security interest shall be perfected; provided
--------
further, however, that
-------
-62-
notwithstanding such equal and ratable securing and sharing, the existence of
such Lien shall constitute a default by the Company in the performance or
observance of this Section 8.01.
8.02 Negative Pledges, Restrictive Agreements, etc. The Company shall not,
---------------------------------------------
and shall not permit any of its Subsidiaries to, enter into any agreement
(excluding this Agreement and any other Loan Documents) prohibiting:
(a) the creation or assumption of any Lien (other than Liens pursuant
to the Melody Mortgage Warehousing Facility or the Melody Loan Arbitrage
Facility) upon its properties, revenues or assets, whether now owned or
hereafter acquired, or the ability of the Company or any other Subsidiary to
amend or otherwise modify this Agreement or any other Loan Document; or
(b) the ability of any Subsidiary to make any payments, directly or
indirectly, to the Company by way of dividends, advances, repayments of the
loans or advances, reimbursements of management and other intercompany
charges, expenses and accruals or other returns on investments, or any other
agreement or arrangement which restricts the ability of any such Subsidiary
to make any payment, directly or indirectly, to the Company.
8.03 Sale of Assets. (a) The Company shall not, and shall not permit any of
--------------
its Subsidiaries to, directly or indirectly, in a single transaction or a series
of transactions, sell, lease, transfer, abandon or otherwise dispose of or
suffer to be sold, leased, transferred, abandoned or otherwise disposed of, all
or any part of its assets except:
(i) the Company or any of its Subsidiaries may sell its surplus and
obsolete equipment and other surplus and obsolete assets, in each case, in
the ordinary course of its business;
(ii) any of its Subsidiaries may sell, lease, transfer or otherwise
dispose of any or all of its assets (other than accounts and inventory
except to the extent permitted under clause (i) or in connection with any
disposition of assets) to the Company or any Wholly-Owned Subsidiary that is
a Guarantor;
(iii) Melody may sell assets purchased pursuant to the Melody Mortgage
Warehousing Facility or the Melody Loan Arbitrage Facility;
(iv) the Company or any of its Subsidiaries may sell, transfer or
otherwise dispose of its assets arising in connection with the Inventory
Property Loan and the Whittier Transaction; and
(v) the Company or any of its Subsidiaries may sell, lease or
otherwise dispose of assets in transactions not otherwise permitted under
clauses (i) through (iv) hereof in an amount not to exceed $5,000,000 in the
aggregate during any one fiscal year (each such sale, lease or other
disposition of assets being hereinafter referred to as a "Sale"), so long as
----
(A) both before and immediately after the consummation of such Sale after
giving effect hereto, no Default or Event of Default shall exist; and (B)
immediately after the consummation of such Sale, after giving effect
thereto, the Company shall be permitted under the provisions of this
Agreement to incur at least $1.00 of additional Indebtedness.
-63-
8.04 Merger, Consolidations and Acquisitions.
---------------------------------------
The Company shall not, and shall not permit any Subsidiary to,
consolidate with, be acquired by, merge into or with any Person, make any
Acquisition or enter into any binding agreement to do any of the foregoing which
is not contingent on obtaining the consent of the Required Banks except:
(a) provided that (i) the Agent shall have received ten (10) days prior
written notice and (ii) immediately before and after giving effect thereto
no Default or Event of Default shall exist, (A) any Subsidiary may merge
with the Company, provided that the Company shall be the continuing or
--------
surviving corporation, or with any one or more Subsidiaries; provided, that
--------
if any transaction shall be between Subsidiaries, the Subsidiary which is
the continuing or surviving corporation shall assume by an instrument
reasonably satisfactory in form and substance to the Agent and the Required
Banks, the obligations of such other Subsidiary if party to any Loan
Document hereunder; and (B) any Subsidiary may sell all or substantially all
of its assets (upon voluntary liquidation or otherwise), to the Company or
another Subsidiary; provided, further that if any transaction shall be
-------- -------
between Subsidiaries, the Subsidiary which is the continuing or surviving
corporation shall assume by an instrument reasonably satisfactory in form
and substance to the Agent and the Required Banks, the obligations of such
other Subsidiary if party to any Loan Document hereunder.
(b) mergers involving Subsidiaries as part of an Acquisition permitted
by subsection (d) below;
(c) Investments permitted by Section 8.13; and
(d) Acquisitions, the Total Consideration of which, for all
Acquisitions made after the Closing Date for any consecutive twelve (12)
month period, shall not exceed $80,000,000 in the aggregate (including, in
determining such Total Consideration, Acquisitions in connection with Joint
Ventures in excess of $5,000,000 in the aggregate in accordance with clause
(g) of the definition of "Permitted Investments"); provided, that:
--------
(i) the Agent and the Banks shall have been given ten (10)
Business Days' prior written notice thereof;
(ii) no Default or Event of Default shall exist immediately before
or after giving effect to such Acquisition;
(iii) the Company will be in compliance with each of the financial
covenants contained in Sections 8.08, 8.09, 8.10 and 8.11 on a pro-
forma basis after giving effect to such Acquisition and any
Indebtedness incurred or assumed in connection therewith, such
Indebtedness having been contracted in accordance with the provisions
of Section 8.05 hereof;
(iv) immediately after giving effect to each such Acquisition, all
of the representations and warranties contained in Article VI shall be
true and correct as if then made;
-64-
(v) the Person, business or assets acquired in connection with
such Acquisition are a real estate services-related business or a
related line of business to the Company or any of its Subsidiaries;
(vi) the prior, effective written consent or approval to such
Acquisition of the Board or equivalent governing body of the acquiree
is obtained;
(vii) immediately after giving effect to each such Acquisition,
the Company and each of its Subsidiaries, on a consolidated basis,
shall have a Minimum Liquidity of at least $25,000,000. "Minimum
Liquidity" shall mean all cash balances plus any unutilized Commitment
----
hereunder after giving effect to such Acquisition;
(viii) the Agent shall have received a certificate of a
Responsible Officer of the Company, (A) identifying the Person or
Property to be acquired, the name of the Person making such Acquisition
and setting forth the total consideration to be paid in respect of such
Acquisition and (B) certifying the information set forth in clauses
(ii), (iii), (iv) and (vii) above and containing computations (in
reasonable detail) in support thereof, such certificate to be in form
and substance satisfactory to the Administrative Agent; provided, that
--------
with respect to any such Acquisition the Total Consideration of which
is equal to or less than $5,000,000, prior to consummation of such
Acquisition, the Agent shall have received such a Certificate
certifying as to items (A) and (B) on a "best estimates" basis; and
(ix) the Agent shall have received such other information,
documents, or opinions of counsel, as the Agent shall have reasonably
requested.
Notwithstanding anything herein to the contrary set forth in this Section
8.04, the Company and its Subsidiaries may make Acquisitions hereunder, the
Total Consideration of which, for all Acquisitions made after the Closing Date
for any consecutive twelve (12) month period, shall be greater than $80,000,000
but shall in no event exceed $380,000,000; provided, that the additional Total
--------
Consideration in excess of $80,000,000 is financed by the issuance of new equity
securities of the Company or its Subsidiaries, and provided, further that after
--------
giving effect to each such Acquisition, EBITDA of the acquired Person for the
preceding twelve (12) month period from the date of the Acquisition is a
positive number.
8.05 Limitation on Indebtedness. The Company shall not, and shall not
--------------------------
suffer or permit any Subsidiary to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Subject to Section 2.07 hereof, Subordinated Debt, but only to the
extent that the aggregate amount outstanding at any one time does not exceed
$100,000,000 (including principal and interest) in the aggregate for the
Company; provided, that the terms of such Subordinated Debt are acceptable to
--------
the Agent and the Required Banks;
(c) Subject to Section 2.07 hereof, additional Indebtedness of the
Company and its Subsidiaries in an aggregate principal amount not to exceed
$50,000,000;
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(d) Permitted Melody Indebtedness; and
(e) All other Indebtedness existing on the Closing Date, after giving
effect to the Closing, and set forth in Schedule 8.05;
-------------
8.06 Transactions with Affiliates. The Company shall not, and shall not
----------------------------
suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Company, except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than it would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Company or such
Subsidiary.
8.07 Use of Proceeds. (a) The Company shall not, and shall not suffer or
---------------
permit any Subsidiary to, use any portion of the Loan proceeds or any Letter of
Credit, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to
repay or otherwise refinance indebtedness of the Company or others incurred to
purchase or carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.
(b) The Company shall not, directly or indirectly, use any portion of
the Loan proceeds or any Letter of Credit (i) knowingly to purchase Ineligible
Securities from the Arranger during any period in which the Arranger makes a
market in such Ineligible Securities, (ii) knowingly to purchase during the
underwriting or placement period Ineligible Securities being underwritten or
privately placed by the Arranger, or (iii) to make payments of principal or
interest on Ineligible Securities underwritten or privately placed by the
Arranger and issued by or for the benefit of the Company or any Affiliate of the
Company. The Arranger is a registered broker-dealer and permitted to underwrite
and deal in certain Ineligible Securities; and "Ineligible Securities" means
---------------------
securities which may not be underwritten or dealt in by member banks of the
Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C.
(S) 24, Seventh), as amended.
8.08 Leverage Ratio Maintenance. The Company shall not permit the Leverage
--------------------------
Ratio at any time to be greater than the applicable ratio set forth below
opposite the period in which such time occurs:
Period Ratio
------ ---------
On or prior to March 31, 1999 3.50:1.00
From April 1, 1999 through March 31, 2000 3.25:1.00
Thereafter 3.00:1.00
8.09 Interest Coverage Ratio Maintenance. The Company shall not permit the
-----------------------------------
Interest Coverage Ratio at any time to be less than the applicable ratio set
forth below opposite the period in which such time occurs:
Period Minimum Ratio
------ -------------
On or prior to September 30, 1998 3.50:1.00
Thereafter 4.00:1.00
-66-
8.10 Minimum EBITDA. The Company shall maintain for each of the following
--------------
fiscal periods, Consolidated EBITDA for the period of the four (4) most recently
ended consecutive fiscal quarters of the Company, of not less than:
Fiscal
Period Ending Minimum EBITDA
------------- --------------
From the Closing Date through
June 30, 1998 $50,000,000
September 30, 1998 and thereafter $75,000,000
8.11 Maintenance of Consolidated Net Worth. The Company shall not permit
-------------------------------------
Consolidated Net Worth at any time to be less than the sum of (i) eighty-five
percent (85%) of Consolidated Net Worth as of the Closing Date, determined on a
pro forma basis to give effect to the transactions contemplated hereby,
including, without limitation, the Merger (provided, that in no event shall such
--------
Consolidated Net Worth be less than $100,000,000) plus (ii) seventy percent
----
(70%) of Consolidated Net Income for each completed fiscal quarter beginning
with the fiscal quarter ended September 30, 1997, for which Consolidated Net
Income is a positive number (Consolidated Net Income for any such fiscal year
where Consolidated Net Income is a loss having no effect on the calculation of
the amount referred to in this clause (ii)), plus seventy percent (70%) of any
----
new equity issuances of the Company and its Subsidiaries for each completed
fiscal quarter beginning with the fiscal quarter ended September 30, 1997.
8.12 Joint Ventures. The Company shall not, and shall not suffer or permit
--------------
any Subsidiary to enter into any Joint Venture, other than as permitted in
accordance with the terms of this Agreement.
8.13 Restricted Investments and Restricted Payments.
----------------------------------------------
(a) The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, declare, make or pay, or incur any liability to make or
pay, or cause or permit to be declared, made or paid, any Restricted Payment
or Restricted Investment, unless prior thereto, immediately thereafter, and
after giving effect thereto:
(i) the aggregate amount of such Restricted Payment or Restricted
Investment, plus all other Restricted Payments or Restricted
Investments made or paid, or for which a liability to make or pay has
been incurred, by the Company or any of its Subsidiaries during any
fiscal year of the Company ending after December 31, 1996 (a "Current
Year"), shall not exceed an amount equal to twenty-five percent (25%)
of Consolidated Net Income, during such Current Year, so long as
Consolidated Net Income is a positive number; and
(ii) no Default or Event of Default shall exist.
(b) Notwithstanding the foregoing provisions of this Section 8.13, the
Company may, at any time following the date hereof, and from time to time
thereafter, repurchase or redeem shares of its capital stock previously
received by
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employees of the Company and held by such employees, at a price
to be determined (a "Stock Repurchase"), so long as both before and after
giving effect to such Stock Repurchase, (i) no Default or Event of Default
shall have occurred and be continuing, and (ii) the aggregate amount of such
Stock Repurchases do not exceed $1,000,000 during any fiscal year of the
Company, and such Stock Repurchase shall not be deemed a Restricted Payment
hereunder.
(c) Notwithstanding anything herein to the contrary, the Company shall
not, and shall not permit any of its Subsidiaries to:
(i) make any payment or prepayment of principal of, or make any
payment of interest on, any Subordinated Debt on any day other than the
stated, scheduled date for such payment or prepayment set forth in the
documents and instruments memorializing such Subordinated Debt, or
which would violate the subordination provisions of such Subordinated
Debt; or
(ii) redeem, purchase or defease, any Subordinated Debt.
8.14 Capital Expenditures, etc. The Company shall not make, and shall not
--------------------------
permit any of its Subsidiaries to make, Capital Expenditures (excluding any
Capital Expenditures deemed to be made as a result of a Permitted Acquisition)
during any fiscal year of the Company in an aggregate amount in excess of Two
Hundred Percent (200%) of the amount of Depreciation Expense incurred by the
Company and its Subsidiaries for the preceding fiscal year; provided, that, the
-------- ----
Company may permit additional Capital Expenditures in an amount not to exceed
$5,000,000 in the aggregate for the fiscal year ending 1997.
8.15 ERISA. The Company shall not, and shall not permit any ERISA Affiliate
-----
or Subsidiary of the Company to, directly or indirectly, establish any new Plan
or modify any existing Plan so as to increase its obligations thereunder (except
in the ordinary course of business consistent with past practice), which
increase in obligations would reasonably be expected to have a Material Adverse
Effect.
8.16 Change in Business. The Company shall not, and shall not suffer or
------------------
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Company and its
Subsidiaries on the date hereof.
8.17 Stock of Material Subsidiaries. Except as set forth in Section 8.17
------------------------------
hereto with respect to the Whittier Transaction, the Company shall not permit
any Material Subsidiary to issue any Capital Stock (whether for value or
otherwise) to any Person other than the Company or another Material Subsidiary
of the Company.
8.18 Sale and Leaseback. The Company shall not, and shall not permit any of
------------------
its Subsidiaries to, enter into any agreement or arrangement with any other
Person providing for the leasing by the Company or any of its Subsidiaries of
real or personal property which has been or is to be sold or transferred by the
Company or any of its Subsidiaries to such other Person or to any other Person
to whom funds have been or are to be advanced by such Person on the security of
such property or rental obligations of the Company or any of its Subsidiaries
other than in connection with the sale and leaseback of improved real estate
owned by the Company in San Diego, California and Phoenix, Arizona with an
aggregate value not in excess of $10,000,000.
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8.19 Amendments. Without limiting the generality of any restrictions
----------
contained in any Contractual Obligation evidencing either any Subordinated Debt
or the Inventory Property Loan, the Company covenants and agrees that it shall
not, and shall not permit any of its Subsidiaries to, without the prior consent
of the Agent and the Required Banks, consent or agree to, or otherwise suffer,
any amendment, waiver or modification of, or supplement to, any Contractual
Obligation evidencing either any Subordinated Debt or the Inventory Property
Loan, except for modifications made in the ordinary course of business which do
not adversely affect the Agent and the Banks or increase any amounts paid by the
Company or any of its Subsidiaries thereunder.
8.20 Accounting Changes. The Company shall not, and shall not suffer or
------------------
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
the Company or of any Subsidiary.
ARTICLE IX
EVENTS OF DEFAULT
-----------------
9.01 Event of Default. Any of the following shall constitute an "Event of
---------------- --------
Default":
-------
(a) Non-Payment. The Company fails to pay, (i) when and as required to
-----------
be paid herein, any amount of principal of any Loan or of any L/C Obligation, or
(ii) within five (5) days after the same becomes due, any interest, fee or any
other amount payable hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by the
--------------------------
Company or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Company, any Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the date made or
deemed made; or
(c) Specific Defaults. The Company fails to perform or observe any
-----------------
term, covenant or agreement contained in any of Section 7.02, 7.09 or 7.12 or in
Article VIII; or
(d) Other Defaults. The Company or any Subsidiary party thereto fails
--------------
to perform or observe any other term or covenant contained in this Agreement or
any other Loan Document, and such default shall continue unremedied for a period
of twenty (20) days after the earlier of (i) the date upon which a Responsible
Officer knew or reasonably should have known of such failure or (ii) the date
upon which written notice thereof is given to the Company by the Agent or any
Bank; or
(e) Cross-Default. The Company or any Subsidiary (A) fails to make any
-------------
payment in respect of any Indebtedness having an aggregate principal amount
(including undrawn committed or available amounts and including amounts owing to
all creditors under any combined or syndicated credit arrangement) of more than
$10,000,000 when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) and such failure continues after the
applicable grace or notice period, if any, specified in the relevant document on
the date of such failure; or (B) fails to perform or observe any
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other condition or covenant, or any other event shall occur or condition exist,
under any agreement or instrument relating to any such Indebtedness or
Contingent Obligation, and such failure continues after the applicable grace or
notice period, if any, specified in the relevant document on the date of such
failure if the effect of such failure, event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof to
be demanded; or
(f) Insolvency; Voluntary Proceedings. The Company or any Material
---------------------------------
Subsidiary (i) ceases or fails to be Solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding
-----------------------
is commenced or filed against the Company or any Material Subsidiary, or any
writ, judgment, warrant of attachment, execution or similar process, is issued
or levied against a substantial part of the Company's or any Material
Subsidiary's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Company or any Material Subsidiary admits
the material allegations of a petition against it in any Insolvency Proceeding,
or an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Company or any Material Subsidiary
acquiesces in the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), assignee for the
benefit of creditors or other similar Person for itself or a substantial portion
of its property or business; or
(h) ERISA. An event or condition described in Section 6.07 shall occur
-----
or exist and, as a result of such event or condition, together with all other
such events or conditions, the Company, an ERISA Affiliate or a Subsidiary of
the Company shall incur or in the opinion of the Agent or the Required Banks
shall be reasonably likely to incur a liability of any kind under ERISA, the
Code, or otherwise which, in the opinion of the Agent or the Required Banks,
could have a Material Adverse Effect; or
(i) Monetary Judgments. One or more non-interlocutory judgments, non-
------------------
interlocutory orders, decrees or arbitration awards is entered against the
Company or any Subsidiary involving in the aggregate a liability (to the extent
not covered by independent third-party insurance as to which the insurer does
not dispute coverage) as to any single or related series of transactions,
incidents or conditions, of $7,500,000 or more, and the same shall remain
unvacated and unstayed pending appeal for a period of 30 days after the entry
thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or decree
----------------------
is entered against the Company or any Subsidiary which does or would reasonably
be expected to have a Material Adverse Effect, and there shall be any period of
30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
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(k) Change of Control. There occurs any Change of Control; or
-----------------
(l) Material Adverse Effect. There occurs a Material Adverse Effect;
-----------------------
or
(m) Guarantor Defaults. Any Guarantor fails in any material respect to
------------------
perform or observe any term, covenant or agreement in the Guaranty; or the
Guaranty is for any reason partially (including with respect to future advances)
or wholly revoked or invalidated, or otherwise ceases to be in full force and
effect, or any Guarantor or any other Person contests in any manner the validity
or enforceability thereof or denies that it has any further liability or
obligation thereunder; or any event described at Sections (f) or (g) of this
Section occurs with respect to any Guarantor; or
(n) Invalidity of Subordination Provisions. The subordination
--------------------------------------
provisions of any agreement or instrument governing any Subordinated Debt is for
any reason revoked or invalidated, or otherwise ceases to be in full force and
effect, any Person contests in any manner the validity or enforceability thereof
or denies that it has any further liability or obligation thereunder, or the
Indebtedness hereunder is for any reason subordinated or does not have the
priority contemplated by this Agreement or such subordination provisions; or
(o) Pledge Agreements. The Company or any of its Subsidiaries shall
-----------------
have knowledge that any Lien created or intended to be created by any of the
Pledge Agreements shall cease to be a valid and enforceable Lien, or any such
Lien shall cease to be a perfected Lien and such Lien remains invalid,
unenforceable or unperfected for ten (10) days.
9.02 Remedies. If any Event of Default occurs, the Agent shall, at the
--------
request of, or may, with the consent of, the Required Banks, take any one or
more of the following actions:
(a) declare the commitment of each Bank to make Loans and any
obligation of the Issuing Bank to Issue Letters of Credit to be terminated,
whereupon such commitments and obligation shall be terminated;
(b) declare an amount equal to the maximum aggregate amount that is or
at any time thereafter may become available for drawing under any outstanding
Letters of Credit (whether or not any beneficiary shall have presented, or shall
be entitled at such time to present, the drafts or other documents required to
draw under such Letters of Credit) to be immediately due and payable, and
declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Company; and/or
(c) exercise on behalf of itself and the Banks all rights and remedies
available to it and the Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in Section
-------- -------
(f) or (g) of Section 9.01 (in the case of clause (i) of Section (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans and any obligation of the Issuing Bank to Issue Letters of Credit
shall automatically terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid
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shall automatically become due and payable without further act of the Agent, the
Issuing Bank or any Bank.
9.03 Rights Not Exclusive. The rights provided for in this Agreement and
--------------------
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE X
THE AGENT
---------
10.01 Appointment and Authorization; "Agent". (a) Each Bank hereby
-------------------------------------
irrevocably (subject to Section 10.09) appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
(b) The Issuing Bank shall act on behalf of the Banks with respect to
any Letters of Credit Issued by it and the documents associated therewith until
such time and except for so long as the Agent may agree at the request of the
Required Banks to act for such Issuing Bank with respect thereto; provided,
--------
however, that the Issuing Bank shall have all of the benefits and immunities (i)
-------
provided to the Agent in this Article X with respect to any acts taken or
omissions suffered by the Issuing Bank in connection with Letters of Credit
Issued by it or proposed to be Issued by it and the application and agreements
for letters of credit pertaining to the Letters of Credit as fully as if the
term "Agent", as used in this Article X, included the Issuing Bank with respect
to such acts or omissions, and (ii) as additionally provided in this Agreement
with respect to the Issuing Bank.
10.02 Delegation of Duties. The Agent may execute any of its duties under
--------------------
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.03 Liability of Agent. None of the Agent-Related Persons shall (i) be
------------------
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to
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any of the Banks for any recital, statement, representation or warranty made by
the Company or any Subsidiary or Affiliate of the Company, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of the Company or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Company or any of the Company's Subsidiaries or Affiliates.
10.04 Reliance by Agent. (a) The Agent shall be entitled to rely, and
-----------------
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.
10.05 Notice of Default. The Agent shall not be deemed to have knowledge
-----------------
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Banks, unless the Agent shall have
received written notice from a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". The Agent will notify the Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Banks in accordance with Article
IX; provided, however, that unless and until the Agent has received any such
-------- -------
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
10.06 Credit Decision. Each Bank acknowledges that none of the Agent-
---------------
Related Persons has made any representation or warranty to it, and that no act
by the Agent
-73-
hereinafter taken, including any review of the affairs of the Company and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Bank. Each Bank represents to the Agent that it
has, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon any Agent-
Related Person and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of the Company. Except for notices, reports and
other documents expressly herein required to be furnished to the Banks by the
Agent, the Agent shall not have any duty or responsibility to provide any Bank
with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Company which may come into the possession of any of the Agent-Related Persons.
10.07 Indemnification of Agent. Whether or not the transactions
------------------------
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that no
-------- -------
Bank shall be liable for the payment to the Agent-Related Persons of any portion
of such Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each Bank
shall reimburse the Agent upon demand for its ratable share of any costs or out-
of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
10.08 Agent in Individual Capacity. BofA and its Affiliates may make loans
----------------------------
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent or the Issuing
Bank hereunder and without notice to or consent of the Banks. The Banks
acknowledge that, pursuant to such activities, BofA or its Affiliates may
receive information regarding the Company or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company or such Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Loans, BofA
shall have the same rights and powers under this Agreement as any other Bank and
may exercise the same as though it were not the Agent or the Issuing Bank.
-74-
10.09 Successor Agent. The Agent may, and at the request of the Required
---------------
Banks shall, resign as Agent upon 30 days' notice to the Banks. If the Agent
resigns under this Agreement, the Required Banks shall appoint from among the
Banks, with the consent of the Company, which consent shall not be unreasonably
withheld, a successor agent for the Banks. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Banks and the Company, a successor agent from
among the Banks. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article X and Sections 11.04 and 11.05 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent
by the date which is 30 days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Required Banks appoint a successor agent as provided for
above. Notwithstanding the foregoing, however, BofA may not be removed as the
Agent at the request of the Required Banks unless BofA shall also simultaneously
be replaced as "Issuing Bank" hereunder pursuant to documentation in form and
substance reasonably satisfactory to BofA.
10.10 Withholding Tax. (a) If any Bank is a "foreign corporation,
---------------
partnership or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Bank agrees with and in favor of the Agent, to deliver to
the Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly completed and
executed copies of IRS Form 1001 before the payment of any interest in the
first calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this
Agreement;
(ii) if such Bank claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Bank and in each
succeeding taxable year of such Bank during which interest may be paid under
this Agreement; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Company to such Bank, such Bank agrees to notify the
Agent of the percentage amount in
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which it is no longer the beneficial owner of Obligations of the Company to such
Bank. To the extent of such percentage amount, the Agent will treat such Bank's
IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of the Company to such
Bank, such Bank agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into account
such reduction. However, if the forms or other documentation required by
Section (a) of this Section are not delivered to the Agent, then the Agent may
withhold from any interest payment to such Bank not providing such forms or
other documentation an amount equivalent to the applicable withholding tax
imposed by Sections 1441 and 1442 of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of the United States
or other jurisdiction asserts a claim that the Agent did not properly withhold
tax from amounts paid to or for the account of any Bank (because the appropriate
form was not delivered or was not properly executed, or because such Bank failed
to notify the Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason)
such Bank shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section, together with all costs and expenses (including
Attorney Costs). The obligation of the Banks under this Section shall survive
the payment of all Obligations and the resignation or replacement of the Agent.
10.11 Co-Agents; Lead Managers. None of the Banks identified on the facing
------------------------
page or signature pages of this Agreement as a "senior managing agent" or a "co-
agent" shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Banks as such.
Without limiting the foregoing, none of the Banks so identified as a "senior
managing agent" or a "co-agent" shall have or be deemed to have any fiduciary
relationship with any Bank. Each Bank acknowledges that it has not relied, and
will not rely, on any of the Banks so identified in deciding to enter into this
Agreement or in taking or not taking action hereunder.
ARTICLE XI
MISCELLANEOUS
-------------
11.01 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in writing and signed by the Required Banks
(or by the Agent at the written request of the Required Banks) and the Company
and acknowledged by the Agent, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent
-------- -------
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shall, unless in writing and signed by all the Banks and the Company and
acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to Section 2.05 or Section 2.07);
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Banks (or any of them) hereunder or under any other Loan Document,
including, without limitation, any mandatory prepayments contemplated by Section
2.07 hereof;
(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or (subject to clause (iii) below) any fees or other amounts
payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which is required for the Banks or any of them to
take any action hereunder;
(e) amend this Section, or Section 2.14, or any provision herein
providing for consent or other action by all Banks; or
(f) discharge any Guarantor, or release any portion of any of the
Pledged Shares or the other Collateral under the Loan Documents except as
otherwise may be provided in the Guaranty or any Pledge Agreement, as the case
may be, or except where the consent of the Required Banks only is specifically
provided for;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
-------- -------
writing and signed by the Issuing Bank in addition to the Required Banks or all
the Banks, as the case may be, affect the rights or duties of the Issuing Bank
under this Agreement or any L/C-Related Document relating to any Letter of
Credit Issued or to be Issued by it, (ii) no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Required Banks or
all the Banks, as the case may be, affect the rights or duties of the Agent
under this Agreement or any other Loan Document, and (iii) the Fee Letter may
only be amended, or rights or privileges thereunder waived, in a writing
executed by the parties thereto.
11.02 Notices. (a) All notices, requests, consents, approvals, waivers and
-------
other communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided that any
matter transmitted by the Company by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on
Schedule 11.02, and (ii) shall be followed promptly by delivery of a hard copy
--------------
original thereof) and mailed, faxed or delivered, to the address or facsimile
number specified for notices on Schedule 11.02; or, as directed to the Company
--------------
or the Agent, to such other address as shall be designated by such party in a
written notice to the other parties, and as directed to any other party, at such
other address as shall be designated by such party in a written notice to the
Company and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed,
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upon the fifth Business Day after the date deposited into the U.S. mail, or if
delivered, upon delivery; except that notices pursuant to Article II, III or X
to the Agent shall not be effective until actually received by the Agent, and
notices pursuant to Article III to the Issuing Bank shall not be effective until
actually received by the Issuing Bank at the address specified for the "Issuing
Bank" on the applicable signature page hereof.
(c) Any agreement of the Agent and the Banks herein to receive certain
notices by telephone or facsimile is solely for the convenience and at the
request of the Company. The Agent and the Banks shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by the Company to
give such notice and the Agent and the Banks shall not have any liability to the
Company or other Person on account of any action taken or not taken by the Agent
or the Banks in reliance upon such telephonic or facsimile notice. The
obligation of the Company to repay the Loans and L/C Obligations shall not be
affected in any way or to any extent by any failure by the Agent and the Banks
to receive written confirmation of any telephonic or facsimile notice or the
receipt by the Agent and the Banks of a confirmation which is at variance with
the terms understood by the Agent and the Banks to be contained in the
telephonic or facsimile notice.
11.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay
------------------------------
in exercising, on the part of the Agent or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
11.04 Costs and Expenses. The Company shall:
------------------
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent and
Issuing Bank) within five Business Days after demand (subject to Section
5.01(e)) for all reasonable costs and expenses incurred by BofA (including in
its capacity as Agent and Issuing Bank) in connection with the development,
preparation, delivery, administration and execution of, and any amendment,
supplement, consent, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Loan Document and any other documents prepared
in connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including reasonable Attorney Costs incurred
solely by BofA (including in its capacity as Agent and Issuing Bank) with
respect thereto; and
(b) pay or reimburse the Agent, the Arranger and each Bank within five
Business Days after demand (subject to Section 5.01(e)) for all costs and
expenses (including Attorney Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or any other Loan Document during the existence of an Event
of Default or after acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding).
11.05 Company Indemnification. Whether or not the transactions
-----------------------
contemplated hereby are consummated, the Company shall indemnify, defend and
hold the Agent-Related Persons, and each Bank and each of its respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
------------------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature
-78-
whatsoever which may at any time (including at any time following repayment of
the Loans, the termination of the Letters of Credit and the termination,
resignation or replacement of the Agent or replacement of any Bank) be imposed
on, incurred by or asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or arising out of this
Agreement or the Loans or Letters of Credit or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, that the Company shall
----------------------- --------
have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
11.06 Payments Set Aside. To the extent that the Company makes a payment
------------------
to the Agent or the Banks, or the Agent or the Banks exercise their right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a)
to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each Bank severally agrees to pay to the Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Agent.
11.07 Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Bank.
11.08 Assignments, Participations, etc. (a) With the written consent of
---------------------------------
the Company (at all times other than during the existence of an Event of
Default) and the Agent and the Issuing Bank, which consents shall not be
unreasonably withheld, any Bank may, at any time, assign and delegate to one or
more Eligible Assignees (provided that no written consent of the Company, the
Agent or the Issuing Bank shall be required in connection with any assignment
and delegation by a Bank to an Eligible Assignee that is a Bank or an Affiliate
of a Bank) (each an "Assignee") all, or any ratable part of all, of the Loans,
--------
the Commitments, the L/C Obligations and the other rights and obligations of
such Bank hereunder, in a minimum amount of $5,000,000 and so long as, after
giving effect thereto, the Bank's remaining Commitment is either (i) equal to or
greater than $5,000,000 or (ii) zero; provided, however, that the Company and
-------- -------
the Agent may continue to deal solely and directly with such Bank in connection
with the interest so assigned to an Assignee until (X) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Company
and the Agent by such Bank and the Assignee; (Y) such Bank and its Assignee
shall have delivered to the Company and the Agent an Assignment and Acceptance
in the form of Exhibit F ("Assignment and Acceptance") together with any Note or
--------- -------------------------
Notes subject to such assignment and (Z) the assignor Bank or Assignee has paid
to the Agent a processing fee in the amount of $3,000.
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(b) From and after the date that the Agent notifies the assignor Bank
that it has received (and provided its consent with respect to) an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank under
the Loan Documents, and (ii) the assignor Bank shall, to the extent that rights
and obligations hereunder and under the other Loan Documents have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the Agent
that it has received an executed Assignment and Acceptance and payment of the
processing fee, (and provided that it consents to such assignment in accordance
with Section 11.08(a)), the Company shall execute and deliver to the Agent, new
Notes evidencing such Assignee's assigned Loans and Commitment and, if the
assignor Bank has retained a portion of its Loans and its Commitment,
replacement Notes in the principal amount of the Loans retained by the assignor
Bank (such Notes to be in exchange for, but not in payment of, the Notes held by
such Bank). Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Bank pro tanto.
--- -----
(d) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Company (a "Participant") participating
-----------
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under this
-------- -------
Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Company, the
Issuing Bank and the Agent shall continue to deal solely and directly with the
originating Bank in connection with the originating Bank's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no Bank
shall transfer or grant any participating interest under which the Participant
has rights to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment, consent or waiver would require unanimous consent of the Banks as
described in the first proviso to Section 11.01. In the case of any such
----- -------
participation, the Participant shall be entitled to the benefit of Sections
4.01, 4.03 and 11.05 as though it were also a Bank hereunder, and if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank may
at any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement and the Note held by it in favor of
any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR (S)203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
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11.09 Confidentiality. Each Bank agrees to take and to cause its
---------------
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Company and provided to it by the Company or any Subsidiary, or
by the Agent on the Company's or such Subsidiary's behalf, under this Agreement
or any other Loan Document, and neither it nor any of its Affiliates shall use
any such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents or in connection with other business now
or hereafter existing or contemplated with the Company or any Subsidiary; except
to the extent such information (i) was or becomes generally available to the
public other than as a result of disclosure by the Bank, or (ii) was or becomes
available on a non-confidential basis from a source other than the Company,
provided that such source is not bound by a confidentiality agreement with the
Company known to the Bank; provided, however, that any Bank may disclose such
-------- -------
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding relating to this
Agreement and the transactions contemplated hereby to which the Agent, any Bank
or their respective Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Bank's independent auditors and other
professional advisors; (G) to any Participant or Assignee, actual or potential,
with the prior consent of the Company, which consent shall not be unreasonably
withheld; provided, that such Person agrees in writing to keep such information
---------
confidential to the same extent required of the Banks hereunder; and (H) as to
any Bank or its Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Company or any
Subsidiary is party or is deemed party with such Bank or such Affiliate.
11.10 Set-off. In addition to any rights and remedies of the Banks
-------
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of the Company against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not the Agent or such Bank
shall have made demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured. Each Bank agrees promptly to
notify the Company and the Agent after any such set-off and application made by
such Bank; provided, however, that the failure to give such notice shall not
-------- -------
affect the validity of such set-off and application.
11.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall
------------------------------------------------
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
11.12 Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
-81-
11.13 Severability. The illegality or unenforceability of any provision of
------------
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
11.14 No Third Parties Benefited. This Agreement is made and entered into
--------------------------
for the sole protection and legal benefit of the Company, the Banks, the Agent
and the Agent-Related Persons, and their permitted successors and assigns, and
no other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any of the other Loan Documents.
11.15 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE NOTES
------------------------------
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA
OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE BANKS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
--------------------
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE AGENT AND
THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
11.16 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT EACH
--------------------
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE
BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO
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ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
11.17 Entire Agreement. This Agreement, together with the other Loan
----------------
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Agent, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
-83-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered in Los Angeles, California by their proper and duly
authorized officers as of the day and year first above written.
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Executive Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
Agency Specialist
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Issuing Bank
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
Agency Specialist
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
Commitment: $40,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
-84-
Commitment: $40,000,000 THE SUMITOMO BANK, LIMITED
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: General Manager
By:
---------------------------
Name:
Title:
Commitment: $22,000,000 ▇▇▇▇▇ FARGO BANK, N.A.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Regional Vice President
Commitment: $17,000,000 BHF-BANK AKTIENGESELLSCHAFT
By: /s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: V.P.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: A.T.
Commitment: $17,000,000 CREDIT LYONNAIS LOS ANGELES BRANCH
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
By:
---------------------------
Name:
Title:
-85-
Commitment: $17,000,000 DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: ASSISTANT VICE PRESIDENT
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
Commitment: $17,000,000 KEYBANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Commercial Banking Officer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Commitment: $13,000,000 THE BANK OF NOVA SCOTIA
By: /s/ ▇. ▇. Quick
---------------------------
Name: ▇. ▇. Quick
Title: Senior Relationship Manager
Commitment: $13,000,000 LASALLE NATIONAL BANK
By: /s/ ▇▇▇▇ Berchorst
---------------------------
Name: ▇▇▇▇ Berchorst
Title: Vice President
By: /s/ ▇▇▇▇▇▇ Welthoven
---------------------------
Name: ▇▇▇▇▇▇ Welthoven
Title: Loan Officer
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Commitment: $13,000,000 THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Deputy General Manager
By:
---------------------------
Name:
Title:
Commitment: $13,000,000 THE SAKURA BANK, LIMITED
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Senior Vice President &
Assistant General Manager
Commitment: $13,000,000 THE BANK OF NEW YORK
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Vice President
Commitment: $13,000,000 MELLON BANK, N.A.
By: /s/ ▇. ▇. ▇▇▇▇
---------------------------
Name: ▇. ▇. ▇▇▇▇
Title: Vice President
By:
---------------------------
Name:
Title:
-87-
Commitment: $13,000,000 THE FUJI BANK, LIMITED, LOS ANGELES
AGENCY
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Joint General Manager
By:
---------------------------
Name:
Title:
Commitment: $13,000,000 NATEXIS BANQUE-BFCE
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇ Touffu
---------------------------
Name: ▇▇▇▇▇▇ TOUFFU
Title: FIRST VP AND REGIONAL MANAGER
Commitment: $13,000,000 BANK OF MONTREAL
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
By:
---------------------------
Name:
Title:
Commitment: $13,000,000 UNION BANK OF CALIFORNIA, N.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
By:
---------------------------
Name:
Title:
-88-
EXHIBIT A
NOTICE OF BORROWING
-------------------
Date: ________________, 199__
To: Bank of America National Trust and Savings Association, as Agent for the
Banks parties to the Credit Agreement dated as of August 28, 1997 (as
extended, renewed, amended or restated from time to time, the "Credit
------
Agreement") among CB Commercial Real Estate Services Group, Inc., certain
---------
Banks which are signatories thereto and Bank of America National Trust and
Savings Association, as Agent and as Issuing Bank.
Ladies and Gentlemen:
The undersigned, CB Commercial Real Estate Services Group, Inc., a Delaware
corporation (the "Company"), refers to the Credit Agreement, the terms defined
-------
therein being used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 2.03 of the Credit Agreement, of the Borrowing
specified below:
1. The Business Day of the proposed Borrowing is
________________________, 19___.
2. The aggregate amount of the proposed Borrowing is
$_____________________.
3. The Borrowing is to be comprised of $___________ of [Base Rate]
[Offshore Rate] Loans.
4. The duration of the Interest Period for the [Offshore Rate Loans]
included in the Borrowing shall be [_____ days] [_____ months].
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the proposed Borrowing, before
and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Company contained in
Article VI of the Credit Agreement are true and correct as though made on
and as of such date (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and
correct as of such date);
(b) no Default or Event of Default has occurred and is continuing, or
would result from such proposed Borrowing; and
(c) The proposed Borrowing will not cause the aggregate principal
amount of all outstanding Revolving Loans plus the aggregate amount
----
available for drawing
A-1
under all outstanding Letters of Credit plus the aggregate
----
principal amount of all outstanding L/C Borrowings to exceed the Combined
Commitments.
CB COMMERCIAL REAL ESTATE SERVICES GROUP,
INC.
By: __________________________________
Name:
Title:
A-2
EXHIBIT B
NOTICE OF CONVERSION/CONTINUATION
---------------------------------
Date: ________________, 199__
To: Bank of America National Trust and Savings Association, as Agent for the
Banks parties to the Credit Agreement dated as of August 28, 1997 (as
extended, renewed, amended or restated from time to time, the "Credit
------
Agreement") among CB Commercial Real Estate Services Group, Inc., a
---------
Delaware corporation, certain Banks which are signatories thereto and Bank
of America National Trust and Savings Association, as Agent and as Issuing
Bank
Ladies and Gentlemen:
The undersigned, CB Commercial Real Estate Services Group, Inc., a Delaware
corporation (the "Company"), refers to the Credit Agreement, the terms defined
-------
therein being used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 2.04 of the Credit Agreement, of the
[conversion] [continuation] of the Loans specified herein, that:
1. The Conversion/Continuation Date is ____________, 19__.
2. The aggregate amount of the Loans to be [converted] [continued] is
$______________.
3. The Loans are to be [converted into] [continued as] [Offshore
Rate] [Base Rate] Loans.
4. [If applicable:] The duration of the Interest Period for the
Loans included in the [conversion] [continuation] shall be [____ days]
[____ months].
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the proposed Conversion/Continuation Date,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Company contained in
Article VI of the Credit Agreement are true and correct as though made on
and as of such date (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and
correct as of such date);
(b) no Default or Event of Default has occurred and is continuing, or
would result from such proposed [conversion] [continuation][; and
(c) the proposed [conversion][continuation] will not cause the
aggregate principal amount of all outstanding Revolving Loans plus the
----
aggregate amount available for drawing under all outstanding Letters of
Credit plus the aggregate
----
B-1
principal amount of all outstanding L/C Borrowings to exceed the Combined
Commitments.
CB COMMERCIAL REAL ESTATE
SERVICES GROUP, INC.
By: ______________________________
Name:
Title:
▇-▇
▇▇▇▇▇▇▇ ▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ SERVICES GROUP, INC.
----------------------------------------------
COMPLIANCE CERTIFICATE
----------------------
Financial
Statement Date: ____________, 199_
Reference is made to that certain Credit Agreement dated as of August 28,
1997 (as extended, renewed, amended or restated from time to time, the "Credit
------
Agreement") among CB Commercial Real Estate Services Group, Inc., a Delaware
---------
corporation (the "Company"), the several financial institutions from time to
-------
time parties to this Credit Agreement (the "Banks") and Bank of America National
-----
Trust and Savings Association, as agent for the Banks (in such capacity, the
"Agent") and as Issuing Bank. Unless otherwise defined herein, capitalized
------
terms used herein have the respective meanings assigned to them in the Credit
Agreement.
The undersigned, a Responsible Officer of the Company, hereby certifies as
of the date hereof that he/she is the __________________ of the Company, and
that, as such, he/she is authorized to execute and deliver this Certificate to
the Banks and the Agent on the behalf of the Company and its consolidated
Subsidiaries, and that:
[Use the following paragraph if this Certificate is delivered in connection with
the financial statements required by Section [7.01(a)] of the Credit Agreement.]
1. Attached as Schedule 1 hereto are (a) a true and correct copy of the
----------
audited consolidated balance sheet of the Company and its consolidated
Subsidiaries as at the end of the fiscal year ended _______________, 199__ and
(b) the related consolidated statements of income or operations, [retained
earnings,] shareholders' equity and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year,
[reported on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit] and accompanied by the
opinion of _________________ or another nationally-recognized certified
independent public accounting firm (the "Independent Auditor") which report
-------------------
shall state that such consolidated financial statements are complete and correct
and have been prepared in accordance with GAAP, and fairly present, in all
material respects, the financial position of the Company and its consolidated
Subsidiaries for the periods indicated and on a basis consistent with prior
periods.
or
[Use the following paragraph if this Certificate is delivered in connection with
the financial statements required by Section [7.01(b)] of the Credit Agreement.]
1. Attached as Schedule 1 hereto are (a) a true and correct copy of the
----------
unaudited consolidated balance sheet of the Company and its consolidated
Subsidiaries as of the end of the fiscal quarter ended __________, 199__, and
(b) the related unaudited consolidated statements of income, shareholders'
equity, [retained earnings,] and cash flows
C-1
for the period commencing on the first day and ending on the last day of such
quarter, [setting forth in each case in comparative form the figures for the
previous year,] and certified by a Responsible Officer that such financial
statements were prepared in accordance with GAAP (subject only to ordinary, good
faith year-end audit adjustments and the absence of footnotes) and fairly
present, in all material respects, the financial position and the results of
operations of the Company and its consolidated Subsidiaries.
OR
[Use the following paragraph if this Certificate is delivered in connection with
the financial statements required by subsection [7.01(c)] of the Credit
Agreement.]
1. Attached as Schedule 1 hereto are (a) a true and correct copy of the
----------
unaudited consolidating balance sheet of the Company and its consolidated
Subsidiaries as of the end of the fiscal year ended ______________, 199__ and
(b) the related consolidating statements of income, shareholders' equity [and
retained earnings], and cash flows for such fiscal year, [all showing separately
the principal lines of business conducted by separate Subsidiaries or groups of
Subsidiaries to the extent requested by the Agent] and certified by a
Responsible Officer that such financial statements [were prepared in accordance
with GAAP (subject only to ordinary, good faith year-end audit adjustments and
the absence of footnotes) and] fairly present, in all material respects, the
financial position and results of operations of the Company and its consolidated
Subsidiaries and that such financial statements were developed and used in
connection with the preparation of the financial statements referred to in
subsection [7.01(a)].
or
[Use the following paragraph if this Certificate is delivered in connection with
the financial statements required by subsection [7.01(d)] of the Credit
Agreement.]
1. Attached as Schedule 1 hereto are (a) a true and correct copy of the
----------
unaudited consolidating balance sheets of the Company and its consolidated
Subsidiaries as of the end of the fiscal quarter ended ______________, 199__ and
(b) the related consolidating statements of income, shareholders' equity [and
retained earnings] and cash flows for such quarter [and the portion of the
fiscal quarter through the end of such quarter], [all showing separately the
principal lines of business conducted by separate Subsidiaries or groups of
Subsidiaries to the extent requested by the Agent for such quarter taken as a
whole], certified by a Responsible Officer that such financial statements [were
prepared in accordance with GAAP (subject only to ordinary, good-faith year-end
audit adjustments and the absence of footnotes) and] fairly present, in all
material respects, the financial position and results of operations of the
Company and its consolidated Subsidiaries and that such financial statements
were developed and used in connection with the preparation of the financial
statements referred to in subsection [7.01(b)].
2. The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and has made, or has caused to be made under his/her
supervision, a detailed review of the transactions and conditions (financial or
otherwise) of the Company during the accounting period covered by the attached
financial statements.
3. To the best of the undersigned's knowledge, the Company, during such
period, has observed, performed or satisfied all of its covenants and other
agreements, and
C-2
satisfied every condition in the Credit Agreement to be observed, performed or
satisfied by the Company, and the undersigned has no knowledge of any Default or
Event of Default.
4. The following financial covenant analyses and information set forth on
Schedule 2 attached hereto are true and accurate on and as of the date of this
----------
Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
___________________, 199__.
CB COMMERCIAL REAL ESTATE
SERVICES GROUP, INC.
By: __________________________
Name:
Title:
▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF LEGAL OPINION OF COMPANY'S COUNSEL
------------------------------------------
▇-▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ AT LAW
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
[▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
LOGO] TELEPHONE (▇▇▇) ▇▇▇-▇▇▇▇ FAX (▇▇▇) ▇▇▇-▇▇▇▇
internet: ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Madison &
Sutro LLP
August 28, 1997
Bank of America National
Trust and Savings Association
The Bank of Nova Scotia
BHF Bank Aktiengesellschaft
Credit Lyonnais Los Angeles Branch
LaSalle National Bank
The Mitsubishi Trust and Banking
Corporation
The Sakura Bank, Limited
The Sumitomo Bank, Limited
▇▇▇▇▇ Fargo Bank, N.A.
The Bank of New York
Mellon Bank, N.A.
The Fuji Bank, Limited
Natexis Banque-BFCE
Key Bank National Association
Bank of Montreal
Dresdner Bank AG
Union Bank of California, N.A.
Ladies and Gentlemen:
We have acted as counsel to CB Commercial Real Estate Services Group, Inc.,
a Delaware corporation (the "Company") and CB Commercial Real Estate Group,
Inc., a Delaware corporation ("CBC Group"), with respect to the negotiation and
execution of the Credit Agreement (the "Credit Agreement") dated as of
August 28, 1997 among the Company, the several financial institutions from time
to time party to the Credit Agreement (collectively, the "Lenders"), The
Sumitomo Bank, Limited, as senior managing agent for the Lenders and Bank of
America National Trust and Savings Association as Issuing Bank and as Agent,
(in such capacity, the "Agent"). This opinion is rendered pursuant to Section
5.01(d)(i) of the Credit Agreement. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Credit Agreement.
Bank of American National
Trust and Savings Association
and the other Lenders identified in
the herein referenced Credit
Agreement
August 28, 1997
Page 2
We have examined executed copies of the Credit Agreement, the Guaranty
dated as of August 28, 1997 (the "Guaranty") from CBC Group, ▇▇▇▇ Management
Services, Inc., Westmark Realty Advisors LLC, ▇.▇. ▇▇▇▇▇▇ & Company, ▇▇▇▇
Corporate Services, Inc., ▇▇▇▇ Investment Management, Inc., ▇▇▇▇ ▇▇▇▇ Realty
Advisors, Inc., CBS Investment Realty, Inc., ▇▇▇▇ Partnerships I, Inc. and ▇▇▇▇
Partnerships II, Inc., (collectively, the "Material Subsidiaries") and ▇▇▇▇/CC&F
Management Services ("▇▇▇▇/CC&F") to the Agent for the benefit of the Lenders,
the Pledge Agreement dated as of August 28, 1997 (the "Company Pledge
Agreement") from the Company to the Agent for the benefit of the Lenders, the
Pledge Agreement dated as of August 28, 1997 (the "CBC Group Pledge Agreement")
from CBC Group to the Agent for the benefit of the Lenders, the Pledge Agreement
dated as of August 28, 1997 (the "CBC Group Pledge Agreement") from CBC Group to
the Agent for the benefit of the Lenders, the Pledge Agreement dated as of
August 28, 1997 (the "KMSI Pledge Agreement") from ▇▇▇▇ Management Services,
Inc. ("KMSI"), the Pledge Agreement dated as of August 28, 1997 (the "KRES
Pledge Agreement") from ▇▇▇▇ Real Estate Services ("KRES") to the Agent for the
benefit of the Lenders, the Pledge Agreement dated as of August 28, 1997 (the
"WREAP Pledge Agreement") from HoldPar A and HoldPar B (collectively, "HoldPar")
and Westmark Real Estate Acquisition Partnership, L.P. ("WREAP") to the Agent
for the benefit of the Lenders and the Pledge Agreement dated as of August 28,
1997 (the "KVK Pledge Agreement") from ▇▇▇▇ Von ▇▇▇▇▇▇, Inc. ("KVK") to the
Agent for the benefit of the Lenders. KRES, CBC Group, KVK and KMSI are
collectively herein referred to as the "Subsidiary Pledgors", and the CBC Group
Pledge Agreement, the KMSI Pledge Agreement, the KRES Pledge Agreement, the
WREAP Pledge Agreement and the KVK Pledge Agreement are herein collectively
referred to as the "Subsidiary Pledge Agreements". We have also examined such
other documents, certificates of public officials and representatives of the
Company and subsidiaries of the Company as we have deemed necessary as a basis
for the opinions expressed herein. As to questions of fact material to such
opinions, we have relied upon certificates of officers of the Company or its
subsidiaries.
We have assumed the genuineness of all signatures and documents submitted
to us as originals, that all copies submitted to us conform to the originals,
the legal capacity of all natural persons, and as to documents executed by
entities other than the Company and its Subsidiaries, that each such entity has
complied with any applicable requirement to file returns and pay taxes under the
California Franchise Tax law and had the power to enter into and perform its
obligations thereunder, and that such documents have been duly authorized,
executed and delivered by, and are binding upon and enforceable against, such
entities.
We have assumed that each of the Lenders is either a bank (i) organized
under the laws of the United States or any State thereof, or (ii) licensed to
maintain an office in California, or (iii) licensed or otherwise authorized by
another State of the United States to maintain an agency or branch in such
State, or (iv) which maintains a Federal agency or Federal branch in any State
Bank of American National
Trust and Savings Association
and the other Lenders identified in
the herein referenced Credit
Agreement
August 28, 1997
Page 3
of the United States of America or (v) which has, and will have during the term
of the Agreement, assets equal to at least $100,000,000, and, as a result
thereof, is a lender exempt from the restrictions of Section 1 or Article XV of
the Constitution of the State of California relating to rates of interest upon
the loan of money.
We express no opinion as to the laws of any jurisdiction other than the
State of California, the corporation law of the State of Delaware and the
Federal laws of the United States of America.
Based upon the foregoing and subject to the assumptions set forth above and
the qualifications set forth below, it is our opinion that:
1. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Delaware, is duly
qualified and in good standing as a foreign corporation authorized to do
business in the State of California and, based solely upon certificates of its
officers, is duly qualified and in good standing as a foreign corporation
authorized to do business in each other state where the nature of its business
activities conducted or properties owned or leased requires it to be so
qualified except where the failure to be so qualified would not have a material
adverse effect upon the business or financial condition of the Company. The
Company has all requisite corporate power and authority to execute and deliver
each of the Loan Documents to which it is a party and to perform its respective
obligations thereunder.
2. Each of the Material Subsidiaries has been duly incorporated and is
a validly existing corporation in good standing under the laws of the
jurisdiction of its incorporation and, based solely upon certificates of its
officers, is duly qualified and in good standing as a foreign corporation and
authorized to do business in each state where the nature of its business
activities conducted or properties owned or leased requires it to be so
qualified except where the failure to be so qualified would not have a material
adverse effect upon the respective business or financial condition of such
Material Subsidiary. Each Material Subsidiary has all requisite corporate power
and authority to execute, deliver and perform its obligations under the
Guaranty.
3. Each of the Subsidiary Pledgors has been duly incorporated and is a
validly existing corporation in good standing under the laws of the jurisdiction
of its incorporation and, based solely upon certificates of its officers, is
duly qualified and in good standing as a foreign corporation and authorized to
do business in each state where the nature of its business activities conducted
or properties owned or leased requires it to be so qualified except where the
failure to be so qualified would not have a material adverse effect upon the
respective business or
Bank of American National
Trust and Savings Association
and the other Lenders identified in
the herein referenced Credit
Agreement
August 28, 1997
Page 4
financial condition of such Subsidiary Pledgor. Each Subsidiary Pledgor has all
requisite corporate power and authority to execute, deliver and perform its
obligations under its respective Pledge Agreement. Each of WREAP and HoldPar has
the requisite power and authority to execute, deliver and perform its
obligations under its respective Pledge Agreement.
4. The execution and delivery of each of the Loan Documents to which it
is a party and performance by the Company of its obligations thereunder have
been duly authorized by all necessary action on the part of the Company.
5. The execution and delivery of the Guaranty by the Material
Subsidiaries and ▇▇▇▇/CC&F and performance by the Material Subsidiaries and
▇▇▇▇/CC&F of their respective obligations thereunder have been duly authorized
by all necessary action on the part of each Material Subsidiary and ▇▇▇▇/CC&F.
6. The execution and delivery of the Subsidiary Pledge Agreements by the
Subsidiary Pledgors and by WREAP and HoldPar and performance by the Subsidiary
Pledgors and by WREAP and HoldPar of their respective obligations thereunder
have been duly authorized by all necessary action on the part of each Subsidiary
Pledgor and WREAP and HoldPar.
7. Each of the Loan Documents to which the Company is a Party constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its respective terms. The Subsidiary Pledge
Agreements constitute the legal, valid and binding obligations of the Subsidiary
Pledgors, WREAP and HoldPar, respectively, enforceable against each Subsidiary
Pledgor, WREAP and HoldPar, respectively, in accordance with their respective
terms. The Guaranty constitutes the legal, valid and binding obligation of each
of the Material Subsidiaries and ▇▇▇▇/CC&F, enforceable against each Material
Subsidiary and ▇▇▇▇/CC&F in accordance with its terms.
8. Upon filing a financing statement in proper form with respect thereto
in the office of the California Secretary of State, a valid security interest in
each of KMSI's and KVK's interests in ▇▇▇▇/CC&F in favor of the Agent for the
benefit of the Lenders will be perfected to the extent that a security interest
in such collateral may be so perfected. So long as the Agent (as such term is
defined in the Company Pledge Agreement and the Subsidiary Pledge Agreements)
takes possession of and holds the stock certificates representing all of the
Pledged Shares, which are being delivered to the Agent for the benefit of the
Lenders in accordance with the terms of the Company Pledge Agreement and the
Subsidiary Pledge Agreements, together with undated stock powers duly endorsed
in blank, the Company Pledge Agreement and the Subsidiary Pledge Agreements
create a valid and perfected security interest in favor of the Agent,
Bank of American National
Trust and Savings Association
and the other Lenders identified in
the herein referenced Credit
Agreement
August 28, 1997
Page 5
for the benefit of the Lenders in the Pledged Shares, as security for the
payment, to the extent set forth in the Company Pledge Agreement and each
Subsidiary Pledge Agreement, of all the Obligations.
9. None of the Company, any Material Subsidiary, ▇▇▇▇/CC&F or any
Subsidiary Pledgor or WREAP or HoldPar (i) is an "investment company" registered
or required to be registered under the Investment Company Act of 1940, as
amended, or a company controlled by such a company or (ii) is subject to
regulation under the Public Utility Holding Company Act of 1934, the Federal
Power Act, the Interstate Commerce Act or any other state or federal statute or
regulation limiting its ability to incur debt for borrowed money.
10. The execution, delivery and performance by the Company and each
Material Subsidiary, each Subsidiary Pledgor, WREAP and HoldPar of each Loan
Document to which it is a party do not and will not violate any Margin
Regulations or any other law or regulation of the United States of America
binding on any of them.
11. The execution, delivery and performance by the Company, each
Material Subsidiary and each Subsidiary Pledgor of each Loan Document to which
it is a party do not and will not violate the charter or bylaws of any of them.
The execution, delivery and performance by WREAP and HoldPar of the Subsidiary
Pledge Agreements to which each is a party and the execution delivery and
performance by ▇▇▇▇/CC&F of the Guaranty do not and will not violate the
partnership agreements of any of them.
12. The execution, delivery and performance by the Company, each
Material Subsidiary, ▇▇▇▇/CC&F, each Subsidiary Pledgor and WREAP and HoldPar
of each Loan Document to which it is a party do not and will not to our
knowledge based upon certificates of appropriate officers (or in the case of
WREAP, HoldPar and ▇▇▇▇/CC&F of appropriate partners) (a) violate any order,
judgment or decree of any court or other governmental authority binding on any
of them or (b) conflict with, result in a breach of, or constitute (where with a
giving of notice or lapse of time or both, constitute) a default under, or
require the approval or consent of any person pursuant to any contractual
obligation of any of them.
13. To the best of our knowledge after due inquiry only of officers of
the Company, there are no actions, suits or proceedings at law or in equity
pending, or threatened, at law, or in equity, against the Company or its
Material Subsidiaries or ▇▇▇▇/CC&F which purport to affect or pertain to any of
the Loan Documents. Based solely upon certificates of its officers, no
injunction, writ, temporary restraining order of any nature has been issued by
any court of other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance
Bank of American National
Trust and Savings Association
and the other Lenders identified in
the herein referenced Credit
Agreement
August 28, 1997
Page 6
of any of the Loan Documents, or directing that the transactions provided for
therein, including the Merger (as such term is defined in the Credit Agreement),
not be consummated.
The opinions set forth above are subject to the following qualifications:
(a) Our opinion in paragraph 7 above is subject to and limited by: (i)
the effect of bankruptcy, insolvency, reorganization, receivership,
conservatorship, arrangement, moratorium or other laws affecting or relating to
the rights of creditors generally, (ii) the rules governing the availability of
specific performance, injunctive relief or other equitable remedies and general
principles of equity, regardless of whether considered in a proceeding in equity
or at law, (iii) the effect of applicable court decisions, invoking statutes or
principles of equity, which have held that certain covenants and provisions of
agreements are unenforceable where the breach of such covenants or provisions
imposes restrictions or burdens upon a borrower, and it cannot be demonstrated
that the enforcement of such restrictions or burdens is necessary for the
protection of the creditor, or which have held that the creditor's enforcement
of such covenants or provisions under the circumstances would violate the
creditor's covenants of good faith and fair dealing implied under California law
and (iv) the effect of California statutes and rules of law which cannot be
waived prospectively by a borrower. With respect to the Guaranty and the
Subsidiary Pledge Agreements, our opinion is further subject to the effect of
California statutes and cases to the effect that a surety may be exonerated if
the creditor alters the original obligation of the principal without the
surety's consent, elects remedies for default that may impair the surety's
subrogation rights against the principal, or otherwise takes action which
materially prejudices the surety, without notification of the surety, unless
such rights of the surety are validly waived. While we believe that a California
court should hold that waivers of such rights contained in the Guaranty and the
Subsidiary Pledge Agreements are enforceable, we express no opinion with respect
to the effect of any modification of the obligations of the Company which
materially increases such obligations, or any election of remedies by the Agent
or the Lenders following the occurrence of a default, or any other act by the
Agent or the Lenders, which materially prejudices any of the Material
Subsidiaries or ▇▇▇▇/CC&F, if such actions occur without notice and opportunity
to cure being granted to such Subsidiary. We further advise you that if it could
be contended that the Guaranty and the Subsidiary Pledge Agreements have not
been given for a fair or reasonably equivalent consideration, or that any or the
Material Subsidiaries or ▇▇▇▇/CC&F executing the Guaranty or a Subsidiary Pledge
Agreement may become insolvent and that such documents are therefore voidable by
creditors of such Subsidiary or by a trustee or receiver of such Subsidiary in
bankruptcy or similar proceedings pursuant to applicable bankruptcy, fraudulent
conveyance or similar laws. We express no opinion as to any provision in the
Credit Agreement which increases the rate of interest or imposes any late charge
Bank of American National
Trust and Savings Association
and the other Lenders identified in
the herein referenced Credit
Agreement
August 28, 1997
Page 7
or prepayment fee in the event of a delinquency or default or other event, to
the extent such increased rate or charge or fee is found to constitute a
penalty.
(b) Whenever a statement herein is qualified by "known to us," "to our
knowledge," or similar phrase, it indicates that in the course of our
representation of the Company no information that would give us current actual
knowledge of the inaccuracy of such statement has come to the attention of the
attorneys in this firm who have rendered legal services in connection with this
transaction. We have not made any independent investigation to determine the
accuracy of such statement, except as expressly described herein. No inference
as to our knowledge of any matters bearing on the accuracy of such statement
should be drawn from the fact of our representation of the Company in other
matters in which such attorneys are not involved.
This opinion is rendered solely for your benefit and may not be used,
circulated, quoted or relied upon for any other purpose without our prior
written consent except that you may provide this opinion to (i) bank examiners
and other regulatory authorities should they so request, (ii) in accordance with
their normal examinations, to your independent auditors or attorneys, (iii)
pursuant to legal process, or (iv) in connection with any legal action to which
you are a party arising out of the transactions contemplated by any of the
documents referenced herein. In addition, we advise you that we accede to your
request to provide a copy of this opinion to any person in connection with
assignment of, or any sale of a participating interest in, any of the loans
under the Credit Agreement without any right to rely thereon.
Very truly yours,
Pillsbury Madison & Sutro LLP
EXHIBIT D-2
FORM OF LEGAL OPINION OF COMPANY'S GENERAL COUNSEL
---------------------------------------------------
D-2
[LETTERHEAD OF CB COMMERCIAL REAL ESTATE GROUP, INC.]
August 28, 1997
Bank of America, National Trust and Savings Association; The Bank of Nova
Scotia; BHF Bank Aktiengesellschaft; Credit Lyonnais, Los Angeles Branch;
LaSalle National Bank; The Mitsubishi Trust and Banking Corporation; The
Sakura Bank, Limited; The Sumitomo Bank, Limited; ▇▇▇▇▇ Fargo Bank, N.A.;
The Bank of New York; Mellon Bank, N.A.; The Fuji Bank, Limited; Natexis
Banque-BFCE; Key Bank, National Association; Bank of Montreal; Dresdner
Bank AG; and Union Bank of California, N.A.
Ladies and Gentlemen:
I am the general counsel of CB Commerical Real Estate Services Group, Inc., a
Delaware corporation ("CBC") and CB Acquisition Corporation, a Delaware
corporation ("Acquisition"). I have acted as counsel to CBC and Acquisition in
connection with the merger (the "Merger") of Acquisition Corporation with and
into ▇▇▇▇ Real Estate Services, a Delaware corporation ("KRES") pursuant to the
Agreement and Plan of Reorganization dated May 14, 1997 (the "Merger
Agreement"). In connection with the negotiation of the Merger Agreement and
related due diligence I became familiar with KRES and its major shareholders.
I have also acted as counsel to CBC with respect to the Credit Agreement dated
August 28, 1997 between CBC, Bank of America National Trust and Savings
Association ("Bank of America") and various other banks (the "Credit
Agreement"). This opinion is rendered to Bank of America and each other bank
signatory to the Credit Agreement.
I have examined an executed copy of the Merger Agreement. I have also examined
such other documents and certificates of public officials and representatives of
CBC, Acquisition and KRES as I have deemed necessary as a basis for the opinions
expressed herein. As to questions of fact material to such opinions, I have,
when relevant facts were not independently established, relied upon certificates
of officers of CBC, Acquisition and KRES.
I have assumed the genuineness of all signatures and documents submitted as
originals and that all copies submitted to us conform to the originals.
I assume that no party to the Merger Agreement knows of any agreements,
understandings or negotiations between the parties not set forth in the Merger
Agreement that would modify the terms or rights and obligations of the parties
thereunder.
I express no opinion as to the laws of any jurisdiction other than California,
the corporate law of the State of Delaware and the federal securities law of the
United States.
Bank of America National Trust and Savings Association
August 28, 1997
Page 2
Based upon the foregoing and subject to the qualifications set forth below, it
is my opinion that:
1. Each of CBC, Acquisition, KRES and the KRES corporate shareholders which
are a party thereto, had the power and authority (corporate or otherwise)
to execute and deliver the Merger Agreement and to perform its
obligations under the Merger Agreement. Each of the Company, Acquisition,
KRES and the KRES corporate shareholders which are a party thereto has
taken all necessary action to authorize the execution, delivery and
performance by it of the Merger Agreement.
2. Each of the Company, Acquisition Corporation, KRES and the KRES corporate
shareholders who are a party thereto has duly executed and delivered the
Merger Agreement and the Merger Agreement constitutes the legal, valid
and binding obligation of each of the Company, the Acquisition
Corporation, KRES and such shareholders enforceable against each in
accordance with its terms.
3. Upon the filing of the Certificate of Merger with the Delaware Secretary
of State, the Merger shall become effective at the effective time set
forth in the Merger Agreement, in accordance with the terms and
provisions of the Merger Agreement.
The opinions set forth above are subject to the following qualifications:
a. The opinion in paragraph 2. above is subject to and limited by:
i. the effect of bankruptcy, insolvency, reorganization,
receivership, conservatorship, arrangement, moratorium or
other laws affecting or relating to the rights of creditors
generally;
ii. the rules governing the availability of specific
performance, injunctive relief or other equitable remedies
and general principles of equity, regardless of whether
considered in a proceeding in equity or at law;
iii. the effect of applicable court decisions, invoking statutes
or principles of equity, which have held that certain
covenants and provisions of agreements are unenforceable
where the breach of such covenants or provisions imposes
restrictions or burdens upon an obligor, and it cannot be
demonstrated that the enforcement of such restrictions or
burdens is necessary for the protection of the creditor, or
which have held that the creditor's enforcement of such
covenants or provisions under the circumstances would
violate the creditor's covenants of good faith and fair
dealing implied under California law;
iv. the effect of statutes and rules of law which cannot be
waived prospectively by an obligor or
Bank of America National Trust and Savings Association
August 28, 1997
Page 3
v. the effect of California Civil Code sections 1670.5, 1671, 1698
and 1717, California Business & Professions Code sections 16600
and 16601, and UCC sections 6101-6111 and 9501 and sections
cited therein, and of cases applying such statutes and cases
denying enforcement of indemnities against the indemnitee's
negligence, wrongdoing or violation of law or as to the
enforceability of paragraph 16.10 of the Merger Agreement in a
federal court.
b. Whenever a statement herein is qualified by "known to me" "to my
knowledge" or similar phrase, it indicates that in the course of my
representation of the Company and Acquisition no information that
would give me current actual knowledge of the inaccuracy of such
statement has come to my attention but I have not made any independent
investigation to determine the accuracy of such statement, except as
expressly described herein. No inference as to my knowledge of any
matters bearing on the accuracy of such statement should be drawn from
the fact of my representation of the Company and Acquisition in other
matters.
This opinion is rendered solely for the information of Bank of America and the
other banks who are a party to the Credit Agreement and may not be relied upon
by any other person for any purpose without our prior written consent.
Yours very truly,
EXHIBIT E
FORM OF LEGAL OPINION OF AGENT'S COUNSEL
----------------------------------------
E-1
[LETTERHEAD OF PAUL, HASTINGS, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP]
August 28, 1997
The Financial Institutions Listed on Annex A Hereto
Re: CB Commercial Real Estate Services
Group, Inc. Credit Agreement
----------------------------------
Ladies and Gentlemen:
We have acted as counsel for Bank of America National Trust and
Savings Association, in its capacity as agent under the Credit Agreement
referenced below (in such capacity, the "Agent") in connection with the
negotiation, execution and delivery of the Credit Agreement, dated as of August
28, 1997 (the "Credit Agreement"), by and among CB Commercial Real Estate
Services Group, Inc., a Delaware corporation (the "Borrower"), the banks parties
thereto (individually a "Bank" and collectively, the "Banks"), and, Agent
thereunder, and the other agreements and documents referred to therein. This
opinion is being given pursuant to Section 5.01(d)(ii) of the Credit Agreement.
Capitalized terms used herein without definition shall have the meaning ascribed
to such terms in the Credit Agreement.
We have participated in various conferences with representatives of
the Borrower, Pillsbury Madison & Sutro LLP, counsel for each of the Borrower,
its Material Subsidiaries and each of the pledgors under the Pledge Agreements
(the "Subsidiaries"), and with your representatives, during which the Credit
Agreement and related matters have been discussed, and we have also
The Financial Institutions Listed on Annex A Hereto
August 28, 1997
Page 2
participated in the meeting held on the date hereof (the
"Closing"), incident to the making of the initial Borrowing
under the Credit Agreement. We have reviewed the forms of
the Credit Agreement and the exhibits thereto and the
opinion of Pillsbury Madison & Sutro LLP, counsel to the
Borrower and Guarantors (the "Opinion"). We have assumed
the genuineness of all signatures, the authenticity of all
documents submitted to us as originals or copies and the due
authority of all persons executing the same, and we have
relied as to factual matters on the documents which we have
reviewed. We have further assumed, as to all actions that
must be taken or conditions that must exist to any of the
Agent's or the Bank's satisfaction, or as required by any of
them under the terms of the Credit Agreement, including,
without limitation, the form and substance of various
agreements and other documents, that such actions have been
taken and such conditions exist to such satisfaction or
requirements, as the case may be.
Although we have not independently considered any
of the matters covered by the Opinion to the extent which
would be necessary to enable us to express the conclusions
therein stated, we believe that the Opinion is substantially
responsive to the requirements of the Credit Agreement.
Very truly yours,
ANNEX A
-------
Bank of America National Trust and Savings Association, as Bank
The Sumitomo Bank, Limited
▇▇▇▇▇ Fargo Bank, N.A.
BHF-Bank Aktiengesellschaft
Credit Lyonnais Los Angeles Branch
Dresdner Bank AG, New York Branch and Grand Cayman Branch
Key Bank National Association
Bank of Nova Scotia
LaSalle National Bank
The Mitsubishi Trust and Banking Corporation
The Sakura Bank, Limited
The Bank of New York
Mellon Bank, N.A.
The Fuji Bank, Limited, Los Angeles Agency
NATEXIS Banque - BFCE
Bank of Montreal
Union Bank of California, N.A.
EXHIBIT F
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
-------------------------------------------
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
--------------
Acceptance") dated as of __________, 199__ is made between
______________________________ (the "Assignor") and __________________________
--------
(the "Assignee").
--------
RECITALS
--------
WHEREAS, the Assignor is party to that certain Credit Agreement dated as
of August 28, 1997 (as amended, amended and restated, modified, supplemented or
renewed, the "Credit Agreement") among CB Commercial Real Estate Services Group,
----------------
Inc., a Delaware corporation (the "Company"), the several financial institutions
-------
from time to time party thereto (including the Assignor, the "Banks"), and Bank
-----
of America National Trust and Savings Association, as letter of credit issuing
bank ("Issuing Bank") and as agent for the Banks (the "Agent"). Any terms
------------
defined in the Credit Agreement and not defined in this Assignment and
Acceptance are used herein as defined in the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to making Loans (the "Committed Loans") to the Company in an aggregate
---------------
amount not to exceed $__________ (the "Commitment");
----------
WHEREAS, [the Assignor has made Committed Loans in the aggregate
principal amount of $__________ to the Company] [no Committed Loans are
outstanding under the Credit Agreement];
WHEREAS, [the Assignor has acquired a participation in the Issuing Bank's
liability under Letters of Credit in an aggregate principal amount of
$____________ (the "L/C Obligations")] [no Letters of Credit are outstanding
---------------
under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part of the]
[all] rights and obligations of the Assignor under the Credit Agreement in
respect of its Commitment, [together with a corresponding portion of each of its
outstanding Committed Loans and L/C Obligations,] in an amount equal to
$__________ (the "Assigned Amount") on the terms and subject to the conditions
---------------
set forth herein and the Assignee wishes to accept assignment of such rights and
to assume such obligations from the Assignor on such terms and subject to such
conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
F-1
1. Assignment and Acceptance.
-------------------------
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) __% (the "Assignee's Percentage
---------------------
Share") of (A) the Commitment [and the Committed Loans and the L/C Obligations]
-----
of the Assignor and (B) all related rights, benefits, obligations, liabilities
and indemnities of the Assignor under and in connection with the Credit
Agreement and the Loan Documents.
[If appropriate, add paragraph specifying payment to Assignor by Assignee
of outstanding principal of, accrued interest on, and fees with respect to,
Committed Loans and L/C Obligations assigned.]
(b) With effect on and after the Effective Date (as defined in Section 5
hereof), the Assignee shall be a party to the Credit Agreement and succeed to
all of the rights and be obligated to perform all of the obligations of a Bank
under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform
in accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank. It is the intent
of the parties hereto that the Commitment of the Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Amount and the
Assignor shall relinquish its rights and be released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee; provided, however, the Assignor shall not relinquish its rights under
-------- -------
Sections 4.01, 4.03 and 11.05 of the Credit Agreement to the extent such rights
relate to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignee's Commitment will be $__________.
(d) After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignor's Commitment will be $__________.
2. Payments.
--------
(a) As consideration for the sale, assignment and transfer contemplated
in Section 1 hereof, the Assignee shall pay to the Assignor on the Effective
Date in immediately available funds an amount equal to $__________, representing
the Assignee's Pro Rata Share of the principal amount of all Committed Loans.
(b) The [Assignor] [Assignee] further agrees to pay to the Agent a
processing fee in the amount specified in Section 11.08(a) of the Credit
Agreement.
3. Reallocation of Payments.
------------------------
Any interest, fees and other payments accrued to the Effective Date with
respect to the Commitment[,] [and] Committed Loans [and L/C Obligations] shall
be for the account of the Assignor. Any interest, fees and other payments
accrued on and after the Effective Date with respect to the Assigned Amount
shall be for the account of the
F-2
Assignee. Each of the Assignor and the Assignee agrees that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding sentence
and pay to the other party any such amounts which it may receive promptly upon
receipt.
4. Independent Credit Decision.
---------------------------
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Annexes, Schedules and Exhibits thereto, together with copies
of the most recent financial statements referred to in Section 7.01 of the
Credit Agreement, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into
this Assignment and Acceptance; and (b) agrees that it will, independently and
without reliance upon the Assignor, the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Credit Agreement.
5. Effective Date; Notices.
-----------------------
(a) As between the Assignor and the Assignee, the effective date for this
Assignment and Acceptance shall be __________, 199__ (the "Effective Date");
--------------
provided that the following conditions precedent have been satisfied on or
--------
before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
(ii) the consent of the Company, the Issuing Bank and the
Agent required for an effective assignment of the Assigned Amount by the
Assignor to the Assignee under Section 11.08 of the Credit Agreement shall have
been duly obtained and shall be in full force and effect as of the Effective
Date;
(iii) the Assignee shall pay to the Assignor all amounts due
to the Assignor under this Assignment and Acceptance;
(iv) the Assignee shall have complied with Section 11.08 of
the Credit Agreement (if applicable);
(v) the processing fee referred to in Section 2(b) hereof
and in Section 11.08 of the Credit Agreement shall have been paid to the Agent;
and
(vi) the Assignor shall have assigned and the Assignee shall
have assumed a percentage equal to the Assignee's Percentage Share of the rights
and obligations of the Assignor under the Credit Agreement (if such agreement
exists).
(b) Promptly following the execution of this Assignment and Acceptance,
the Assignor shall deliver to the Company, the Issuing Bank and the Agent for
acknowledgement by the Agent, a Notice of Assignment substantially in the form
attached hereto as Schedule 1.
----------
F-3
6. Agent.
-----
(a) The Assignee hereby appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the Banks pursuant to the terms of
the Credit Agreement.
[(b) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Agent under the Credit Agreement.] [INCLUDE ONLY IF
ASSIGNOR IS AGENT]
7. Withholding Tax.
---------------
The Assignee (a) represents and warrants to the Bank, the Agent and the
Company that under applicable law and treaties no tax will be required to be
withheld by the Bank with respect to any payments to be made to the Assignee
hereunder, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to the Agent and
the Company prior to the time that the Agent or Company is required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 (wherein the Assignee claims entitlement to the benefits of a
tax treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms 4224
or 1001 upon the expiration of any previously delivered form or comparable
statements in accordance with applicable U.S. law and regulations and amendments
thereto, duly executed and completed by the Assignee, and (c) agrees to comply
with all applicable U.S. laws and regulations with regard to such withholding
tax exemption.
8. Representations and Warranties.
------------------------------
(a) The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any Lien or other adverse claim; (ii) it is duly
organized and existing and it has the full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in
F-4
or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Company, or the performance or observance by the Company, of any of its
respective obligations under the Credit Agreement or any other instrument or
document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly organized
and existing and it has full power and authority to take, and has taken, all
action necessary to execute and deliver this Assignment and Acceptance and any
other documents required or permitted to be executed or delivered by it in
connection with this Assignment and Acceptance, and to fulfill its obligations
hereunder; (ii) no notices to, or consents, authorizations or approvals of, any
Person are required (other than any already given or obtained) for its due
execution, delivery and performance of this Assignment and Acceptance; and apart
from any agreements or undertakings or filings required by the Credit Agreement,
no further action by, or notice to, or filing with, any Person is required of it
for such execution, delivery or performance; (iii) this Assignment and
Acceptance has been duly executed and delivered by it and constitutes the legal,
valid and binding obligation of the Assignee, enforceable against the Assignee
in accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable principles;
and (iv) it is an Eligible Assignee.
9. Further Assurances.
------------------
The Assignor and the Assignee each hereby agree to execute and deliver such
other instruments, and take such other action, as either party may reasonably
request in connection with the transactions contemplated by this Assignment and
Acceptance, including the delivery of any notices or other documents or
instruments to the Company or the Agent, which may be required in connection
with the assignment and assumption contemplated hereby.
10. Miscellaneous.
-------------
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
F-5
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA. The Assignor and the
Assignee each irrevocably submits to the non-exclusive jurisdiction of any State
or Federal court sitting in California over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such California State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER
ORAL OR WRITTEN).
[Other provisions to be added as may be negotiated between the
Assignor and the Assignee, provided that such provisions are not inconsistent
with the Credit Agreement.]
F-6
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:
-----------------------------
Name:
Title:
Address:
By:
-----------------------------
Name:
Title:
Address:
[ASSIGNEE]
By:
-----------------------------
Name:
Title:
Address:
By:
-----------------------------
Name:
Title:
Address:
F-7
Schedule 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
-----------------------------------
_______________, 19__
Bank of America National Trust
and Savings Association, as Agent
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Agency Management Services #▇▇▇▇
[▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ National Trust
and Savings Association, as Issuing Bank
International Trade
Banking Division #5655
333 ▇. ▇▇▇▇▇▇▇ Ave., 19th Floor
Los Angeles, CA 90017]
CB Commercial Real Estate Services Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of August 28, 1997 (as amended,
amended and restated, modified, supplemented or renewed from time to time the
"Credit Agreement") among CB Commercial Real Estate Services Group, Inc., a
-----------------
Delaware corporation (the "Company"), the Banks referred to therein and Bank of
-------
America National Trust and Savings Association, as letter of credit issuing bank
("Issuing Bank") and as agent for the Banks (the "Agent"). Terms defined in the
------------ -----
Credit Agreement are used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "Assignor") to _______________ (the
--------
"Assignee") of _____% of the right, title and interest of the Assignor in and to
---------
the Credit Agreement (including, without limitation, the right, title and
interest of the Assignor in and to the Commitments of the Assignor[,] [and] all
outstanding Loans made by the Assignor [and the Assignor's participation in the
Letters of Credit]) pursuant to the Assignment and Acceptance Agreement attached
hereto (the "Assignment and Acceptance"). Before giving effect to such
-------------------------
assignment the Assignor's Commitment is $ ___________[,] [and] the aggregate
amount of its outstanding Loans is $_____________[, and its participation in L/C
Obligations is $_____________].
2. The Assignee agrees that, upon receiving the consent of the Agent,
[the Issuing Bank] and, if applicable, CB Commercial Real Estate Services Group,
Inc. to such assignment, the Assignee will be bound by the terms of the Credit
Agreement as
F-8
fully and to the same extent as if the Assignee were the Bank originally holding
such interest in the Credit Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name: _______________________________________
Address: _____________________________________________
_______________________________________
_______________________________________
Attention: ___________________________________________
Telephone: (___) ____________________________________
Telecopier: (___) ___________________________________
Telex (Answerback): __________________________________
(B) Payment Instructions:
Account No.: _________________________________________
At: _______________________________________
_______________________________________
Reference: ___________________________________________
Attention: ___________________________________________
4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment and
Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice
of Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By: _____________________________
Name:
Title:
F-9
[NAME OF ASSIGNEE]
By: _____________________________
Name:
Title:
By: _____________________________
Name:
Title:
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
By: _______________________________
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By: _______________________________
Name:
Title:
[BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Issuing Bank
By: _______________________________
Name:
Title:
F-10
EXHIBIT G
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FORM OF PROMISSORY NOTE
-----------------------
$__________________________ _______________________, 199__
FOR VALUE RECEIVED, the undersigned, CB COMMERCIAL REAL ESTATE SERVICES
GROUP, INC., a Delaware corporation (the "Company"), hereby promises to pay to
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the order of ________________________________ (the "Bank") the principal sum of
----
__________________________ Dollars ($________________________) or, if less, the
aggregate unpaid principal amount of all Loans made by the Bank to the Company
pursuant to the Credit Agreement, dated as of August 28, 1997 (such Credit
Agreement, as it may be amended, restated, supplemented or otherwise modified
from time to time, being hereinafter called the "Credit Agreement"), among the
----------------
Company, the Bank, the other banks parties thereto, and Bank of America National
Trust and Savings Association, as Agent for the Banks and as Issuing Bank, on
the dates and in the amounts provided in the Credit Agreement. The Company
further promises to pay interest on the unpaid principal amount of the Loans
evidenced hereby from time to time at the rates, on the dates, and otherwise as
provided in the Credit Agreement.
The Bank is authorized to endorse the amount and the date on which each
Loan is made, the maturity date therefor and each payment of principal with
respect thereto on the schedules annexed hereto and made a part hereof, or on
continuations thereof which shall be attached hereto and made a part hereof;
provided, that any failure to endorse such information on such schedule or
continuation thereof shall not in any manner affect any obligation of the
Company under the Credit Agreement and this Promissory Note (the "Note").
----
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement, which Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.
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Terms defined in the Credit Agreement are used herein with their
defined meanings therein unless otherwise defined herein. This Note shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of California applicable to contracts made and to be performed entirely
within such State.
CB COMMERCIAL REAL ESTATE
SERVICES GROUP, INC.
By: ________________________
Name:
Title:
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Schedule A to Note
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BASE RATE LOANS AND REPAYMENT OF BASE RATE LOANS
------------------------------------------------
(3) (4)
(2) Maturity Amount
Amount Date of of Base (5)
(1) of Base Base Rate Loan Notation
Date Rate Loan Loan Repaid Made By
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-------- --------- --------- -------- --------
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-------- --------- --------- -------- --------
-------- --------- --------- -------- --------
-------- --------- --------- -------- --------
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Schedule B to Note
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OFFSHORE RATE LOANS AND REPAYMENT OF OFFSHORE RATE LOANS
--------------------------------------------------------
(4)
(2) (3) Amount
Amount Maturity of
of Date of Offshore (5)
(1) Offshore Offshore Rate Loan Notation
Date Rate Loan Rate Loan Repaid Made By
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EXHIBIT H
FORM OF GUARANTY
H-1
EXHIBIT H
FORM OF GUARANTY
This SUBSIDIARY GUARANTY, (as it may be amended, supplemented or
otherwise modified from time to time, this "GUARANTY") is entered into as of
August 28, 1997 by CB COMMERCIAL REAL ESTATE GROUP, INC., a Delaware
corporation, ▇▇▇▇ MANAGEMENT SERVICES, INC., a Delaware corporation, WESTMARK
REALTY ADVISORS LLC, a Delaware limited liability company, ▇.▇. ▇▇▇▇▇▇ &
COMPANY, a Texas corporation, ▇▇▇▇ CORPORATE SERVICES, INC., a Delaware
corporation, ▇▇▇▇ INVESTMENT MANAGEMENT, INC., a California corporation, ▇▇▇▇
▇▇▇▇ REALTY ADVISORS, INC., a Delaware corporation, CBS INVESTMENT REALTY, INC.,
an Arizona corporation, ▇▇▇▇ PARTNERSHIPS I, INC., a Delaware corporation, ▇▇▇▇
PARTNERSHIPS II, INC., a Delaware corporation, and ▇▇▇▇/CC&F MANAGEMENT
SERVICES, a California general partnership (each a "GUARANTOR" and collectively,
"GUARANTORS") in favor of and for the benefit of BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as agent for and representative of (in such capacity
herein called "AGENT") those certain financial institutions (each a "BANK" and
collectively, "BANKS") party to the Credit Agreement (as hereinafter defined).
RECITALS
A. Pursuant to and subject to the terms and conditions of that
certain Credit Agreement dated as of August 28, 1997 by and among CB Commercial
Real Estate Services Group, Inc., a Delaware corporation (the "COMPANY"), Agent,
and Banks (as the same from time to time may be amended, restated, supplemented
or otherwise modified, the "CREDIT AGREEMENT"), Banks have agreed, among other
things, to provide a revolving credit loan (including a subfacility for letters
of credit) upon the terms and subject to the conditions set forth therein.
B. Company owns, directly or indirectly, 100% of the issued and
outstanding capital stock, partnership interest or membership interest of each
Guarantor.
C. The transactions contemplated by the Credit Agreement will
confer, directly or indirectly, a benefit on each Guarantor.
D. It is a condition precedent to effectiveness of the Credit
Agreement and the making of any Loans (as defined in the Credit Agreement) that
the Company's obligations under the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement) be guarantied by the Guarantors
as provided herein.
NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Banks and Agent to enter into the Credit Agreement,
Guarantors hereby agree as follows:
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SECTION 1. DEFINITIONS
1.1. CERTAIN DEFINED TERMS. Capitalized terms defined in the Credit
---------------------
Agreement and not otherwise defined herein shall have the respective meanings
given to such terms in the Credit Agreement. As used in this Guaranty, the
following terms shall have the following meanings unless the context otherwise
requires:
"GUARANTIED OBLIGATIONS" has the meaning assigned to that term in
subsection 2.1.
"PAYMENT IN FULL", "PAID IN FULL" or any similar term means payment in
full of the Guarantied Obligations, including without limitation all
principal, interest, costs, fees and expenses (including, without
limitation, reasonable legal fees and expenses) of Banks and Agent as
required under the Credit Agreement and the other Loan Documents.
1.2. INTERPRETATION.
--------------
(a) References to "Sections" and "subsections" shall be to Sections
and subsections, respectively, of this Guaranty unless otherwise
specifically provided. All accounting terms not otherwise defined herein
shall have the meanings assigned to them under generally accepted
accounting principles.
(b) In the event of any conflict or inconsistency between the terms,
conditions and provisions of this Guaranty and the terms, conditions and
provisions of the Credit Agreement and the other Loan Documents, the terms,
conditions and provisions of this Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1. GUARANTY OF THE GUARANTIED OBLIGATIONS. Subject to the provisions of
--------------------------------------
subsection 2.2(a), Guarantors, jointly and severally, hereby irrevocably and
unconditionally guaranty, as primary obligors and not merely as sureties, the
due and punctual payment in full of all Guarantied Obligations when the same
shall become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. (S) 362(a)). The term "GUARANTIED OBLIGATIONS"
is used herein in its most comprehensive sense and includes:
(a) any and all obligations of Company in respect of principal,
interest, fees, costs, expenses (including, without limitation, legal fees
and expenses of counsel and allocated costs of internal counsel),
indemnities and liabilities of whatsoever nature now or hereafter made,
incurred or created, whether absolute or contingent, liquidated or
unliquidated, whether due or not due, and however arising under or in
connection with the Credit Agreement and the other Loan Documents,
including those arising under successive borrowing transactions under the
Credit Agreement which shall either continue such obligations of Company or
from time to time renew them after they have been satisfied and including
interest which, but for the filing of a petition in bankruptcy with respect
to Company, would have accrued on any Guarantied
H-2
Obligations, whether or not a claim is allowed against Company for such
interest in the related bankruptcy proceeding, and the obligation to make
payments in the event of early termination thereunder; and
(b) those expenses set forth in subsection 2.9 hereof.
2.2. LIMITATION ON AMOUNT GUARANTIED; CONTRIBUTION BY GUARANTORS. (a)
-----------------------------------------------------------
Anything contained in this Guaranty to the contrary notwithstanding, if any
Fraudulent Transfer Law (as hereinafter defined) is determined by a court of
competent jurisdiction to be applicable to the obligations of any Guarantor
under this Guaranty, such obligations of such Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "FRAUDULENT
TRANSFER LAWS"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (x) in respect of intercompany indebtedness to Company or other
affiliates of Company to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Guarantor hereunder and (y) under
any guaranty of Subordinated Indebtedness which guaranty contains a limitation
as to maximum amount similar to that set forth in this subsection 2.2(a),
pursuant to which the liability of such Guarantor hereunder is included in the
liabilities taken into account in determining such maximum amount) and after
giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
reimbursement, indemnification or contribution of such Guarantor pursuant to
applicable law or pursuant to the terms of any agreement (including without
limitation any such right of contribution under subsection 2.2(b)).
(b) Guarantors under this Guaranty together desire to allocate among
themselves, in a fair and equitable manner, their obligations arising under this
Guaranty. Accordingly, in the event any payment or distribution is made on any
date by any Guarantor under this Guaranty (a "FUNDING GUARANTOR") that exceeds
its Fair Share (as defined below) as of such date, that Funding Guarantor shall
be entitled to a contribution from each of the other Guarantors in the amount of
such other Guarantor's Fair Share Shortfall (as defined below) as of such date,
with the result that all such contributions will cause each Guarantor's
Aggregate Payments (as defined below) to equal its Fair Share as of such date.
"FAIR SHARE" means, with respect to a Guarantor as of any date of determination,
an amount equal to (i) the ratio of (x) the Adjusted Maximum Amount (as defined
below) with respect to such Guarantor to (y) the aggregate of the Adjusted
Maximum Amounts with respect to all Guarantors, multiplied by (ii) the aggregate
---------- --
amount paid or distributed on or before such date by all Funding Guarantors
under this Guaranty in respect of the obligations guarantied. "FAIR SHARE
SHORTFALL" means, with respect to a Guarantor as of any date of determination,
the excess, if any, of the Fair Share of such Guarantor over the Aggregate
Payments of such Guarantor. "ADJUSTED MAXIMUM AMOUNT" means, with respect to a
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Guarantor under this Guaranty, determined as of such date in
accordance with subsection 2.2(a); provided that, solely for purposes of
--------
calculating the "ADJUSTED MAXIMUM AMOUNT" with respect to any Guarantor for
H-3
purposes of this subsection 2.2(b), any assets or liabilities of such Guarantor
arising by virtue of any rights to subrogation, reimbursement or indemnification
or any rights to or obligations of contribution hereunder shall not be
considered as assets or liabilities of such Guarantor. "AGGREGATE PAYMENTS"
means, with respect to a Guarantor as of any date of determination, an amount
equal to (i) the aggregate amount of all payments and distributions made on or
before such date by such Guarantor in respect of this Guaranty (including,
without limitation, in respect of this subsection 2.2(b)) minus (ii) the
-----
aggregate amount of all payments received on or before such date by such
Guarantor from the other Guarantors as contributions under this subsection
2.2(b). The amounts payable as contributions hereunder shall be determined as of
the date on which the related payment or distribution is made by the applicable
Funding Guarantor. The allocation among Guarantors of their obligations as set
forth in this subsection 2.2(b) shall not be construed in any way to limit the
liability of any Guarantor hereunder.
2.3. PAYMENT BY GUARANTORS; APPLICATION OF PAYMENTS. Subject to the
----------------------------------------------
provisions of subsection 2.2(a), Guarantors hereby jointly and severally agree,
in furtherance of the foregoing and not in limitation of any other right which
Agent or any Bank may have at law or in equity against any Guarantor by virtue
hereof, that upon the failure of Company to pay any of the Guarantied
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)),
Guarantors will upon demand pay, or cause to be paid, in cash, to Agent for the
ratable benefit of Banks, an amount equal to the sum of the unpaid principal
amount of all Guarantied Obligations then due as aforesaid, accrued and unpaid
interest on such Guarantied Obligations (including, without limitation, interest
which, but for the filing of a petition in bankruptcy with respect to Company,
would have accrued on such Guarantied Obligations, whether or not a claim is
allowed against Company for such interest in the related bankruptcy proceeding)
and all other Guarantied Obligations then owed to Banks and/or Agent as
aforesaid. All such payments shall be applied promptly from time to time by
Agent:
First, to the payment of costs and expenses of any collection or
-----
other realization under this Guaranty, including reasonable compensation to
Agent and its agents and counsel, and all expenses, liabilities and
advances made or incurred by Agent in connection therewith;
Second, to the payment of all other Guarantied Obligations; and
------
Third, after payment in full of all Guarantied Obligations, to the
-----
payment to Guarantor, or its successors or assigns, or to whomsoever may
be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such payments.
2.4. LIABILITY OF GUARANTORS ABSOLUTE. Each Guarantor agrees that its
--------------------------------
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guarantied Obligations. In furtherance of the foregoing and without limiting
the generality thereof, each Guarantor agrees as follows:
H-4
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) Agent may enforce this Guaranty upon the occurrence of an Event of
Default under the Credit Agreement notwithstanding the existence of any
dispute between Company and any Bank with respect to the existence of such
Event of Default.
(c) The obligations of each Guarantor hereunder are independent of the
obligations of Company under the Credit Agreement and the obligations of
any other guarantor (including any other Guarantor) of the obligations of
Company under the Credit Agreement, and a separate action or actions may be
brought and prosecuted against such Guarantor whether or not any action is
brought against Company or any of such other guarantors and whether or not
Company is joined in any such action or actions.
(d) Payment by any Guarantor of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge any
Guarantor's liability for any portion of the Guarantied Obligations which
has not been paid. Without limiting the generality of the foregoing, if
Agent is awarded a judgment in any suit brought to enforce any Guarantor's
covenant to pay a portion of the Guarantied Obligations, such judgment
shall not be deemed to release such Guarantor from its covenant to pay the
portion of the Guarantied Obligations that is not the subject of such suit,
and such judgment shall not, except to the extent satisfied by such
Guarantor, limit, affect, modify or abridge any other Guarantor's liability
hereunder in respect of the Guarantied Obligations.
(e) Any Bank, upon such terms as it deems appropriate, without notice
or demand and without affecting the validity or enforceability of this
Guaranty or giving rise to any reduction, limitation, impairment, discharge
or termination of any Guarantor's liability hereunder, from time to time
may (i) renew, extend, accelerate, increase the rate of interest on, or
otherwise change the time, place, manner or terms of payment of the
Guarantied Obligations, (ii) settle, compromise, release or discharge, or
accept or refuse any offer of performance with respect to, or substitutions
for, the Guarantied Obligations or any agreement relating thereto and/or
subordinate the payment of the same to the payment of any other
obligations; (iii) request and accept other guaranties of the Guarantied
Obligations and take and hold security for the payment of this Guaranty or
the Guarantied Obligations; (iv) release, surrender, exchange, substitute,
compromise, settle, rescind, waive, alter, subordinate or modify, with or
without consideration, any security for payment of the Guarantied
Obligations, any other guaranties of the Guarantied Obligations, or any
other obligation of any Person (including any other Guarantor) with respect
to the Guarantied Obligations; (v) enforce and apply any security now or
hereafter held by or for the benefit of such Bank in respect of this
Guaranty or the Guarantied Obligations and direct the order or manner of
sale thereof, or exercise any other right or remedy that such Bank may have
against any such security, in each case as such Bank in its discretion may
determine consistent with the Credit Agreement and any applicable security
agreement, including foreclosure on any such security pursuant to one or
more judicial or
H-5
nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right or
remedy of any Guarantor against Company or any security for the Guarantied
Obligations; and (vi) exercise any other rights available to it under the
Credit Agreement.
(f) This Guaranty and the obligations of Guarantors hereunder shall be
valid and enforceable and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason (other than
payment in full of the Guarantied Obligations), including without
limitation the occurrence of any of the following, whether or not any
Guarantor shall have had notice or knowledge of any of them: (i) any
failure or omission to assert or enforce or agreement or election not to
assert or enforce, or the stay or enjoining, by order of court, by
operation of law or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy (whether arising under the Credit
Agreement, at law, in equity or otherwise) with respect to the Guarantied
Obligations or any agreement relating thereto, or with respect to any other
guaranty of or security for the payment of the Guarantied Obligations; (ii)
any rescission, waiver, amendment or modification of, or any consent to
departure from, any of the terms or provisions (including without
limitation provisions relating to events of default) of the Credit
Agreement or any agreement or instrument executed pursuant thereto, or of
any other guaranty or security for the Guarantied Obligations, in each case
whether or not in accordance with the terms of the Credit Agreement or any
agreement relating to such other guaranty or security; (iii) the Guarantied
Obligations, or any agreement relating thereto, at any time being found to
be illegal, invalid or unenforceable in any respect; (iv) the application
of payments received from any source (other than payments received pursuant
to the Credit Agreement or from the proceeds of any security for the
Guarantied Obligations, except to the extent such security also serves as
collateral for indebtedness other than the Guarantied Obligations) to the
payment of indebtedness other than the Guarantied Obligations, even though
Agent or any Bank might have elected to apply such payment to any part or
all of the Guarantied Obligations; (v) any Bank's consent to the change,
reorganization or termination of the corporate structure or existence of
Company or the corporate, partnership or limited liability company
structure of any of its Subsidiaries and to any corresponding restructuring
of the Guarantied Obligations; (vi) any failure to perfect or continue
perfection of a security interest in any collateral which secures any of
the Guarantied Obligations; (vii) any defenses, set-offs or counterclaims
which Company may allege or assert against any Bank in respect of the
Guarantied Obligations, including but not limited to failure of
consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction and usury; and (viii) any other act or
thing or omission, or delay to do any other act or thing, which may or
might in any manner or to any extent vary the risk of any Guarantor as an
obligor in respect of the Guarantied Obligations.
2.5. WAIVERS BY GUARANTORS. Each Guarantor hereby waives, for the benefit
---------------------
of Banks and Agent:
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(a) any right to require Agent or any Bank, as a condition of payment
or performance by such Guarantor, to (i) proceed against Company, any other
guarantor (including any other Guarantor) of the Guarantied Obligations or
any other Person, (ii) proceed against or exhaust any security held from
Company, any such other guarantor (including any other Guarantor) or any
other Person, (iii) proceed against or have resort to any balance of any
deposit account or credit on the books of Agent or any Bank in favor of
Company or any other Person, or (iv) pursue any other remedy in the power
of Agent or any Bank whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of Company including, without
limitation, any defense based on or arising out of the lack of validity or
the unenforceability of the Guarantied Obligations or any agreement or
instrument relating thereto or by reason of the cessation of the liability
of Company from any cause other than payment in full of the Guarantied
Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;
(d) any defense based upon Agent's or any Bank's errors or omissions
in the administration of the Guarantied Obligations, except behavior which
amounts to bad faith;
(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Guaranty and any
legal or equitable discharge of such Guarantor's obligations hereunder,
(ii) the benefit of any statute of limitations affecting such Guarantor's
liability hereunder or the enforcement hereof, (iii) any rights to set-
offs, recoupments and counterclaims, and (iv) promptness, diligence and any
requirement that Agent or any Bank protect, secure, perfect or insure any
security interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including
acceptance of this Guaranty, notices of default under the Credit Agreement,
the Loan Documents or any agreement or instrument related thereto, notices
of any renewal, extension or modification of the Guarantied Obligations or
any agreement related thereto, notices of any extension of credit to
Company and notices of any of the matters referred to in subsection 2.4 and
any right to consent to any thereof; and
(g) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or
which may conflict with the terms of this Guaranty.
2.6. CERTAIN CALIFORNIA LAW WAIVERS. As used in this subsection 2.6, any
------------------------------
reference to "the principal" includes Company, and any reference to "the
creditor" includes Agent and each Bank. In accordance with Section 2856 of the
California Civil Code:
H-7
(a) each Guarantor agrees (i) to waive any and all rights of
subrogation and reimbursement against Company or against any collateral or
security granted by Company for any of the Guarantied Obligations and (ii)
to withhold the exercise of any and all rights of subrogation,
reimbursement and contribution against Company, against any other guarantor
of any of the Guarantied Obligations and against any collateral or security
granted by any such other guarantor for any of the Guarantied Obligations
until the Guarantied Obligations shall have been paid in full and all
letters of credit issued under the Credit Agreement and the other Loan
Documents shall have expired or been cancelled, all as more fully set forth
in subsection 2.7;
(b) each Guarantor waives any and all other rights and defenses
available to such Guarantor by reason of Sections 2787 to 2855, inclusive,
2899 and 3433 of the California Civil Code, including without limitation
any and all rights or defenses such Guarantor may have by reason of
protection afforded to the principal with respect to any of the Guarantied
Obligations, or to any other guarantor (including any other Guarantor) of
any of the Guarantied Obligations with respect to any of such guarantor's
obligations under its guaranty, in either case pursuant to the
antideficiency or other laws of the State of California limiting or
discharging the principal's indebtedness or such guarantor's obligations,
including without limitation Section 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure; and
(c) each Guarantor waives all rights and defenses arising out of an
election of remedies by the creditor, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for
any Guarantied Obligation, has destroyed such Guarantor's rights of
subrogation and reimbursement against the principal by the operation of
Section 580d of the Code of Civil Procedure or otherwise; and even though
that election of remedies by the creditor, such as nonjudicial foreclosure
with respect to security for an obligation of any other guarantor
(including any other Guarantor) of any of the Guarantied Obligations, has
destroyed such Guarantor's rights of contribution against such other
guarantor.
No other provision of this Guaranty shall be construed as limiting the
generality of any of the covenants and waivers set forth in this subsection 2.6.
2.7. GUARANTORS' RIGHTS OF SUBROGATION, CONTRIBUTION, ETC. Each Guarantor
----------------------------------------------------
hereby waives any claim, right or remedy, direct or indirect, that such
Guarantor now has or may hereafter have against Company or any of its assets in
connection with this Guaranty or the performance by such Guarantor of its
obligations hereunder, in each case whether such claim, right or remedy arises
in equity, under contract, by statute (including without limitation under
California Civil Code Section 2847, 2848 or 2849), under common law or otherwise
and including without limitation (a) any right of subrogation, reimbursement or
indemnification that such Guarantor now has or may hereafter have against
Company, (b) any right to enforce, or to participate in, any claim, right or
remedy that Agent or any Bank now has or may hereafter have against Company, and
(c) any benefit of, and any right to participate in, any collateral or security
now or hereafter held by Agent or any Bank. In addition, until the Guarantied
Obligations shall have been indefeasibly paid in full and all letters of credit
issued under the Credit Agreement shall have expired or been
H-8
cancelled, each Guarantor shall withhold exercise of any right of contribution
such Guarantor may have against any other guarantor (including any other
Guarantor) of the Guarantied Obligations (including without limitation any such
right of contribution under California Civil Code Section 2848 or under
subsection 2.2(b)). Each Guarantor further agrees that, to the extent the waiver
or agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification such Guarantor may have
against Company or against any collateral or security, and any rights of
contribution such Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights Agent or any Bank may have against Company,
to all right, title and interest Agent or any Bank may have in any such
collateral or security, and to any right Agent or any Bank may have against such
other guarantor. If any amount shall be paid to any Guarantor on account of any
such subrogation, reimbursement, indemnification or contribution rights at any
time when all Guarantied Obligations shall not have been paid in full, such
amount shall be held in trust for Agent on behalf of Banks and shall forthwith
be paid over to Agent for the benefit of Banks to be credited and applied
against the Guarantied Obligations, whether matured or unmatured, in accordance
with the terms hereof.
2.8. SUBORDINATION OF OTHER OBLIGATIONS. Any indebtedness of Company now
----------------------------------
or hereafter held by any Guarantor is hereby subordinated in right of payment to
the Guarantied Obligations, and any such indebtedness of Company to such
Guarantor collected or received by such Guarantor after an Event of Default has
occurred and is continuing shall be held in trust for Agent on behalf of Banks
and shall forthwith be paid over to Agent for the benefit of Banks to be
credited and applied against the Guarantied Obligations but without affecting,
impairing or limiting in any manner the liability of such Guarantor under any
other provision of this Guaranty.
2.9. EXPENSES. Guarantors jointly and severally agree to pay, or cause to
--------
be paid, on demand, and to save Agent and Banks harmless against liability for,
any and all costs and expenses (including fees and disbursements of counsel and
allocated costs of internal counsel) incurred or expended by Agent or any Bank
in connection with the enforcement of or preservation of any rights under this
Guaranty.
2.10. CONTINUING GUARANTY. This Guaranty is a continuing guaranty and
-------------------
shall remain in effect until all of the Guarantied Obligations shall have been
paid in full and all letters of credit issued under the Credit Agreement shall
have expired or been cancelled. Each Guarantor hereby irrevocably waives any
right (including without limitation any such right arising under California
Civil Code Section 2815) to revoke this Guaranty as to future transactions
giving rise to any Guarantied Obligations.
2.11. AUTHORITY OF GUARANTORS OR COMPANY. It is not necessary for
----------------------------------
Agent or any Bank to inquire into the capacity or powers of any Guarantor or
Company or the officers, directors or any agents acting or purporting to act on
behalf of any of them.
2.12. FINANCIAL CONDITION OF COMPANY. Any Loans may be granted to
------------------------------
Company or continued from time to time without notice to or authorization from
any Guarantor regardless of the financial or other condition of Company at the
time of
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any such grant or continuation. Agent and Banks shall have no obligation to
disclose or discuss with any Guarantor its assessment, or any Guarantor's
assessment, of the financial condition of Company. Each Guarantor has adequate
means to obtain information from Company on a continuing basis concerning the
financial condition of Company and its ability to perform its obligations under
the Credit Agreement, and each Guarantor assumes the responsibility for being
and keeping informed of the financial condition of Company and of all
circumstances bearing upon the risk of nonpayment of the Guarantied Obligations.
Each Guarantor hereby waives and relinquishes any duty on the part of Agent or
any Bank to disclose any matter, fact or thing relating to the business,
operations or conditions of Company now known or hereafter known by Agent or any
Bank.
2.13. RIGHTS CUMULATIVE. The rights, powers and remedies given to
-----------------
Banks and Agent by this Guaranty are cumulative and shall be in addition to and
independent of all rights, powers and remedies given to Banks and Agent by
virtue of any statute or rule of law or in the Credit Agreement any other Loan
Document or any agreement between any Guarantor and Agent and/or any Bank or
between Company and any Agent and/or any Bank. Any forbearance or failure to
exercise, and any delay by Agent or any Bank in exercising, any right, power or
remedy hereunder shall not impair any such right, power or remedy or be
construed to be a waiver thereof, nor shall it preclude the further exercise of
any such right, power or remedy.
2.14. BANKRUPTCY: POST-PETITION INTEREST: REINSTATEMENT OF GUARANTY.
-------------------------------------------------------------
(a) So long as any Guarantied Obligations remain outstanding, no Guarantor
shall, without the prior written consent of Agent, commence or join with any
other Person in commencing any bankruptcy, reorganization or insolvency
proceedings of or against Company. The obligations of Guarantors under this
Guaranty shall not be reduced, limited, impaired, discharged, deferred,
suspended or terminated by any proceeding, voluntary or involuntary, involving
the bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of Company or by any defense which Company may have by reason of the
order, decree or decision of any court or administrative body resulting from any
such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any portion
of the Guarantied Obligations which accrues after the commencement of any
proceeding referred to in clause (a) above (or, if interest on any portion of
the Guarantied Obligations ceases to accrue by operation of law by reason of the
commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceedings had not been
commenced) shall be included in the Guarantied Obligations because it is the
intention of Guarantors, Agent and Banks that the Guarantied Obligations which
are guarantied by Guarantors pursuant to this Guaranty should be determined
without regard to any rule of law or order which may relieve Company of any
portion of such Guarantied Obligations. Guarantors will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay Agent, or allow the claim of Agent in respect
of, any such interest accruing after the date on which such proceeding is
commenced.
(c) In the event that all or any portion of the Guarantied Obligations are
paid by Company, the obligations of Guarantors hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or
H-10
any part of such payment(s) are rescinded or recovered directly or indirectly
from Agent or any Bank as a preference, fraudulent transfer or otherwise, and
any such payments which are so rescinded or recovered shall constitute
Guarantied Obligations for all purposes under this Guaranty.
2.15. NOTICE OF EVENTS. As soon as any Guarantor obtains knowledge
----------------
thereof, such Guarantor shall give Agent written notice of any condition or
event which has resulted in (a) a material adverse change in the financial
condition of any Guarantor or Company or (b) a breach of or noncompliance with
any term, condition or covenant contained herein or in the Credit Agreement, any
other Loan Document or any other document delivered pursuant hereto or thereto.
2.16. SET OFF. In addition to any other rights Agent or any Bank may
-------
have under law or in equity, if any amount shall at any time be due and owing by
any Guarantor to Agent or any Bank under this Guaranty, such Bank or Agent is
authorized at any time or from time to time, without notice (any such notice
being hereby expressly waived), to set off and to appropriate and to apply any
and all property of such Guarantor held by Agent or any Bank to or for the
credit or the account of such Guarantor against and on account of the Guarantied
Obligations and liabilities of such Guarantor to Agent or any Bank under this
Guaranty.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
In order to induce the Banks and the Agent to accept this Guaranty and to
enter into the Credit Agreement and make the Loans thereunder, each Guarantor
hereby represents and warrants to Agent and each Bank that the following
statements are true and correct:
3.1. EXISTENCE. Such Guarantor is duly organized, validly existing and in
---------
good standing under the laws of the state of its incorporation or formation, has
the power to own its assets and to transact the business in which it is now
engaged and is duly qualified as a foreign corporation, partnership or limited
liability company and in good standing under the laws of each jurisdiction where
its ownership or lease of property or the conduct of its business requires such
qualification, except for failures to be so qualified, authorized or licensed
that would not in the aggregate have a material adverse effect on the business,
operations, assets or financial condition of such Guarantor and its
Subsidiaries, taken as a whole.
3.2. POWER: AUTHORIZATION: ENFORCEABLE OBLIGATIONS. Such Guarantor has the
---------------------------------------------
power, authority and legal right to execute, deliver and perform this Guaranty
and all obligations required hereunder and has taken all necessary action to
authorize its Guaranty hereunder on the terms and conditions hereof and its
execution, delivery and performance of this Guaranty and all obligations
required hereunder. No consent of any other Person including, without
limitation, stockholders, members, partners and/or creditors of such Guarantor,
and no license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority is required by such Guarantor in connection with this Guaranty or the
execution, delivery, performance, validity or enforceability of this Guaranty
and all obligations required hereunder. This Guaranty has been, and each
instrument or document required hereunder will be, executed and delivered by a
duly authorized officer of such Guarantor, and this Guaranty constitutes, and
each
H-11
instrument or document required hereunder when executed and delivered by such
Guarantor hereunder will constitute, the legally valid and binding obligation of
such Guarantor, enforceable against such Guarantor in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws or equitable principles
relating to or limiting creditors' rights generally.
3.3. NO LEGAL BAR TO THIS GUARANTY. The execution, delivery and
-----------------------------
performance of this Guaranty and the documents or instruments required
hereunder, and the use of the proceeds of Loans under the Credit Agreement, will
not violate any provision of any existing law or regulation binding on such
Guarantor, or any order, judgment, award or decree of any court, arbitrator or
governmental authority binding on such Guarantor, or the certificate of
incorporation or bylaws, or certificate of partnership or partnership agreement,
or articles of organization or operating agreement, of such Guarantor or any
securities issued by such Guarantor, or any mortgage, indenture, lease, contract
or other agreement, instrument or undertaking to which such Guarantor is a party
or by which such Guarantor or any of its assets may be bound, the violation of
which would have a material adverse effect on the business, operations, assets
or financial condition of such Guarantor and will not result in, or require, the
creation or imposition of any Lien on any of its property, assets or revenues
pursuant to the provisions of any such mortgage, indenture, lease, contract or
other agreement, instrument or undertaking.
SECTION 4. AFFIRMATIVE COVENANTS
Each Guarantor covenants and agrees that, unless and until all of the
Guarantied Obligations shall have been paid in full, unless the Required Banks
shall otherwise consent in writing:
4.1. EXISTENCE, ETC. Such Guarantor shall at all times preserve and keep
---------------
in full force and effect its existence and all rights and franchises material to
its business.
4.2. COMPLIANCE WITH LAWS, ETC. Such Guarantor shall comply in all
--------------------------
material respects with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, paying when due all taxes,
assessments and governmental charges imposed upon it or upon any of its
properties or assets or in respect of any of its franchises, businesses, income
or property before any penalty or interest accrues thereon.
4.3. BOOKS AND RECORDS. Such Guarantor shall keep and maintain books of
-----------------
record and account with respect to its operations in accordance with generally
accepted accounting principles and shall permit Agent or any Bank and their
officers, employees and authorized agents, to the extent Agent in good ▇▇▇▇▇
▇▇▇▇▇ necessary for the proper administration of this Guaranty, to examine, copy
and make excerpts from the books and records of such Guarantor and its
Subsidiaries and to inspect the properties of such Guarantor and its
Subsidiaries, both real and personal, at such reasonable times as Agent may
request.
SECTION 5. MISCELLANEOUS
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5.1. SURVIVAL OF WARRANTIES. All agreements, representations and
----------------------
warranties made herein shall survive the execution and delivery of this Guaranty
and the other Loan Documents.
5.2. NOTICES. Any communications between Agent and any Guarantor and any
-------
notices or requests provided herein to be given may be given by mailing the
same, postage prepaid, or by facsimile transmission or cable to each such party
at its address set forth in the Credit Agreement, on the signature pages hereof
or to such other addresses as each such party may in writing hereafter indicate.
Any notice, request or demand to or upon Agent or any Guarantor shall when
transmitted by facsimile, not be effective until received or, if mailed, upon
the fifth business day after the date deposited into the U.S. mail.
5.3. SEVERABILITY. In case any provision in or obligation under this
------------
Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
5.4. AMENDMENTS AND WAIVERS. No amendment, modification or waiver of any
----------------------
provision of this Guaranty, and no consent to any departure by any Guarantor
therefrom, shall in any event be effective without the written concurrence of
the Required Banks under the Credit Agreement and, in the case of any such
amendment or modification, each Guarantor against whom enforcement of such
amendment or modification is sought; provided, that no termination or discharge
-------- ----
of any obligation of Guarantor shall be effective without the consent of all the
Banks, as provided in Section 11.01 of the Credit Agreement. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
5.5. HEADINGS. Section and subsection headings in this Guaranty are
--------
included herein for convenience of reference only and shall not constitute a
part of this Guaranty for any other purpose or be given any substantive effect.
5.6. APPLICABLE LAW. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
--------------
GUARANTORS, AGENT AND EACH BANK HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (INCLUDING WITHOUT LIMITATION SECTION 1646.5 OF THE CIVIL CODE OF THE
STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
5.7. SUCCESSORS AND ASSIGNS. This Guaranty is a continuing guaranty and
----------------------
shall be binding upon each Guarantor and its respective successors and assigns.
This Guaranty shall inure to the benefit of Agent, Banks and their respective
successors and assigns. No Guarantor shall assign this guaranty or any of the
rights or obligations of such Guarantor hereunder without the prior written
consent of all Banks. Any Bank may, without notice or consent, assign its
interest in this Guaranty in whole or in part. The terms and provisions of this
Guaranty shall inure to the benefit of any transferee or assignee of Agent or
any Bank, and in the event of such transfer or assignment the rights and
privileges herein conferred upon such Agent or
H-13
Bank shall automatically extend to and be vested in such transferee or assignee,
all subject to the terms and conditions hereof.
5.8. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
----------------------------------------------
PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS
GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN THE COURTS OF THE
STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF
CALIFORNIA. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GUARANTOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO SUCH GUARANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SUBSECTION 5.2;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GUARANTOR IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT AGENT AND BANKS RETAIN THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH
GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 5.8 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 410.40
OR OTHERWISE.
5.9. WAIVER OF TRIAL BY JURY. EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE
-----------------------
BENEFITS HEREOF, AGENT AND EACH BANK EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS GUARANTY. The scope of this waiver is intended to be all encompassing
of any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims and all other common law and
statutory claims.
H-14
Each Guarantor and, by its acceptance of the benefits hereof, Agent and each
lender, each (i) acknowledges that this waiver is a material inducement for such
Guarantor and Agent and each Bank, to enter into a business relationship, that
such Guarantor and Agent and each Bank, have already relied on this waiver in
entering into this Guaranty or accepting the benefits thereof, as the case may
be, and that each will continue to rely on this waiver in their related future
dealings and (ii) further warrants and represents that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
5.9 AND EXECUTED BY AGENT, EACH BANK AND EACH GUARANTOR), AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS GUARANTY. In the event of litigation, this Guaranty may be filed as a
written consent to a trial by the court.
5.10. NO OTHER WRITING. This writing is intended by Guarantors, Agent
----------------
and Banks as the final expression of this Guaranty and is also intended as a
complete and exclusive statement of the terms of their agreement with respect to
the matters covered hereby. No course of dealing, course of performance or
trade usage, and no parol evidence of any nature, shall be used to supplement or
modify any terms of this Guaranty. There are no conditions to the full
effectiveness of this Guaranty.
5.11. FURTHER ASSURANCES. At any time or from time to time, upon the
------------------
request of Agent or Required Banks, Guarantors shall execute and deliver such
further documents and do such other acts and things as Agent or Required Banks
may reasonably request in order to effect fully the purposes of this Guaranty.
5.12. ADDITIONAL GUARANTORS. The initial Guarantors hereunder shall be
---------------------
such of the Material Subsidiaries of Company as are signatories hereto on the
date hereof. From time to time subsequent to the date hereof, additional
Material Subsidiaries of Company may become parties hereto, as additional
Guarantors (each an "ADDITIONAL GUARANTOR"), by executing a counterpart of this
Guaranty. Upon delivery of any such counterpart to Agent, notice of which is
hereby waived by Guarantors, each such Additional Guarantor shall be a Guarantor
and shall be as fully a party hereto as if such Additional Guarantor were an
original signatory hereof. Each Guarantor expressly agrees that its obligations
arising hereunder shall not be affected or diminished by the addition or release
of any other Guarantor hereunder, nor by any election of Agent or Required Banks
not to cause any Material Subsidiary of Company to become an Additional
Guarantor hereunder. This Guaranty shall be fully effective as to any Guarantor
that is or becomes a party hereto regardless of whether any other Person becomes
or fails to become or ceases to be a Guarantor hereunder.
5.13. COUNTERPARTS: EFFECTIVENESS. This Guaranty may be executed in
---------------------------
any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Guaranty shall become
effective as to each Guarantor upon the execution of a counterpart hereof by
such Guarantor (whether or not a counterpart
H-15
hereof shall have been executed by any other Guarantor) and receipt by Agent of
written or telephonic notification of such execution and authorization of
delivery thereof.
H-16
IN WITNESS WHEREOF, each of the undersigned Guarantors has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first written above.
CB COMMERCIAL REAL ESTATE GROUP, INC.,
a Delaware corporation
By __________________________________
Title ________________________________
Address: _____________________________
______________________________________
______________________________________
Attn:
▇▇▇▇ MANAGEMENT SERVICES, INC.,
a Delaware corporation
By ___________________________________
Title ________________________________
Address: _____________________________
______________________________________
______________________________________
Attn:
WESTMARK REALTY ADVISORS LLC,
a Delaware limited liability company
By ___________________________________
Title ________________________________
Address: _____________________________
______________________________________
______________________________________
Attn:
H-17
▇.▇. ▇▇▇▇▇▇ & COMPANY,
a Texas corporation
By ___________________________________
Title ________________________________
Address: _____________________________
______________________________________
______________________________________
Attn:
▇▇▇▇ CORPORATE SERVICES, INC.,
a Delaware corporation
By ___________________________________
Title ________________________________
Address: _____________________________
______________________________________
______________________________________
Attn:
▇▇▇▇ INVESTMENT MANAGEMENT, INC.,
a California corporation
By ___________________________________
Title ________________________________
Address: _____________________________
______________________________________
______________________________________
Attn:
H-18
▇▇▇▇ ▇▇▇▇ REALTY ADVISORS, INC.,
a Delaware corporation
By ___________________________________
Title ________________________________
Address: _____________________________
______________________________________
______________________________________
Attn:
CBS INVESTMENT REALTY, INC.,
an Arizona corporation
By ___________________________________
Title ________________________________
Address: _____________________________
______________________________________
______________________________________
Attn:
▇▇▇▇ PARTNERSHIPS I, INC.,
a Delaware corporation
By ___________________________________
Title ________________________________
Address: _____________________________
______________________________________
______________________________________
Attn:
H-19
▇▇▇▇ PARTNERSHIPS II, INC.,
a Delaware corporation
By ___________________________________
Title ________________________________
Address: _____________________________
______________________________________
______________________________________
Attn:
▇▇▇▇/CC&F MANAGEMENT SERVICES,
a California general partnership
By ___________________________________
Title ________________________________
Address: _____________________________
______________________________________
______________________________________
Attn:
H-20
IN WITNESS WHEREOF, the undersigned Additional Guarantor has caused this
Subsidiary Guaranty to be duly executed and delivered by its officer thereunto
duly authorized as of ______________, [199_/200_].
______________________________________
(Name of Additional Guarantor)
By ___________________________________
Title ________________________________
H-21
EXHIBIT I
[FORM OF PLEDGE AGREEMENTS]
I-1
EXHIBIT I-1
FORM OF PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "AGREEMENT") is dated as of August 28,
1997 and entered into by and between CB COMMERCIAL REAL ESTATE SERVICES GROUP,
INC., a Delaware corporation ("PLEDGOR"), and BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, as agent for and representative of (in such capacity herein
called "AGENT") those certain financial institutions (each a "BANK" and
collectively, "BANKS") party to the Credit Agreement (as hereinafter defined).
RECITALS
A. Pledgor is the legal and beneficial owner of the shares of stock
(the "PLEDGED SHARES") described in Schedule I annexed hereto and issued by the
----------
corporations named therein.
B. Pursuant to and subject to the terms and conditions of that
certain Credit Agreement dated as of August 28, 1997 by and among Pledgor,
Agent, and Banks (as the same from time to time may be amended, restated,
supplemented or otherwise modified, the "CREDIT AGREEMENT"), Banks have agreed,
among other things, to provide a revolving credit loan (including a subfacility
for letters of credit) upon the terms and subject to the conditions set forth
therein. Except as otherwise defined herein, all other capitalized terms used
herein shall have the respective meanings given to such terms in the Credit
Agreement.
C. It is a condition precedent to the effectiveness of the Credit
Agreement and the making of any Loans that Pledgor shall have pledged the
collateral, granted the security interests and undertaken the obligations
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Agent and Banks to enter into the Credit Agreement and the other
agreements, documents and instruments to be delivered pursuant thereto and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Pledgor hereby agrees with Agent as follows:
SECTION 1. PLEDGE AND GRANT OF SECURITY INTERESTS. Pledgor hereby
--------------------------------------
pledges and assigns to Agent for the benefit of the Banks, and hereby grants to
Agent for the benefit of the Banks a security interest in, all of Pledgor's
right, title and interest in and to the following (the "PLEDGED COLLATERAL"):
(a) the Pledged Shares and the certificates representing the Pledged
Shares and any interest of Pledgor in the entries on the books of any securities
intermediary pertaining to the Pledged Shares, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to time
received,
I-1-1
receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares;
(b) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any issuer of the Pledged Shares from time to time acquired by Pledgor in any
manner (which shares shall be deemed to be part of the Pledged Shares), the
certificates or other instruments representing such additional shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any securities intermediary pertaining to such
additional shares, securities, warrants, options or other rights, and all
dividends, cash, warrants, rights, instruments 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 such additional shares, securities, warrants,
options or other rights;
(c) all shares of, and all securities convertible into and warrants,
options and other rights to purchase or otherwise acquire, stock of any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a Material Subsidiary which is a direct Subsidiary of Pledgor (which shares
shall be deemed to be part of the Pledged Shares), the certificates or other
instruments representing such shares, securities, warrants, options or other
rights and any interest of Pledgor in the entries on the books of any securities
intermediary pertaining to such shares, securities, warrants, options or other
rights, and all dividends, cash, warrants, rights, instruments 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 such shares,
securities, warrants, options or other rights; and
(d) to the extent not covered by clauses (a) through (c) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes of
this Agreement, the term "PROCEEDS" includes whatever is receivable or received
when Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and whether
or not occurring by operation of law, and includes, without limitation, proceeds
of any indemnity or guaranty payable to Pledgor or Agent from time to time with
respect to any of the Pledged Collateral.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
------------------------
Pledged Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. (S)362(a)), of all obligations and
liabilities of every nature of Pledgor now or hereafter existing under or
arising out of or in connection with the Credit Agreement, the Guaranty and the
other Loan Documents, and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Pledgor, would accrue on such
obligations), fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, determined or undetermined, whether or not jointly owed with
others, and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or
I-1-2
indirectly from Agent or any Bank as a preference, fraudulent transfer or
otherwise (all such obligations and liabilities being the "UNDERLYING DEBT"),
and all obligations of every nature of Pledgor now or hereafter existing under
this Agreement and under any other Loan Document heretofore, now or hereafter
delivered by Pledgor to Agent, and all extensions, renewals, restatements,
supplements, amendments or modifications thereof or thereto (all such
obligations of Pledgor, together with the Underlying Debt, being the "SECURED
OBLIGATIONS").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
------------------------------
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Agent pursuant hereto and shall be in suitable
form for transfer by delivery or, as applicable, shall be accompanied by
Pledgor's endorsement, where necessary, or duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to Agent. Agent
shall have the right, at any time in its discretion and without notice to
Pledgor, to transfer to or to register in the name of Agent or any of its
nominees any or all of the Pledged Collateral, subject only to the revocable
rights specified in Section 7(a). In addition, Agent shall have the right at
any time to exchange certificates or instruments representing or evidencing
any Pledged Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
------------------------------
warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
---------------------------------------------
Shares have been duly authorized and validly issued and are fully paid and non-
assessable.
(b) Description of Pledged Collateral. The Pledged Shares constitute
---------------------------------
all of the issued and outstanding shares of stock of each issuer thereof, except
as otherwise set forth in Schedule II annexed hereto, and there are no
-----------
outstanding warrants, options or other rights to purchase, or other agreements
outstanding with respect to, or property that is now or hereafter convertible
into, or that requires the issuance or sale of, any Pledged Shares.
(c) Ownership of Pledged Collateral. Except for qualifying shares
-------------------------------
held by Pledgor's directors, Pledgor is the legal, record and beneficial owner
of the Pledged Collateral free and clear of any Lien except for the security
interest created by this Agreement.
(d) Governmental Authorizations. No authorization, approval or other
---------------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge by Pledgor of the Pledged
Collateral pursuant to this Agreement and the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the exercise by Agent of the voting or other
rights, or the remedies in respect of the Pledged Collateral, provided for in
this Agreement (except as may be required in connection with a disposition of
Pledged Collateral by laws affecting the offering and sale of securities
generally).
(e) Due Authorization, etc. of Agreement. This Agreement has been
------------------------------------
duly authorized, executed and delivered by Pledgor, and is in full force and
I-1-3
effect and is binding upon and enforceable against Pledgor in accordance with
the terms hereof.
(f) Perfection. Except as otherwise set forth in Schedule III
---------- ------------
annexed hereto, (i) the pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral free of any adverse claim, securing the payment of the
Secured Obligations, and (ii) Agent has "control" of the Pledged Collateral
within the meaning of Section 9115(c) of the Uniform Commercial Code of the
State of California ("UCC").
(g) Margin Regulations. The pledge of the Pledged Collateral pursuant
------------------
to this Agreement does not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
(h) Other Information. All information heretofore, herein or
-----------------
hereafter supplied to Agent by or on behalf of Pledgor with respect to the
Pledged Collateral is accurate and complete in all respects.
SECTION 5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL;
---------------------------------------------------------
ETC. Pledgor shall:
----
(a) not, except as expressly permitted by the Credit Agreement, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) execute or
grant any stock power or endorsement with respect to any of the Pledged
Collateral, or any other document or instrument purporting to assign, transfer
or redeem any of the Pledged Collateral, or otherwise grant any indicia of
"control" (within the meaning of Section 9115(c) of the UCC) with respect to any
of the Pledged Collateral, (iii) create or suffer to exist any Lien upon or with
respect to any of the Pledged Collateral, except for the security interest under
this Agreement, any other security interest granted in favor of Agent or any
other Lien expressly permitted under Section 8.01 of the Credit Agreement, or
(iv) permit any issuer of Pledged Shares to merge or consolidate unless all the
outstanding capital stock of the surviving or resulting corporation is, upon
such merger or consolidation, pledged hereunder and no cash, securities or other
property is distributed in respect of the outstanding shares of any other
constituent corporation;
(b) (i) cause each issuer of Pledged Collateral not to issue any stock
or other securities in addition to or in substitution for the Pledged Collateral
issued by such issuer, except to Pledgor, (ii) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all additional
shares of stock or other securities of each issuer of Pledged Collateral, and
(iii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all shares of stock or other securities of any
Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a Material Subsidiary of Pledgor;
(c) promptly notify Agent of any event of which Pledgor becomes aware
causing loss or depreciation in the value of the Pledged Collateral;
(d) promptly deliver to Agent all written notices received by it with
respect to the Pledged Collateral; and
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(e) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Pledged Collateral,
except to the extent the validity thereof is being contested in good faith;
provided, however, that Pledgor shall in any event pay such taxes, assessments,
-------- -------
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgment, writ or warrant of attachment entered or filed
against Pledgor or any of the Pledged Collateral as a result of the failure to
make such payment.
SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
-------------------------------------
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Agent
may request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Agent to exercise and enforce its
rights and remedies hereunder with respect to any Pledged Collateral. Without
limiting the generality of the foregoing, Pledgor will: (i) execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices (including, without limitation, stock powers with respect
to, or other endorsements or instruments necessary to effect the assignment or
other transfer of, any of the Pledged Collateral), as may be necessary or
desirable, or as Agent may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby and (ii) at Agent's
request, appear in and defend any action or proceeding that may affect Pledgor's
title to or Agent's security interest in all or any part of the Pledged
Collateral.
(b) Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 5(b), promptly (and in any event within five Business Days) deliver
to Agent a Pledge Amendment, duly executed by Pledgor, in substantially the form
of Schedule IV annexed hereto (a "PLEDGE AMENDMENT"), in respect of the
-----------
additional Pledged Shares to be pledged pursuant to this Agreement. Pledgor
hereby authorizes Agent to attach each Pledge Amendment to this Agreement and
agrees that all Pledged Shares listed on any Pledge Amendment delivered to Agent
shall for all purposes hereunder be considered Pledged Collateral; provided,
--------
however, that the failure of Pledgor to execute a Pledge Amendment with respect
-------
to any additional Pledged Shares pledged pursuant to this Agreement shall not
impair the security interest of Agent therein or otherwise adversely affect the
rights and remedies of Agent hereunder with respect thereto.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
------------------------------
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Credit
Agreement; provided, however, that Pledgor shall not exercise or refrain from
-------- -------
exercising any such right if Agent shall have notified Pledgor that, in Agent's
judgment, such action would have a material adverse effect on the value of the
Pledged Collateral or any part thereof;
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(ii) Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the lien of this Agreement, any and all dividends and interest
paid in respect of the Pledged Collateral; provided, however, that any and all
-------- -------
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with (x) a partial or total
liquidation or dissolution, (y) a reduction of capital, capital surplus or paid-
in-surplus or (z) a quasi-reorganization, and
(C) cash paid, payable or otherwise distributed in respect of
principal or in redemption of or in exchange for any Pledged Collateral,
shall be, and shall forthwith be delivered to Agent to hold as, Pledged
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Agent, be segregated from the other property or funds of Pledgor and
be forthwith delivered to Agent as Pledged Collateral in the same form as so
received (with all necessary endorsements); and
(iii) Agent shall promptly execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies, dividend payment orders and
other instruments as Pledgor may from time to time reasonably request for the
purpose of enabling Pledgor to exercise the voting and other consensual rights
which it is entitled to exercise pursuant to paragraph (i) above and to receive
the dividends, principal or interest payments which it is authorized to receive
and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of any Default or
Event of Default:
(i) upon written notice from Agent to Pledgor, all rights of Pledgor
to exercise the voting and other consensual rights which it would otherwise be
entitled to exercise pursuant to Section 7(a)(i) shall cease, and all such
rights shall thereupon become vested in Agent who shall thereupon have the sole
right to exercise such voting and other consensual rights;
(ii) all rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain pursuant
to Section 7(a)(ii) shall cease, and all such rights shall thereupon become
vested in Agent who shall thereupon have the sole right to receive and hold as
Pledged Collateral such dividends and interest payments; and
(iii) all dividends, principal and interest payments which are
received by Pledgor contrary to the provisions of paragraph (ii) of this Section
7(b) shall be received in trust for the benefit of Agent, shall be segregated
from other funds of Pledgor and shall forthwith be paid over to Agent as Pledged
Collateral in the same form as so received (with any necessary endorsements).
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(c) In order to permit Agent to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section
7(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) Pledgor
shall promptly execute and deliver (or cause to be executed and delivered) to
Agent all such proxies, dividend payment orders and other instruments as Agent
may from time to time reasonably request and (ii) without limiting the effect of
the immediately preceding clause (i), Pledgor hereby grants to Agent an
irrevocable proxy to vote the Pledged Collateral and to exercise all other
rights, powers, privileges and remedies to which a holder of the Pledged
Collateral would be entitled (including, without limitation, giving or
withholding written consents of shareholders, calling special meetings of
shareholders and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Collateral on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Collateral or any officer or agent
thereof), upon the occurrence of an Event of Default or Default and which proxy
shall only terminate upon the payment in full of the Secured Obligations.
SECTION 8. AGENT APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
--------------------------------
irrevocably appoints Agent as Pledgor's attorney-in-fact, with full authority in
the place and stead of Pledgor and in the name of Pledgor, Agent or otherwise,
from time to time in Agent's discretion to take any action and to execute any
instrument that Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including without limitation:
(a) to file one or more financing or continuation statements, or
amendments thereto, or stock powers or other endorsements or instruments of
transfer or assignments in blank, relative to all or any part of the Pledged
Collateral, or to enter into agreements with Agent and any securities
intermediaries described in Section 1 relating to any Pledged Collateral to
protect Agent's security interest therein, in form and substance satisfactory to
Agent, in each case without the signature of Pledgor;
(b) after the occurrence and during the continuation of any Event of
Default, to ask, demand, collect, ▇▇▇ for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Pledged Collateral;
(c) after the occurrence and during the continuation of any Event of
Default, to receive, endorse and collect any instruments made payable to Pledgor
representing any dividend, principal or interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same; and
(d) after the occurrence and during the continuation of any Event of
Default, to file any claims or take any action or institute any proceedings that
Agent may deem necessary or desirable for the collection of any of the Pledged
Collateral or otherwise to enforce the rights of Agent with respect to any of
the Pledged Collateral.
SECTION 9. AGENT MAY PERFORM. If Pledgor fails to perform any
-----------------
agreement contained herein, Agent may itself perform, or cause performance of,
such
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agreement, and the expenses of Agent incurred in connection therewith shall
be payable by Pledgor under Section 12(b).
SECTION 10. STANDARD OF CARE. The powers conferred on Agent
----------------
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Pledged Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Agent shall have no duty as to any Pledged Collateral, it being understood that
Agent shall have no responsibility for (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Pledged Collateral, whether or not Agent has or is deemed to
have knowledge of such matters, (b) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the Pledged Collateral) to preserve rights against any parties
with respect to any Pledged Collateral, (c) taking any necessary steps to
collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Agent shall be deemed to have exercised reasonable care in the custody
and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Agent accords
its own property consisting of negotiable securities.
SECTION 11. REMEDIES.
--------
(a) If any Event of Default shall have occurred and be continuing,
Agent may, subject to the terms of the Credit Agreement, exercise in respect of
the Pledged Collateral, in addition to all other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the Uniform Commercial Code as in effect in any
relevant jurisdiction (the "CODE") (whether or not the Code applies to the
affected Pledged Collateral), and Agent may also in its sole discretion, without
notice except as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange or
broker's board or at any of Agent's offices or elsewhere, for cash, on credit or
for future delivery, at such time or times and at such price or prices and upon
such other terms as Agent may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the Pledged Collateral. Agent
or any Bank may be the purchaser of any or all of the Pledged Collateral at any
such sale and Agent, as agent for and representative of the Banks, shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold at any such
public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Pledged Collateral payable by Agent at
such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Pledgor, and Pledgor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Agent may adjourn
any public or private sale from
I-1-8
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by applicable law, Pledgor hereby waives any
claims against Agent arising by reason of the fact that the price at which any
Pledged Collateral may have been sold at any such private sale was less than the
price which might have been obtained at a public sale, even if Agent accepts the
first offer received and does not offer such Pledged Collateral to more than one
offeree. If the proceeds of any sale or other disposition of the Pledged
Collateral are insufficient to pay all of the Secured Obligations, Pledgor shall
be liable for the deficiency and the reasonable fees of any attorneys employed
by Agent to collect such deficiency.
(b) Any cash held by Agent as Pledged Collateral and all cash proceeds
received by Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Pledged Collateral may, in the
discretion of Agent, be held by Agent as collateral for, and/or then or at any
time thereafter applied (after payment of any amounts payable to Agent pursuant
to Section 12(b)) in whole or in part by Agent against all or any part of the
Secured Obligations in such order as Agent shall elect. Any surplus of such
cash or cash proceeds held by Agent and remaining after payment in full of all
the Secured Obligations shall be paid over to Pledgor or to whosoever may be
lawfully entitled to receive such surplus.
(c) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended from time to time (the
"SECURITIES ACT"), and applicable state securities laws, Agent may be compelled,
with respect to any sale of all or any part of the Pledged Collateral conducted
without prior registration or qualification of such Pledged Collateral under the
Securities Act and/or such state securities laws, to conduct such sales as
private, not public, sales and to limit purchasers to a restricted group who
will agree, among other things, to acquire the Pledged Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges and agrees that any such private sales may be at
prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including, without limitation, a public offering made
pursuant to an effective registration statement under the Securities Act) and,
notwithstanding such circumstances, Pledgor agrees that any such private sale
shall be conclusively deemed to have been made in a commercially reasonable
manner and that Agent shall have no obligation either to engage in public sales
or to delay the sale of any Pledged Collateral for the period of time necessary
to permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities
laws, even if such issuer would, or should, agree to so register it. Pledgor
further acknowledges the impossibility of ascertaining the amount of damages
which would be suffered by Agent by reason of the failure by Pledgor to perform
any of the covenants contained in this Section and, consequently, agrees that,
if Pledgor shall fail to perform any of such covenants, it shall pay, as
liquidated damages and not as a penalty, an amount equal to the value of the
Pledged Collateral on the date Agent shall demand compliance with this Section.
(d) If Agent determines to exercise its right to sell any or all of
the Pledged Collateral, upon written request, Pledgor shall and shall cause each
issuer of any Pledged Shares to be sold hereunder from time to time to furnish
to Agent all such information as Agent may request in order to determine the
number of shares and other instruments included in the Pledged Collateral which
may be sold by Agent in exempt transactions under the Securities Act and the
rules and regulations of the
I-1-9
Securities and Exchange Commission thereunder, as the same are from time to time
in effect.
SECTION 12. INDEMNITY AND EXPENSES.
----------------------
(a) Pledgor agrees to indemnify Agent and each Bank from and against
any and all claims, losses and liabilities in any way relating to, growing out
of or resulting from this Agreement and the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Agent's or such
Bank's gross negligence or willful misconduct as finally determined by a court
of competent jurisdiction.
(b) Pledgor shall pay to Agent upon demand the amount of any and all
costs and expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, that 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 Agent
hereunder, or (iv) the failure by Pledgor to perform or observe any of the
provisions hereof.
SECTION 13. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
-----------------------------------------------
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in full force and effect until the payment in full of all
Secured Obligations, (b) be binding upon Pledgor, its successors and assigns,
and (c) inure, together with the rights and remedies of Agent hereunder, to the
benefit of Agent and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), any Bank may, subject to the terms
of the Credit Agreement, assign or otherwise transfer its interest in the Credit
Agreement in whole or in part to any other Person, and such other Person shall
thereupon become vested with all benefits in respect thereof granted to Banks
herein or otherwise. Upon the payment in full of all Secured Obligations, the
security interest granted hereby shall terminate and all rights to the Pledged
Collateral shall revert to Pledgor. Upon any such termination Agent will, at
Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination and Pledgor shall be
entitled to the return, upon its request and at its expense, against receipt and
without recourse to Agent, of such of the Pledged Collateral as shall not have
been sold or otherwise applied pursuant to the terms hereof.
SECTION 14. AMENDMENTS; ETC. Subject to Section 11.01 of the Credit
---------------
Agreement, no amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by Pledgor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Agent
and, in the case of any such amendment or modification, by Pledgor. Any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given.
SECTION 15. NOTICES. Any notice or other communication herein
-------
required or permitted to be given shall be in writing and may be personally
served or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or five (5) Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of
I-1-10
each party hereto shall be as set forth under such party's name on the signature
pages hereof or, as to either party, such other address as shall be designated
by such party in a written notice delivered to the other party hereto.
SECTION 16. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
-----------------------------------------------------
No failure or delay on the part of Agent in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 17. SEVERABILITY. In case any provision in or obligation
------------
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 18. HEADINGS. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 19. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
--------------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA. Unless otherwise defined herein or in the Credit Agreement, terms
used in Articles 8 and 9 of the UCC are used herein as therein defined.
SECTION 20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE
UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Pledgor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Pledgor at its address provided in Section 15, such
service being hereby acknowledged by Pledgor to be sufficient for personal
jurisdiction in any
I-1-11
action against Pledgor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of Agent
to bring proceedings against Pledgor in the courts of any other jurisdiction.
SECTION 21. WAIVER OF JURY TRIAL. PLEDGOR AND AGENT HEREBY AGREE TO
--------------------
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Agent each acknowledge that
this waiver is a material inducement for Pledgor and Agent to enter into a
business relationship, that Pledgor and Agent have already relied on this waiver
in entering into this Agreement and that each will continue to rely on this
waiver in their related future dealings. Pledgor and Agent further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 22. COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
(remainder of page intentionally left blank)
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IN WITNESS WHEREOF, Pledgor and Agent have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
By: _____________________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, AS AGENT
By: __________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
I-1-13
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated as of August
28, 1997 between CB Commercial Real Estate Services Group, Inc., as Pledgor, and
Bank of America National Trust & Savings Association, as Agent.
Part A
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
------------ -------- ----------- ----- ---------
CB Commercial Real
Estate Group, Inc. Common
I-1
SCHEDULE II
Attached to and forming a part of the Pledge Agreement dated as of August
28, 1997 between CB Commercial Real Estate Services Group, Inc., as Pledgor, and
Bank of America National Trust & Savings Association, as Agent.
Percentage
Number of Represented Holders
Shares Issued by Pledged of Shares
Stock Issuer and Outstanding Shares Not Pledged
--------------- --------------- ---------- -----------
II-1
SCHEDULE III
Attached to and forming a part of the Pledge Agreement dated as of
August 28, 1997 between CB Commercial Real Estate Services Group, Inc., as
Pledgor, and Bank of America National Trust & Savings Association, as Agent.
EXCEPTIONS TO PRIORITY OF SECURITY INTEREST
-------------------------------------------
III-1
SCHEDULE IV
PLEDGE AMENDMENT
----------------
This Pledge Amendment, dated as of August 28, 1997, is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated as of August 28, 1997, between the undersigned and Bank
of America National Trust & Savings Association, as Agent (the "PLEDGE
AGREEMENT," capitalized terms defined therein being used herein as therein
defined), and that the Pledged Shares listed on this Pledge Amendment shall be
deemed to be part of the Pledged Shares and shall become part of the Pledged
Collateral under the Pledge Agreement as amended hereby, and shall secure all
Secured Obligations.
[NAME OF PLEDGOR]
By: ___________________________
Title:
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
------------ -------- ------------ ----- ---------
IV-1
EXHIBIT I-2
FORM OF PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "AGREEMENT") is dated as of August 28,
1997 and entered into by and between CB COMMERCIAL REAL ESTATE GROUP, INC., a
Delaware corporation ("PLEDGOR"), and BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, as agent for and representative of (in such capacity herein called
"AGENT") those certain financial institutions (each a "BANK" and collectively,
"BANKS") party to the Credit Agreement (as hereinafter defined).
RECITALS
A. Pledgor is the legal and beneficial owner of the shares of stock
(the "PLEDGED SHARES") described in Schedule I annexed hereto and issued by the
----------
corporations named therein.
B. Pursuant to and subject to the terms and conditions of that
certain Credit Agreement dated as of August 28, 1997 by and among CB Commercial
Real Estate Services Group, Inc. a Delaware corporation, Agent, and Banks (as
the same from time to time may be amended, restated, supplemented or otherwise
modified, the "CREDIT AGREEMENT"), Banks have agreed, among other things, to
provide a revolving credit loan (including a subfacility for letters of credit)
upon the terms and subject to the conditions set forth therein. Except as
otherwise defined herein, all other capitalized terms used herein shall have the
respective meanings given to such terms in the Credit Agreement.
C. It is a condition precedent to the effectiveness of the Credit
Agreement and the making of any Loans that Pledgor shall have pledged the
collateral, granted the security interests and undertaken the obligations
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Agent and Banks to enter into the Credit Agreement and the other
agreements, documents and instruments to be delivered pursuant thereto and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Pledgor hereby agrees with Agent as follows:
SECTION 1. PLEDGE AND GRANT OF SECURITY INTERESTS. Pledgor hereby
--------------------------------------
pledges and assigns to Agent for the benefit of the Banks, and hereby grants to
Agent for the benefit of the Banks a security interest in, all of Pledgor's
right, title and interest in and to the following (the "PLEDGED COLLATERAL"):
(a) the Pledged Shares and the certificates representing the Pledged
Shares and any interest of Pledgor in the entries on the books of any securities
intermediary pertaining to the Pledged Shares, and all dividends, cash,
warrants,
I-2-1
rights, instruments 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;
(b) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any issuer of the Pledged Shares from time to time acquired by Pledgor in any
manner (which shares shall be deemed to be part of the Pledged Shares), the
certificates or other instruments representing such additional shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any securities intermediary pertaining to such
additional shares, securities, warrants, options or other rights, and all
dividends, cash, warrants, rights, instruments 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 such additional shares, securities, warrants,
options or other rights;
(c) all shares of, and all securities convertible into and warrants,
options and other rights to purchase or otherwise acquire, stock of any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a Material Subsidiary which is a direct Subsidiary of Pledgor (which shares
shall be deemed to be part of the Pledged Shares), the certificates or other
instruments representing such shares, securities, warrants, options or other
rights and any interest of Pledgor in the entries on the books of any securities
intermediary pertaining to such shares, securities, warrants, options or other
rights, and all dividends, cash, warrants, rights, instruments 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 such shares,
securities, warrants, options or other rights; and
(d) to the extent not covered by clauses (a) through (c) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes of
this Agreement, the term "PROCEEDS" includes whatever is receivable or received
when Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and whether
or not occurring by operation of law, and includes, without limitation, proceeds
of any indemnity or guaranty payable to Pledgor or Agent from time to time with
respect to any of the Pledged Collateral.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
------------------------
Pledged Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. (S)362(a)), of all obligations and
liabilities of every nature of Pledgor now or hereafter existing under or
arising out of or in connection with the Credit Agreement, the Guaranty and the
other Loan Documents, and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Pledgor, would accrue on such
obligations), fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, determined or undetermined, whether or not jointly owed with
others, and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or
I-2-2
indirectly from Agent or any Bank as a preference, fraudulent transfer or
otherwise (all such obligations and liabilities being the "UNDERLYING DEBT"),
and all obligations of every nature of Pledgor now or hereafter existing under
this Agreement and under any other Loan Document heretofore, now or hereafter
delivered by Pledgor to Agent, and all extensions, renewals, restatements,
supplements, amendments or modifications thereof or thereto (all such
obligations of Pledgor, together with the Underlying Debt, being the "SECURED
OBLIGATIONS").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
------------------------------
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Agent pursuant hereto and shall be in suitable
form for transfer by delivery or, as applicable, shall be accompanied by
Pledgor's endorsement, where necessary, or duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to Agent. Agent
shall have the right, at any time in its discretion and without notice to
Pledgor, to transfer to or to register in the name of Agent or any of its
nominees any or all of the Pledged Collateral, subject only to the revocable
rights specified in Section 7(a). In addition, Agent shall have the right at
any time to exchange certificates or instruments representing or evidencing
any Pledged Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
------------------------------
warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
---------------------------------------------
Shares have been duly authorized and validly issued and are fully paid and non-
assessable.
(b) Description of Pledged Collateral. The Pledged Shares constitute
---------------------------------
all of the issued and outstanding shares of stock of each issuer thereof, except
as otherwise set forth in Schedule II annexed hereto, and there are no
-----------
outstanding warrants, options or other rights to purchase, or other agreements
outstanding with respect to, or property that is now or hereafter convertible
into, or that requires the issuance or sale of, any Pledged Shares.
(c) Ownership of Pledged Collateral. Except for qualifying shares
-------------------------------
held by Pledgor's directors, Pledgor is the legal, record and beneficial owner
of the Pledged Collateral free and clear of any Lien except for the security
interest created by this Agreement.
(d) Governmental Authorizations. No authorization, approval or other
---------------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge by Pledgor of the Pledged
Collateral pursuant to this Agreement and the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the exercise by Agent of the voting or other
rights, or the remedies in respect of the Pledged Collateral, provided for in
this Agreement (except as may be required in connection with a disposition of
Pledged Collateral by laws affecting the offering and sale of securities
generally).
(e) Due Authorization, etc. of Agreement. This Agreement has been
------------------------------------
duly authorized, executed and delivered by Pledgor, and is in full force and
I-2-3
effect and is binding upon and enforceable against Pledgor in accordance with
the terms hereof.
(f) Perfection. Except as otherwise set forth in Schedule III
---------- ------------
annexed hereto, (i) the pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral free of any adverse claim, securing the payment of the
Secured Obligations, and (ii) Agent has "control" of the Pledged Collateral
within the meaning of Section 9115(c) of the Uniform Commercial Code of the
State of California ("UCC").
(g) Margin Regulations. The pledge of the Pledged Collateral pursuant
------------------
to this Agreement does not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
(h) Other Information. All information heretofore, herein or
-----------------
hereafter supplied to Agent by or on behalf of Pledgor with respect to the
Pledged Collateral is accurate and complete in all respects.
SECTION 5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL;
---------------------------------------------------------
ETC. Pledgor shall:
----
(a) not, except as expressly permitted by the Credit Agreement, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) execute or
grant any stock power or endorsement with respect to any of the Pledged
Collateral, or any other document or instrument purporting to assign, transfer
or redeem any of the Pledged Collateral, or otherwise grant any indicia of
"control" (within the meaning of Section 9115(c) of the UCC) with respect to any
of the Pledged Collateral, (iii) create or suffer to exist any Lien upon or with
respect to any of the Pledged Collateral, except for the security interest under
this Agreement, any other security interest granted in favor of Agent or any
other Lien expressly permitted under Section 8.01 of the Credit Agreement, or
(iv) permit any issuer of Pledged Shares to merge or consolidate unless all the
outstanding capital stock of the surviving or resulting corporation is, upon
such merger or consolidation, pledged hereunder and no cash, securities or other
property is distributed in respect of the outstanding shares of any other
constituent corporation;
(b) (i) cause each issuer of Pledged Collateral not to issue any stock
or other securities in addition to or in substitution for the Pledged Collateral
issued by such issuer, except to Pledgor, (ii) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all additional
shares of stock or other securities of each issuer of Pledged Collateral, and
(iii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all shares of stock or other securities of any
Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a Material Subsidiary of Pledgor;
(c) promptly notify Agent of any event of which Pledgor becomes aware
causing loss or depreciation in the value of the Pledged Collateral;
(d) promptly deliver to Agent all written notices received by it with
respect to the Pledged Collateral; and
I-2-4
(e) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Pledged Collateral,
except to the extent the validity thereof is being contested in good faith;
provided, however, that Pledgor shall in any event pay such taxes, assessments,
-------- -------
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgment, writ or warrant of attachment entered or filed
against Pledgor or any of the Pledged Collateral as a result of the failure to
make such payment.
SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
-------------------------------------
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Agent
may request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Agent to exercise and enforce its
rights and remedies hereunder with respect to any Pledged Collateral. Without
limiting the generality of the foregoing, Pledgor will: (i) execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices (including, without limitation, stock powers with respect
to, or other endorsements or instruments necessary to effect the assignment or
other transfer of, any of the Pledged Collateral), as may be necessary or
desirable, or as Agent may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby and (ii) at Agent's
request, appear in and defend any action or proceeding that may affect Pledgor's
title to or Agent's security interest in all or any part of the Pledged
Collateral.
(b) Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 5(b), promptly (and in any event within five Business Days) deliver
to Agent a Pledge Amendment, duly executed by Pledgor, in substantially the form
of Schedule IV annexed hereto (a "PLEDGE AMENDMENT"), in respect of the
-----------
additional Pledged Shares to be pledged pursuant to this Agreement. Pledgor
hereby authorizes Agent to attach each Pledge Amendment to this Agreement and
agrees that all Pledged Shares listed on any Pledge Amendment delivered to Agent
shall for all purposes hereunder be considered Pledged Collateral; provided,
--------
however, that the failure of Pledgor to execute a Pledge Amendment with respect
-------
to any additional Pledged Shares pledged pursuant to this Agreement shall not
impair the security interest of Agent therein or otherwise adversely affect the
rights and remedies of Agent hereunder with respect thereto.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
------------------------------
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms of this Agreement or the Credit
Agreement; provided, however, that Pledgor shall not exercise or refrain from
-------- -------
exercising any such right if Agent shall have notified Pledgor that, in Agent's
judgment, such action would have a material adverse effect on the value of the
Pledged Collateral or any part thereof;
I-2-5
(ii) Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the lien of this Agreement, any and all dividends and
interest paid in respect of the Pledged Collateral; provided, however, that any
-------- -------
and all
(A) dividends and interest paid or payable other than in cash
in respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable in cash
in respect of any Pledged Collateral in connection with (x) a partial or total
liquidation or dissolution, (y) a reduction of capital, capital surplus or paid-
in-surplus or (z) a quasi-reorganization, and
(C) cash paid, payable or otherwise distributed in respect of
principal or in redemption of or in exchange for any Pledged Collateral,
shall be, and shall forthwith be delivered to Agent to hold as, Pledged
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Agent, be segregated from the other property or funds of Pledgor and
be forthwith delivered to Agent as Pledged Collateral in the same form as so
received (with all necessary endorsements); and
(iii) Agent shall promptly execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies, dividend payment orders and
other instruments as Pledgor may from time to time reasonably request for the
purpose of enabling Pledgor to exercise the voting and other consensual rights
which it is entitled to exercise pursuant to paragraph (i) above and to receive
the dividends, principal or interest payments which it is authorized to receive
and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of any Default or
Event of Default:
(i) upon written notice from Agent to Pledgor, all rights of
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 7(a)(i) shall cease, and
all such rights shall thereupon become vested in Agent who shall thereupon have
the sole right to exercise such voting and other consensual rights;
(ii) all rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain pursuant
to Section 7(a)(ii) shall cease, and all such rights shall thereupon become
vested in Agent who shall thereupon have the sole right to receive and hold as
Pledged Collateral such dividends and interest payments; and
(iii) all dividends, principal and interest payments which are
received by Pledgor contrary to the provisions of paragraph (ii) of this Section
7(b) shall be received in trust for the benefit of Agent, shall be segregated
from other funds of Pledgor and shall forthwith be paid over to Agent as Pledged
Collateral in the same form as so received (with any necessary endorsements).
I-2-6
(c) In order to permit Agent to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section
7(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) Pledgor
shall promptly execute and deliver (or cause to be executed and delivered) to
Agent all such proxies, dividend payment orders and other instruments as Agent
may from time to time reasonably request and (ii) without limiting the effect of
the immediately preceding clause (i), Pledgor hereby grants to Agent an
irrevocable proxy to vote the Pledged Collateral and to exercise all other
rights, powers, privileges and remedies to which a holder of the Pledged
Collateral would be entitled (including, without limitation, giving or
withholding written consents of shareholders, calling special meetings of
shareholders and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Collateral on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Collateral or any officer or agent
thereof), upon the occurrence of an Event of Default or Default and which proxy
shall only terminate upon the payment in full of the Secured Obligations.
SECTION 8. AGENT APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
--------------------------------
irrevocably appoints Agent as Pledgor's attorney-in-fact, with full authority in
the place and stead of Pledgor and in the name of Pledgor, Agent or otherwise,
from time to time in Agent's discretion to take any action and to execute any
instrument that Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including without limitation:
(a) to file one or more financing or continuation statements, or
amendments thereto, or stock powers or other endorsements or instruments of
transfer or assignments in blank, relative to all or any part of the Pledged
Collateral, or to enter into agreements with Agent and any securities
intermediaries described in Section 1 relating to any Pledged Collateral to
protect Agent's security interest therein, in form and substance satisfactory to
Agent, in each case without the signature of Pledgor;
(b) after the occurrence and during the continuation of any Event of
Default, to ask, demand, collect, ▇▇▇ for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Pledged Collateral;
(c) after the occurrence and during the continuation of any Event of
Default, to receive, endorse and collect any instruments made payable to Pledgor
representing any dividend, principal or interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same; and
(d) after the occurrence and during the continuation of any Event of
Default, to file any claims or take any action or institute any proceedings that
Agent may deem necessary or desirable for the collection of any of the Pledged
Collateral or otherwise to enforce the rights of Agent with respect to any of
the Pledged Collateral.
SECTION 9. AGENT MAY PERFORM. If Pledgor fails to perform any
-----------------
agreement contained herein, Agent may itself perform, or cause performance of,
such
I-2-7
agreement, and the expenses of Agent incurred in connection therewith shall
be payable by Pledgor under Section 12(b).
SECTION 10. STANDARD OF CARE. The powers conferred on Agent
----------------
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Pledged Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Agent shall have no duty as to any Pledged Collateral, it being understood that
Agent shall have no responsibility for (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Pledged Collateral, whether or not Agent has or is deemed to
have knowledge of such matters, (b) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the Pledged Collateral) to preserve rights against any parties
with respect to any Pledged Collateral, (c) taking any necessary steps to
collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Agent shall be deemed to have exercised reasonable care in the custody
and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Agent accords
its own property consisting of negotiable securities.
SECTION 11. REMEDIES.
--------
(a) If any Event of Default shall have occurred and be continuing,
Agent may, subject to the terms of the Credit Agreement, exercise in respect of
the Pledged Collateral, in addition to all other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the Uniform Commercial Code as in effect in any
relevant jurisdiction (the "CODE") (whether or not the Code applies to the
affected Pledged Collateral), and Agent may also in its sole discretion, without
notice except as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange or
broker's board or at any of Agent's offices or elsewhere, for cash, on credit or
for future delivery, at such time or times and at such price or prices and upon
such other terms as Agent may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the Pledged Collateral. Agent
or any Bank may be the purchaser of any or all of the Pledged Collateral at any
such sale and Agent, as agent for and representative of the Banks, shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold at any such
public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Pledged Collateral payable by Agent at
such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Pledgor, and Pledgor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Agent may adjourn
any public or private sale from
I-2-8
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by applicable law, Pledgor hereby waives any
claims against Agent arising by reason of the fact that the price at which any
Pledged Collateral may have been sold at any such private sale was less than the
price which might have been obtained at a public sale, even if Agent accepts the
first offer received and does not offer such Pledged Collateral to more than one
offeree. If the proceeds of any sale or other disposition of the Pledged
Collateral are insufficient to pay all of the Secured Obligations, Pledgor shall
be liable for the deficiency and the reasonable fees of any attorneys employed
by Agent to collect such deficiency.
(b) Any cash held by Agent as Pledged Collateral and all cash proceeds
received by Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Pledged Collateral may, in the
discretion of Agent, be held by Agent as collateral for, and/or then or at any
time thereafter applied (after payment of any amounts payable to Agent pursuant
to Section 12(b)) in whole or in part by Agent against all or any part of the
Secured Obligations in such order as Agent shall elect. Any surplus of such
cash or cash proceeds held by Agent and remaining after payment in full of all
the Secured Obligations shall be paid over to Pledgor or to whosoever may be
lawfully entitled to receive such surplus.
(c) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended from time to time (the
"SECURITIES ACT"), and applicable state securities laws, Agent may be compelled,
with respect to any sale of all or any part of the Pledged Collateral conducted
without prior registration or qualification of such Pledged Collateral under the
Securities Act and/or such state securities laws, to conduct such sales as
private, not public, sales and to limit purchasers to a restricted group who
will agree, among other things, to acquire the Pledged Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges and agrees that any such private sales may be at
prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including, without limitation, a public offering made
pursuant to an effective registration statement under the Securities Act) and,
notwithstanding such circumstances, Pledgor agrees that any such private sale
shall be conclusively deemed to have been made in a commercially reasonable
manner and that Agent shall have no obligation either to engage in public sales
or to delay the sale of any Pledged Collateral for the period of time necessary
to permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities
laws, even if such issuer would, or should, agree to so register it. Pledgor
further acknowledges the impossibility of ascertaining the amount of damages
which would be suffered by Agent by reason of the failure by Pledgor to perform
any of the covenants contained in this Section and, consequently, agrees that,
if Pledgor shall fail to perform any of such covenants, it shall pay, as
liquidated damages and not as a penalty, an amount equal to the value of the
Pledged Collateral on the date Agent shall demand compliance with this Section.
(d) If Agent determines to exercise its right to sell any or all of
the Pledged Collateral, upon written request, Pledgor shall and shall cause each
issuer of any Pledged Shares to be sold hereunder from time to time to furnish
to Agent all such information as Agent may request in order to determine the
number of shares and other instruments included in the Pledged Collateral which
may be sold by Agent in exempt transactions under the Securities Act and the
rules and regulations of the
I-2-9
Securities and Exchange Commission thereunder, as the same are from time to time
in effect.
SECTION 12. INDEMNITY AND EXPENSES.
----------------------
(a) Pledgor agrees to indemnify Agent and each Bank from and against
any and all claims, losses and liabilities in any way relating to, growing out
of or resulting from this Agreement and the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Agent's or such
Bank's gross negligence or willful misconduct as finally determined by a court
of competent jurisdiction.
(b) Pledgor shall pay to Agent upon demand the amount of any and all
costs and expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, that 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 Agent
hereunder, or (iv) the failure by Pledgor to perform or observe any of the
provisions hereof.
SECTION 13. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
-----------------------------------------------
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in full force and effect until the payment in full of all
Secured Obligations, (b) be binding upon Pledgor, its successors and assigns,
and (c) inure, together with the rights and remedies of Agent hereunder, to the
benefit of Agent and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), any Bank may, subject to the terms
of the Credit Agreement, assign or otherwise transfer its interest in the Credit
Agreement in whole or in part to any other Person, and such other Person shall
thereupon become vested with all benefits in respect thereof granted to Banks
herein or otherwise. Upon the payment in full of all Secured Obligations, the
security interest granted hereby shall terminate and all rights to the Pledged
Collateral shall revert to Pledgor. Upon any such termination Agent will, at
Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination and Pledgor shall be
entitled to the return, upon its request and at its expense, against receipt and
without recourse to Agent, of such of the Pledged Collateral as shall not have
been sold or otherwise applied pursuant to the terms hereof.
SECTION 14. AMENDMENTS; ETC. Subject to Section 11.01 of the Credit
---------------
Agreement, no amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by Pledgor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Agent
and, in the case of any such amendment or modification, by Pledgor. Any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given.
SECTION 15. NOTICES. Any notice or other communication herein
-------
required or permitted to be given shall be in writing and may be personally
served or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or five (5) Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of
I-2-10
each party hereto shall be as set forth under such party's name on the signature
pages hereof or, as to either party, such other address as shall be designated
by such party in a written notice delivered to the other party hereto.
SECTION 16. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
-----------------------------------------------------
No failure or delay on the part of Agent in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 17. SEVERABILITY. In case any provision in or obligation
------------
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 18. HEADINGS. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 19. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
--------------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA. Unless otherwise defined herein or in the Credit Agreement, terms
used in Articles 8 and 9 of the UCC are used herein as therein defined.
SECTION 20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE
UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Pledgor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Pledgor at its address provided in Section 15, such
service being hereby acknowledged by Pledgor to be sufficient for personal
jurisdiction in any
I-2-11
action against Pledgor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of Agent
to bring proceedings against Pledgor in the courts of any other jurisdiction.
SECTION 21. WAIVER OF JURY TRIAL. PLEDGOR AND AGENT HEREBY AGREE TO
--------------------
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Agent each acknowledge that
this waiver is a material inducement for Pledgor and Agent to enter into a
business relationship, that Pledgor and Agent have already relied on this waiver
in entering into this Agreement and that each will continue to rely on this
waiver in their related future dealings. Pledgor and Agent further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 22. WAIVERS BY PLEDGOR. Pledgor hereby waives, for the
------------------
benefit of Banks and Agent:
(a) any right to require Agent or any Bank, as a condition of payment
or performance by Pledgor, to (i) proceed against Company, any other guarantor
of the Secured Obligations or any other Person, (ii) proceed against or exhaust
any security held from Company, any such other guarantor or any other Person,
(iii) proceed against or have resort to any balance of any deposit account or
credit on the books of Agent or any Bank in favor of Company or any other
Person, or (iv) pursue any other remedy in the power of Agent or any Bank
whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of Company including, without limitation, any
defense based on or arising out of the lack of validity or the unenforceability
of the Secured Obligations or any agreement or instrument relating thereto or by
reason of the cessation of the liability of Company from any cause other than
payment in full of the Secured Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(d) any defense based upon Agent's or any Bank's errors or omissions
in the administration of the Secured Obligations, except behavior which amounts
to bad faith;
I-2-12
(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Pledge Agreement and
any legal or equitable discharge of such Pledgor's obligations hereunder, (ii)
the benefit of any statute of limitations affecting Pledgor's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that Agent
or any Bank protect, secure, perfect or insure any security interest or lien or
any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including acceptance
of this Pledge Agreement, notices of default under the Credit Agreement, the
Loan Documents or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Secured Obligations or any agreement
related thereto, notices of any extension of credit to Company and any right to
consent to any thereof; and
(g) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or which
may conflict with the terms of this Pledge Agreement.
SECTION 23. CERTAIN CALIFORNIA LAW WAIVERS. As used in this
------------------------------
Section 23, any reference to "the principal" includes Company, and any reference
to "the creditor" includes Agent and each Bank. In accordance with Section 2856
of the California Civil Code:
(a) Pledgor agrees (i) to waive any and all rights of subrogation and
reimbursement against Company or against any collateral or security granted by
Company for any of the Secured Obligations and (ii) to withhold the exercise of
any and all rights of subrogation, reimbursement and contribution against
Company, against any other guarantor of any of the Secured Obligations and
against any collateral or security granted by any such other guarantor for any
of the Secured Obligations until the Secured Obligations shall have been paid in
full and all letters of credit issued under the Credit Agreement and the other
Loan Documents shall have expired or been cancelled, all as more fully set forth
in Section 24;
(b) Pledgor waives any and all other rights and defenses available to
such Pledgor by reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of the
California Civil Code, including without limitation any and all rights or
defenses Pledgor may have by reason of protection afforded to the principal with
respect to any of the Secured Obligations, or to any other guarantor of any of
the Secured Obligations with respect to any of such guarantor's obligations
under its guaranty, in either case pursuant to the antideficiency or other laws
of the State of California limiting or discharging the principal's indebtedness
or such guarantor's obligations, including without limitation Section 580a,
580b, 580d, or 726 of the California Code of Civil Procedure; and
(c) Pledgor waives all rights and defenses arising out of an election
of remedies by the creditor, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for any Secured Obligation, has
destroyed Pledgor's rights of subrogation and reimbursement against the
principal by the operation of Section 580d of the Code of Civil Procedure or
otherwise; and even though that election of remedies by the creditor, such as
nonjudicial foreclosure with
I-2-13
respect to security for an obligation of any other guarantor (including any
other Pledgor) of any of the Secured Obligations, has destroyed Pledgor's rights
of contribution against such other guarantor.
No other provision of this Pledge Agreement shall be construed as limiting the
generality of any of the covenants and waivers set forth in this Section 23.
SECTION 24. PLEDGOR'S RIGHTS OF SUBROGATION, CONTRIBUTION, ETC.
--------------------------------------------------
Pledgor hereby waives any claim, right or remedy, direct or indirect, that
Pledgor now has or may hereafter have against Company or any of its assets in
connection with this Pledge Agreement or the performance by Pledgor of its
obligations hereunder, in each case whether such claim, right or remedy arises
in equity, under contract, by statute (including without limitation under
California Civil Code Section 2847, 2848 or 2849), under common law or otherwise
and including without limitation (a) any right of subrogation, reimbursement or
indemnification that Pledgor now has or may hereafter have against Company, (b)
any right to enforce, or to participate in, any claim, right or remedy that
Agent or any Bank now has or may hereafter have against Company, and (c) any
benefit of, and any right to participate in, any collateral or security now or
hereafter held by Agent or any Bank. In addition, until the Secured Obligations
shall have been indefeasibly paid in full and all letters of credit issued under
the Credit Agreement shall have expired or been cancelled, Pledgor shall
withhold exercise of any right of contribution Pledgor may have against any
other guarantor of the Secured Obligations (including without limitation any
such right of contribution under California Civil Code Section 2848). Pledgor
further agrees that, to the extent the waiver or agreement to withhold the
exercise of its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation, reimbursement
or indemnification Pledgor may have against Company or against any collateral or
security, and any rights of contribution Pledgor may have against any such other
guarantor, shall be junior and subordinate to any rights Agent or any Bank may
have against Company, to all right, title and interest Agent or any Bank may
have in any such collateral or security, and to any right Agent or any Bank may
have against such other guarantor. If any amount shall be paid to Pledgor on
account of any such subrogation, reimbursement, indemnification or contribution
rights at any time when all Secured Obligations shall not have been paid in
full, such amount shall be held in trust for Agent on behalf of Banks and shall
forthwith be paid over to Agent for the benefit of Banks to be credited and
applied against the Secured Obligations, whether matured or unmatured, in
accordance with the terms hereof.
SECTION 25. COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
(remainder of page intentionally left blank)
I-2-14
IN WITNESS WHEREOF, Pledgor and Agent have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
CB COMMERCIAL REAL ESTATE GROUP, INC.
By: _____________________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, AS AGENT
By: __________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
I-2-15
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated as of August
28, 1997 between CB Commercial Real Estate Group, Inc., as Pledgor, and Bank of
America National Trust & Savings Association, as Agent.
Part A
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
------------ -------- ------------ ----- ---------
▇.▇. ▇▇▇▇▇▇ &
Company Common
I-1
SCHEDULE II
Attached to and forming a part of the Pledge Agreement dated as of August
28, 1997 between CB Commercial Real Estate Group, Inc., as Pledgor, and Bank of
America National Trust & Savings Association, as Agent.
Percentage
Number of Represented Holders
Shares Issued by Pledged of Shares
Stock Issuer and Outstanding Shares Not Pledged
------------ --------------- ----------- -----------
II-1
SCHEDULE III
Attached to and forming a part of the Pledge Agreement dated as of
August 28, 1997 between CB Commercial Real Estate Group, Inc., as Pledgor, and
Bank of America National Trust & Savings Association, as Agent.
EXCEPTIONS TO PRIORITY OF SECURITY INTEREST
-------------------------------------------
III-1
SCHEDULE IV
PLEDGE AMENDMENT
----------------
This Pledge Amendment, dated as of August 28, 1997, is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated as of August 28, 1997, between the undersigned and Bank
of America National Trust & Savings Association, as Agent (the "PLEDGE
AGREEMENT," capitalized terms defined therein being used herein as therein
defined), and that the Pledged Shares listed on this Pledge Amendment shall be
deemed to be part of the Pledged Shares and shall become part of the Pledged
Collateral under the Pledge Agreement as amended hereby, and shall secure all
Secured Obligations.
[NAME OF PLEDGOR]
By: ___________________________
Title:
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
------------ -------- ------------ ----- ---------
IV-1
EXHIBIT I-3
FORM OF PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "AGREEMENT") is dated as of August 28,
1997 and entered into by and between ▇▇▇▇ MANAGEMENT SERVICES, INC., a Delaware
corporation ("PLEDGOR"), and BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, as agent for and representative of (in such capacity herein called
"AGENT") those certain financial institutions (each a "BANK" and collectively,
"BANKS") party to the Credit Agreement (as hereinafter defined).
RECITALS
A. Pledgor is the legal and beneficial owner of the shares of stock
and the partnership interests (the "PLEDGED INTERESTS") described in Schedule I
----------
annexed hereto and issued by the corporations and partnerships named therein
(the latter, the "PARTNERSHIPS").
B. Pursuant to and subject to the terms and conditions of that
certain Credit Agreement dated as of August 28, 1997 by and among CB Commercial
Real Estate Services Group, Inc., Agent, and Banks (as the same from time to
time may be amended, restated, supplemented or otherwise modified, the "CREDIT
AGREEMENT"), Banks have agreed, among other things, to provide a revolving
credit loan (including a subfacility for letters of credit) upon the terms and
subject to the conditions set forth therein. Except as otherwise defined herein,
all other capitalized terms used herein shall have the respective meanings given
to such terms in the Credit Agreement.
C. It is a condition precedent to the effectiveness of the Credit
Agreement and the making of any Loans that Pledgor shall have pledged the
collateral, granted the security interests and undertaken the obligations
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Agent and Banks to enter into the Credit Agreement and the other
agreements, documents and instruments to be delivered pursuant thereto and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Pledgor hereby agrees with Agent as follows:
SECTION 1. PLEDGE AND GRANT OF SECURITY INTERESTS. Pledgor hereby
--------------------------------------
pledges and assigns to Agent for the benefit of the Banks, and hereby grants to
Agent for the benefit of the Banks a security interest in, all of Pledgor's
right, title and interest in and to the following (the "PLEDGED COLLATERAL"):
(a) the Pledged Interests and any certificates representing the
Pledged Interests, and any and all partnership interests of Pledgor in the
Partnerships (collectively, the "PARTNERSHIP INTERESTS"), now existing or
hereafter acquired, including any general and limited partnership interests, and
all dividends,
distributions, capital and profits, cash, warrants, rights, certificates,
instruments, chattel paper and other rights, property or proceeds and products
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Pledged Interests, all additional rights to
purchase interests in the Partnerships from time to time acquired by Pledgor in
any manner (which interests shall be deemed to be part of the Partnership
Interests), the certificates or other instruments representing such additional
interests 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 such
additional interests or other rights, and to the extent not covered by above,
all Proceeds (as defined below) of any or all of the foregoing;
(b) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock or
partnership interests of any issuer of the Pledged Interests from time to time
acquired by Pledgor in any manner (which shares shall be deemed to be part of
the Pledged Interests), the certificates or other instruments representing such
additional shares or interests, securities, warrants, options or other rights
and any interest of Pledgor in the entries on the books of any securities
intermediary pertaining to such additional shares or interests, securities,
warrants, options or other rights, and all dividends, cash, warrants, rights,
instruments 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 such additional shares or interests, securities, warrants, options or other
rights;
(c) all shares of, and all securities convertible into and warrants,
options and other rights to purchase or otherwise acquire, stock or partnership
interests of any Person that, after the date of this Agreement, becomes, as a
result of any occurrence, a Material Subsidiary which is a direct Subsidiary of
Pledgor (which shares or interests shall be deemed to be part of the Pledged
Interests), the certificates or other instruments representing such shares or
interests, securities, warrants, options or other rights and any interest of
Pledgor in the entries on the books of any securities intermediary pertaining to
such shares or interests, securities, warrants, options or other rights, and all
dividends, cash, warrants, rights, instruments 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 such shares or interests, securities, warrants,
options or other rights; and
(d) all of Pledgor's right, title and interest: (i) as a partner in
and to the Partnerships, whether now owned or hereafter acquired, including,
without limitation, any management and voting rights with respect to the
Partnership Interests, and (ii) all other property which, absent this Agreement
would, now or hereafter, be distributable or distributed, transferable or
transferred, payable or paid, or deliverable or delivered to Pledgor as a
partner in the Partnerships, whether at any time prior to, or in connection
with, or after the dissolution of the Partnership, if any, including, without
limitation, distributions of cash and of property in kind by the Partnerships
(collectively, the "DISTRIBUTIONS").
(e) to the extent not covered by clauses (a) through (d) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes of
this Agreement, the term "PROCEEDS" shall have the meaning assigned to that term
under the California Commercial Code (the "CODE") and, in any event, shall
include, without limitation, any and all (A) proceeds of any indemnity or
guaranty payable to Pledgor or Agent from time to time with respect to any of
the Pledged Collateral and
I-3-2
(B) any other amounts from time to time paid or payable under or in connection
with any of the Pledged Collateral.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
------------------------
Pledged Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. (S)362(a)), of all obligations and
liabilities of every nature of Pledgor now or hereafter existing under or
arising out of or in connection with the Credit Agreement, the Guaranty and the
other Loan Documents, and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Pledgor, would accrue on such
obligations), fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, determined or undetermined, whether or not jointly owed with
others, and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Agent or any Bank as a
preference, fraudulent transfer or otherwise (all such obligations and
liabilities being the "UNDERLYING DEBT"), and all obligations of every nature of
Pledgor now or hereafter existing under this Agreement and under any other Loan
Document heretofore, now or hereafter delivered by Pledgor to Agent, and all
extensions, renewals, restatements, supplements, amendments or modifications
thereof or thereto (all such obligations of Pledgor, together with the
Underlying Debt, being the "SECURED OBLIGATIONS").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
------------------------------
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Agent pursuant hereto and shall be in suitable
form for transfer by delivery or, as applicable, shall be accompanied by
Pledgor's endorsement, where necessary, or duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to Agent. Agent
shall have the right, at any time in its discretion and without notice to
Pledgor, to transfer to or to register in the name of Agent or any of its
nominees any or all of the Pledged Collateral, subject only to the revocable
rights specified in Section 7(a). In addition, Agent shall have the right at
any time to exchange certificates or instruments representing or evidencing any
Pledged Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
------------------------------
warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
---------------------------------------------
Interests have been duly authorized and validly issued and are fully paid and
non-assessable.
(b) Description of Pledged Collateral. The Pledged Interests
---------------------------------
constitute all of the issued and outstanding shares of stock or partnership
interests of each issuer thereof, except as otherwise set forth in Schedule II
-----------
annexed hereto, and there are no outstanding warrants, options or other rights
to purchase, or other agree-
I-3-3
ments outstanding with respect to, or property that is now or hereafter
convertible into, or that requires the issuance or sale of, any Pledged
Interests.
(c) Ownership of Pledged Collateral. Except for qualifying shares
-------------------------------
held by Pledgor's directors, Pledgor is the legal, record and beneficial owner
of the Pledged Collateral free and clear of any Lien except for the security
interest created by this Agreement.
(d) Governmental Authorizations. No authorization, approval or other
---------------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge by Pledgor of the Pledged
Collateral pursuant to this Agreement and the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the exercise by Agent of the voting or other
rights, or the remedies in respect of the Pledged Collateral, provided for in
this Agreement (except as may be required in connection with a disposition of
Pledged Collateral by laws affecting the offering and sale of securities
generally).
(e) Due Authorization, etc. of Agreement. This Agreement has been
------------------------------------
duly authorized, executed and delivered by Pledgor, and is in full force and
effect and is binding upon and enforceable against Pledgor in accordance with
the terms hereof.
(f) Perfection. Except as otherwise set forth in Schedule III
---------- ------------
annexed hereto, (i) the pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral free of any adverse claim, securing the payment of the
Secured Obligations, and (ii) Agent has "control" of the Pledged Collateral
within the meaning of Section 9115(c) of the Uniform Commercial Code of the
State of California ("UCC").
(g) Margin Regulations. The pledge of the Pledged Collateral pursuant
------------------
to this Agreement does not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
(h) Other Information. All information heretofore, herein or
-----------------
hereafter supplied to Agent by or on behalf of Pledgor with respect to the
Pledged Collateral is accurate and complete in all respects.
SECTION 5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL;
---------------------------------------------------------
ETC. Pledgor shall:
----
(a) not, except as expressly permitted by the Credit Agreement, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) execute or
grant any stock power or endorsement with respect to any of the Pledged
Collateral, or any other document or instrument purporting to assign, transfer
or redeem any of the Pledged Collateral, or otherwise grant any indicia of
"control" (within the meaning of Section 9115(c) of the UCC) with respect to any
of the Pledged Collateral, (iii) create or suffer to exist any Lien upon or with
respect to any of the Pledged Collateral, except for the security interest under
this Agreement, any other security interest granted in favor of Agent or any
other Lien expressly permitted under Section 8.01 of the Credit Agreement, or
(iv) permit any issuer of Pledged Interests to merge or
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consolidate unless all the outstanding capital stock of the surviving or
resulting corporation is, upon such merger or consolidation, pledged hereunder
and no cash, securities or other property is distributed in respect of the
outstanding shares of any other constituent corporation;
(b) (i) cause each issuer of Pledged Collateral not to issue any stock
or other securities in addition to or in substitution for the Pledged Collateral
issued by such issuer, except to Pledgor, (ii) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all additional
shares of stock or other securities of each issuer of Pledged Collateral, and
(iii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all shares of stock or other securities of any
Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a Material Subsidiary of Pledgor;
(c) promptly notify Agent of any event of which Pledgor becomes aware
causing loss or depreciation in the value of the Pledged Collateral;
(d) promptly deliver to Agent all written notices received by it with
respect to the Pledged Collateral; and
(e) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Pledged Collateral,
except to the extent the validity thereof is being contested in good faith;
provided, however, that Pledgor shall in any event pay such taxes, assessments,
-------- -------
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgment, writ or warrant of attachment entered or filed
against Pledgor or any of the Pledged Collateral as a result of the failure to
make such payment.
SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
-------------------------------------
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Agent
may request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Agent to exercise and enforce its
rights and remedies hereunder with respect to any Pledged Collateral. Without
limiting the generality of the foregoing, Pledgor will: (i) execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices (including, without limitation, stock powers with respect
to, or other endorsements or instruments necessary to effect the assignment or
other transfer of, any of the Pledged Collateral), as may be necessary or
desirable, or as Agent may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby and (ii) at Agent's
request, appear in and defend any action or proceeding that may affect Pledgor's
title to or Agent's security interest in all or any part of the Pledged
Collateral.
(b) Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 5(b), promptly (and in any event within five Business Days) deliver
to Agent a Pledge Amendment, duly executed by Pledgor, in substantially the form
of Schedule IV annexed hereto (a "PLEDGE AMENDMENT"), in respect of the
-----------
additional Pledged Interests to be pledged pursuant to this Agreement. Pledgor
hereby authorizes Agent
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to attach each Pledge Amendment to this Agreement and agrees that all Pledged
Interests listed on any Pledge Amendment delivered to Agent shall for all
purposes hereunder be considered Pledged Collateral; provided, however, that the
-------- -------
failure of Pledgor to execute a Pledge Amendment with respect to any additional
Pledged Interests pledged pursuant to this Agreement shall not impair the
security interest of Agent therein or otherwise adversely affect the rights and
remedies of Agent hereunder with respect thereto.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
------------------------------
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Credit
Agreement; provided, however, that Pledgor shall not exercise or refrain from
-------- -------
exercising any such right if Agent shall have notified Pledgor that, in Agent's
judgment, such action would have a material adverse effect on the value of the
Pledged Collateral or any part thereof;
(ii) Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the lien of this Agreement, any and all dividends and interest
paid in respect of the Pledged Collateral; provided, however, that any and all
-------- -------
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with (x) a partial or total
liquidation or dissolution, (y) a reduction of capital, capital surplus or paid-
in-surplus or (z) a quasi-reorganization, and
(C) cash paid, payable or otherwise distributed in respect of
principal or in redemption of or in exchange for any Pledged Collateral, shall
be, and shall forthwith be delivered to Agent to hold as, Pledged Collateral and
shall, if received by Pledgor, be received in trust for the benefit of Agent, be
segregated from the other property or funds of Pledgor and be forthwith
delivered to Agent as Pledged Collateral in the same form as so received (with
all necessary endorsements); and
(iii) Agent shall promptly execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies, dividend payment orders and
other instruments as Pledgor may from time to time reasonably request for the
purpose of enabling Pledgor to exercise the voting and other consensual rights
which it is entitled to exercise pursuant to paragraph (i) above and to receive
the dividends, principal or interest payments which it is authorized to receive
and retain pursuant to paragraph (ii) above.
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(b) Upon the occurrence and during the continuation of any Default or
Event of Default:
(i) upon written notice from Agent to Pledgor, all rights of Pledgor
to exercise the voting and other consensual rights which it would otherwise be
entitled to exercise pursuant to Section 7(a)(i) shall cease, and all such
rights shall thereupon become vested in Agent who shall thereupon have the sole
right to exercise such voting and other consensual rights;
(ii) all rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain pursuant
to Section 7(a)(ii) shall cease, and all such rights shall thereupon become
vested in Agent who shall thereupon have the sole right to receive and hold as
Pledged Collateral such dividends and interest payments; and
(iii) all dividends, principal and interest payments which are
received by Pledgor contrary to the provisions of paragraph (ii) of this Section
7(b) shall be received in trust for the benefit of Agent, shall be segregated
from other funds of Pledgor and shall forthwith be paid over to Agent as Pledged
Collateral in the same form as so received (with any necessary endorsements).
(c) In order to permit Agent to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section
7(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) Pledgor
shall promptly execute and deliver (or cause to be executed and delivered) to
Agent all such proxies, dividend payment orders and other instruments as Agent
may from time to time reasonably request and (ii) without limiting the effect of
the immediately preceding clause (i), Pledgor hereby grants to Agent an
irrevocable proxy to vote the Pledged Collateral and to exercise all other
rights, powers, privileges and remedies to which a holder of the Pledged
Collateral would be entitled (including, without limitation, giving or
withholding written consents of shareholders, calling special meetings of
shareholders and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Collateral on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Collateral or any officer or agent
thereof), upon the occurrence of an Event of Default or Default and which proxy
shall only terminate upon the payment in full of the Secured Obligations.
SECTION 8. AGENT APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
--------------------------------
irrevocably appoints Agent as Pledgor's attorney-in-fact, with full authority in
the place and stead of Pledgor and in the name of Pledgor, Agent or otherwise,
from time to time in Agent's discretion to take any action and to execute any
instrument that Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including without limitation:
(a) to file one or more financing or continuation statements, or
amendments thereto, or stock powers or other endorsements or instruments of
transfer or assignments in blank, relative to all or any part of the Pledged
Collateral, or to enter into agreements with Agent and any securities
intermediaries described in Section 1 relating to any Pledged Collateral to
protect Agent's security interest
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therein, in form and substance satisfactory to Agent, in each case without the
signature of Pledgor;
(b) after the occurrence and during the continuation of any Event of
Default, to ask, demand, collect, ▇▇▇ for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Pledged Collateral;
(c) after the occurrence and during the continuation of any Event of
Default, to receive, endorse and collect any instruments made payable to Pledgor
representing any dividend, principal or interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same; and
(d) after the occurrence and during the continuation of any Event of
Default, to file any claims or take any action or institute any proceedings that
Agent may deem necessary or desirable for the collection of any of the Pledged
Collateral or otherwise to enforce the rights of Agent with respect to any of
the Pledged Collateral.
SECTION 9. AGENT MAY PERFORM. If Pledgor fails to perform any
-----------------
agreement contained herein, Agent may itself perform, or cause performance of,
such agreement, and the expenses of Agent incurred in connection therewith shall
be payable by Pledgor under Section 12(b).
SECTION 10. STANDARD OF CARE. The powers conferred on Agent
----------------
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Pledged Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Agent shall have no duty as to any Pledged Collateral, it being understood that
Agent shall have no responsibility for (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Pledged Collateral, whether or not Agent has or is deemed to
have knowledge of such matters, (b) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the Pledged Collateral) to preserve rights against any parties
with respect to any Pledged Collateral, (c) taking any necessary steps to
collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Agent shall be deemed to have exercised reasonable care in the custody
and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Agent accords
its own property consisting of negotiable securities.
SECTION 11. REMEDIES.
--------
(a) If any Event of Default shall have occurred and be continuing,
Agent may, subject to the terms of the Credit Agreement, exercise in respect of
the Pledged Collateral, in addition to all other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the Uniform Commercial Code as in effect in any
relevant jurisdiction (the "CODE") (whether or not the Code applies to the
affected Pledged Collateral), and
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Agent may also in its sole discretion, without notice except as specified below,
sell the Pledged Collateral or any part thereof in one or more parcels at public
or private sale, at any exchange or broker's board or at any of Agent's offices
or elsewhere, for cash, on credit or for future delivery, at such time or times
and at such price or prices and upon such other terms as Agent may deem
commercially reasonable, irrespective of the impact of any such sales on the
market price of the Pledged Collateral. Agent or any Bank may be the purchaser
of any or all of the Pledged Collateral at any such sale and Agent, as agent for
and representative of the Banks, shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion
of the Pledged Collateral sold at any such public sale, to use and apply any of
the Secured Obligations as a credit on account of the purchase price for any
Pledged Collateral payable by Agent at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of Pledgor, and Pledgor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Pledgor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to Pledgor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. Agent shall not be obligated to
make any sale of Pledged Collateral regardless of notice of sale having been
given. Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. To
the extent permitted by applicable law, Pledgor hereby waives any claims against
Agent arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at any such private sale was less than the price
which might have been obtained at a public sale, even if Agent accepts the first
offer received and does not offer such Pledged Collateral to more than one
offeree. If the proceeds of any sale or other disposition of the Pledged
Collateral are insufficient to pay all of the Secured Obligations, Pledgor shall
be liable for the deficiency and the reasonable fees of any attorneys employed
by Agent to collect such deficiency.
(b) Any cash held by Agent as Pledged Collateral and all cash proceeds
received by Agent in respect of any sale of, collection from, or other realiza
tion upon all or any part of the Pledged Collateral may, in the discretion of
Agent, be held by Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to Agent pursuant to Section
12(b)) in whole or in part by Agent against all or any part of the Secured
Obligations in such order as Agent shall elect. Any surplus of such cash or
cash proceeds held by Agent and remaining after payment in full of all the
Secured Obligations shall be paid over to Pledgor or to whosoever may be
lawfully entitled to receive such surplus.
(c) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended from time to time (the
"SECURITIES ACT"), and applicable state securities laws, Agent may be compelled,
with respect to any sale of all or any part of the Pledged Collateral conducted
without prior registration or qualification of such Pledged Collateral under the
Securities Act and/or such state securities laws, to conduct such sales as
private, not public, sales and to limit purchasers to a restricted group who
will agree, among other things, to acquire the Pledged Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges and agrees that any such private sales may be at
prices and on terms less favorable than those obtainable
I-3-9
through a public sale without such restrictions (including, without limitation,
a public offering made pursuant to an effective registration statement under the
Securities Act) and, notwithstanding such circumstances, Pledgor agrees that any
such private sale shall be conclusively deemed to have been made in a
commercially reasonable manner and that Agent shall have no obligation either to
engage in public sales or to delay the sale of any Pledged Collateral for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree to
so register it. Pledgor further acknowledges the impossibility of ascertaining
the amount of damages which would be suffered by Agent by reason of the failure
by Pledgor to perform any of the covenants contained in this Section and,
consequently, agrees that, if Pledgor shall fail to perform any of such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount
equal to the value of the Pledged Collateral on the date Agent shall demand
compliance with this Section.
(d) If Agent determines to exercise its right to sell any or all of
the Pledged Collateral, upon written request, Pledgor shall and shall cause each
issuer of any Pledged Interests to be sold hereunder from time to time to
furnish to Agent all such information as Agent may request in order to determine
the number of shares and other instruments included in the Pledged Collateral
which may be sold by Agent in exempt transactions under the Securities Act and
the rules and regulations of the Securities and Exchange Commission thereunder,
as the same are from time to time in effect.
SECTION 12. INDEMNITY AND EXPENSES.
----------------------
(a) Pledgor agrees to indemnify Agent and each Bank from and against
any and all claims, losses and liabilities in any way relating to, growing out
of or resulting from this Agreement and the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Agent's or such
Bank's gross negligence or willful misconduct as finally determined by a court
of competent jurisdiction.
(b) Pledgor shall pay to Agent upon demand the amount of any and all
costs and expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, that 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 Agent
hereunder, or (iv) the failure by Pledgor to perform or observe any of the
provisions hereof.
SECTION 13. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
-----------------------------------------------
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in full force and effect until the payment in full of all
Secured Obligations, (b) be binding upon Pledgor, its successors and assigns,
and (c) inure, together with the rights and remedies of Agent hereunder, to the
benefit of Agent and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), any Bank may, subject to the terms
of the Credit Agreement, assign or otherwise transfer its interest in the Credit
Agreement in whole or in part to any other Person, and such other Person shall
thereupon become vested with all benefits in respect thereof granted to Banks
herein or otherwise. Upon the payment in full of all Secured Obligations, the
security interest granted hereby shall terminate
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and all rights to the Pledged Collateral shall revert to Pledgor. Upon any such
termination Agent will, at Pledgor's expense, execute and deliver to Pledgor
such documents as Pledgor shall reasonably request to evidence such termination
and Pledgor shall be entitled to the return, upon its request and at its
expense, against receipt and without recourse to Agent, of such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
SECTION 14. AMENDMENTS; ETC. Subject to Section 11.01 of the Credit
---------------
Agreement, no amendment, modification, termination or waiver of any provision
of this Agreement, and no consent to any departure by Pledgor therefrom, shall
in any event be effective unless the same shall be in writing and signed by
Agent and, in the case of any such amendment or modification, by Pledgor. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
SECTION 15. NOTICES. Any notice or other communication herein
-------
required or permitted to be given shall be in writing and may be personally
served or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or five (5) Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be
as set forth under such party's name on the signature pages hereof or, as to
either party, such other address as shall be designated by such party in a
written notice delivered to the other party hereto.
SECTION 16. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
-----------------------------------------------------
No failure or delay on the part of Agent in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 17. SEVERABILITY. In case any provision in or obligation
------------
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 18. HEADINGS. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 19. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
--------------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
I-3-11
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA. Unless otherwise defined herein or in the Credit Agreement, terms
used in Articles 8 and 9 of the UCC are used herein as therein defined.
SECTION 20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE
UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Pledgor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Pledgor at its address provided in Section 15, such
service being hereby acknowledged by Pledgor to be sufficient for personal
jurisdiction in any action against Pledgor in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Agent to bring proceedings against Pledgor in the courts of any other
jurisdiction.
SECTION 21. WAIVER OF JURY TRIAL. PLEDGOR AND AGENT HEREBY AGREE TO
--------------------
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Agent each acknowledge that
this waiver is a material inducement for Pledgor and Agent to enter into a
business relationship, that Pledgor and Agent have already relied on this waiver
in entering into this Agreement and that each will continue to rely on this
waiver in their related future dealings. Pledgor and Agent further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 22. WAIVERS BY PLEDGOR. Pledgor hereby waives, for the
------------------
benefit of Banks and Agent:
(a) any right to require Agent or any Bank, as a condition of payment
or performance by Pledgor, to (i) proceed against Company, any other guarantor
of the Secured Obligations or any other Person, (ii) proceed against or
I-3-12
exhaust any security held from Company, any such other guarantor or any other
Person, (iii) proceed against or have resort to any balance of any deposit
account or credit on the books of Agent or any Bank in favor of Company or any
other Person, or (iv) pursue any other remedy in the power of Agent or any Bank
whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of Company including, without limitation, any
defense based on or arising out of the lack of validity or the unenforceability
of the Secured Obligations or any agreement or instrument relating thereto or by
reason of the cessation of the liability of Company from any cause other than
payment in full of the Secured Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(d) any defense based upon Agent's or any Bank's errors or omissions
in the administration of the Secured Obligations, except behavior which amounts
to bad faith;
(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Pledge Agreement and
any legal or equitable discharge of such Pledgor's obligations hereunder, (ii)
the benefit of any statute of limitations affecting Pledgor's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that Agent
or any Bank protect, secure, perfect or insure any security interest or lien or
any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including acceptance
of this Pledge Agreement, notices of default under the Credit Agreement, the
Loan Documents or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Secured Obligations or any agreement
related thereto, notices of any extension of credit to Company and any right to
consent to any thereof; and
(g) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or which
may conflict with the terms of this Pledge Agreement.
SECTION 23. CERTAIN CALIFORNIA LAW WAIVERS. As used in this
------------------------------
Section 23, any reference to "the principal" includes Company, and any reference
to "the creditor" includes Agent and each Bank. In accordance with Section 2856
of the California Civil Code:
(a) Pledgor agrees (i) to waive any and all rights of subrogation and
reimbursement against Company or against any collateral or security granted by
Company for any of the Secured Obligations and (ii) to withhold the exercise of
any and all rights of subrogation, reimbursement and contribution against
Company, against any other guarantor of any of the Secured Obligations and
against any collateral or security granted by any such other guarantor for any
of the Secured Obligations until the Secured Obligations shall have been paid in
full and all letters of
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credit issued under the Credit Agreement and the other Loan Documents shall have
expired or been cancelled, all as more fully set forth in Section 24;
(b) Pledgor waives any and all other rights and defenses available to
such Pledgor by reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of the
California Civil Code, including without limitation any and all rights or
defenses Pledgor may have by reason of protection afforded to the principal with
respect to any of the Secured Obligations, or to any other guarantor of any of
the Secured Obligations with respect to any of such guarantor's obligations
under its guaranty, in either case pursuant to the antideficiency or other laws
of the State of California limiting or discharging the principal's indebtedness
or such guarantor's obligations, including without limitation Section 580a,
580b, 580d, or 726 of the California Code of Civil Procedure; and
(c) Pledgor waives all rights and defenses arising out of an election
of remedies by the creditor, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for any Secured Obligation, has
destroyed Pledgor's rights of subrogation and reimbursement against the
principal by the operation of Section 580d of the Code of Civil Procedure or
otherwise; and even though that election of remedies by the creditor, such as
nonjudicial foreclosure with respect to security for an obligation of any other
guarantor (including any other Pledgor) of any of the Secured Obligations, has
destroyed Pledgor's rights of contribution against such other guarantor.
No other provision of this Pledge Agreement shall be construed as limiting the
generality of any of the covenants and waivers set forth in this Section 23.
SECTION 24. PLEDGOR'S RIGHTS OF SUBROGATION, CONTRIBUTION, ETC.
--------------------------------------------------
Pledgor hereby waives any claim, right or remedy, direct or indirect, that
Pledgor now has or may hereafter have against Company or any of its assets in
connection with this Pledge Agreement or the performance by Pledgor of its
obligations hereunder, in each case whether such claim, right or remedy arises
in equity, under contract, by statute (including without limitation under
California Civil Code Section 2847, 2848 or 2849), under common law or otherwise
and including without limitation (a) any right of subrogation, reimbursement or
indemnification that Pledgor now has or may hereafter have against Company, (b)
any right to enforce, or to participate in, any claim, right or remedy that
Agent or any Bank now has or may hereafter have against Company, and (c) any
benefit of, and any right to participate in, any collateral or security now or
hereafter held by Agent or any Bank. In addition, until the Secured Obligations
shall have been indefeasibly paid in full and all letters of credit issued under
the Credit Agreement shall have expired or been cancelled, Pledgor shall
withhold exercise of any right of contribution Pledgor may have against any
other guarantor of the Secured Obligations (including without limitation any
such right of contribution under California Civil Code Section 2848). Pledgor
further agrees that, to the extent the waiver or agreement to withhold the
exercise of its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation, reimbursement
or indemnification Pledgor may have against Company or against any collateral or
security, and any rights of contribution Pledgor may have against any such other
guarantor, shall be junior and subordinate to any rights Agent or any Bank may
have against Company, to all right, title and interest Agent or any Bank may
have in any such collateral or security, and
I-3-14
to any right Agent or any Bank may have against such other guarantor. If any
amount shall be paid to Pledgor on account of any such subrogation,
reimbursement, indemnification or contribution rights at any time when all
Secured Obligations shall not have been paid in full, such amount shall be held
in trust for Agent on behalf of Banks and shall forthwith be paid over to Agent
for the benefit of Banks to be credited and applied against the Secured
Obligations, whether matured or unmatured, in accordance with the terms hereof.
SECTION 25. FURTHER DOCUMENTATION. Pledgor hereby agrees to promptly
---------------------
execute and deliver all further instruments and documents (including any
financing statements, continuations or amendments of such financing statements
and any consents necessary for the authorization of the transactions
contemplated hereby) and take all further action that may be necessary or
desirable, or that Agent may request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Agent
to exercise and enforce the rights and remedies of Agent hereunder with respect
to any Pledged Collateral or to carry out the provisions and purposes hereof.
SECTION 26. COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
(remainder of page intentionally left blank)
I-3-15
IN WITNESS WHEREOF, Pledgor and Agent have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
▇▇▇▇ MANAGEMENT SERVICES, INC.
By: _____________________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, AS AGENT
By: __________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
I-3-16
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated as of August
28, 1997 between ▇▇▇▇ Management Services, Inc., as Pledgor, and Bank of America
National Trust & Savings Association, as Agent.
Part A
Class of Certificate Par Number of
Issuer Equity Nos. Value Interests
------ --------- ----------- ----- ---------
▇▇▇▇ Corporate
Services, Inc. Common Stock
▇▇▇▇ Investment
Management, Inc. Common Stock
▇▇▇▇ ▇▇▇▇ Realty
Advisors, Inc. Common Stock
CBS Investment Realty,
Inc. Common Stock
▇▇▇▇ Partnerships I,
Inc. Common Stock
▇▇▇▇ Partnerships II,
Inc. Common Stock
▇▇▇▇/CC&F Management
Services Partnership Interests
I-1
SCHEDULE II
Attached to and forming a part of the Pledge Agreement dated as of
August 28, 1997 between ▇▇▇▇ Management Services, Inc., as Pledgor, and Bank of
America National Trust & Savings Association, as Agent.
Percentage
Number of Represented Holders
Interests Issued by Pledged of Interests
Issuer and Outstanding Interests Not Pledged
------------- ---------------- ----------- ------------
II-1
SCHEDULE III
Attached to and forming a part of the Pledge Agreement dated as of
August 28, 1997 between ▇▇▇▇ Management Services, Inc., as Pledgor, and Bank of
America National Trust & Savings Association, as Agent.
EXCEPTIONS TO PRIORITY OF SECURITY INTEREST
-------------------------------------------
III-1
SCHEDULE IV
PLEDGE AMENDMENT
----------------
This Pledge Amendment, dated as of August 28, 1997, is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated as of August 28, 1997, between the undersigned and Bank
of America National Trust & Savings Association, as Agent (the "PLEDGE
AGREEMENT," capitalized terms defined therein being used herein as therein
defined), and that the Pledged Interests listed on this Pledge Amendment shall
be deemed to be part of the Pledged Interests and shall become part of the
Pledged Collateral under the Pledge Agreement as amended hereby, and shall
secure all Secured Obligations.
[NAME OF PLEDGOR]
By: ___________________________
Title:
Class of Certificate Par Number of
Issuer Equity Numbers Value Interests
------ -------- ----------- ----- --------------
IV-1
EXHIBIT I-4
FORM OF PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "AGREEMENT") is dated as of August 28,
1997 and entered into by and between ▇▇▇▇ REAL ESTATE SERVICES, a Delaware
corporation ("PLEDGOR"), and BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, as agent for and representative of (in such capacity herein called
"AGENT") those certain financial institutions (each a "BANK" and collectively,
"BANKS") party to the Credit Agreement (as hereinafter defined).
RECITALS
A. Pledgor is the legal and beneficial owner of the shares of stock
(the "PLEDGED SHARES") described in Schedule I annexed hereto and issued by the
----------
corporations named therein.
B. Pursuant to and subject to the terms and conditions of that certain
Credit Agreement dated as of August 28, 1997 by and among CB Commercial Real
Estate Services Group, Inc., a Delaware corporation, Agent, and Banks (as the
same from time to time may be amended, restated, supplemented or otherwise
modified, the "CREDIT AGREEMENT"), Banks have agreed, among other things, to
provide a revolving credit loan (including a subfacility for letters of credit)
upon the terms and subject to the conditions set forth therein. Except as
otherwise defined herein, all other capitalized terms used herein shall have the
respective meanings given to such terms in the Credit Agreement.
C. It is a condition precedent to the effectiveness of the Credit
Agreement and the making of any Loans that Pledgor shall have pledged the
collateral, granted the security interests and undertaken the obligations
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Agent and Banks to enter into the Credit Agreement and the other
agreements, documents and instruments to be delivered pursuant thereto and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Pledgor hereby agrees with Agent as follows:
SECTION 1. PLEDGE AND GRANT OF SECURITY INTERESTS. Pledgor hereby
--------------------------------------
pledges and assigns to Agent for the benefit of the Banks, and hereby grants to
Agent for the benefit of the Banks a security interest in, all of Pledgor's
right, title and interest in and to the following (the "PLEDGED COLLATERAL"):
(a) the Pledged Shares and the certificates representing the Pledged
Shares and any interest of Pledgor in the entries on the books of any securities
intermediary pertaining to the Pledged Shares, and all dividends, cash,
warrants,
I-4-1
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares;
(b) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any issuer of the Pledged Shares from time to time acquired by Pledgor in any
manner (which shares shall be deemed to be part of the Pledged Shares), the
certificates or other instruments representing such additional shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any securities intermediary pertaining to such
additional shares, securities, warrants, options or other rights, and all
dividends, cash, warrants, rights, instruments 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 such additional shares, securities, warrants,
options or other rights;
(c) all shares of, and all securities convertible into and warrants,
options and other rights to purchase or otherwise acquire, stock of any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a Material Subsidiary which is a direct Subsidiary of Pledgor (which shares
shall be deemed to be part of the Pledged Shares), the certificates or other
instruments representing such shares, securities, warrants, options or other
rights and any interest of Pledgor in the entries on the books of any securities
intermediary pertaining to such shares, securities, warrants, options or other
rights, and all dividends, cash, warrants, rights, instruments 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 such shares,
securities, warrants, options or other rights; and
(d) to the extent not covered by clauses (a) through (c) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes of
this Agreement, the term "PROCEEDS" includes whatever is receivable or received
when Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and whether
or not occurring by operation of law, and includes, without limitation, proceeds
of any indemnity or guaranty payable to Pledgor or Agent from time to time with
respect to any of the Pledged Collateral.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
------------------------
Pledged Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. (S)362(a)), of all obligations and
liabilities of every nature of Pledgor now or hereafter existing under or
arising out of or in connection with the Credit Agreement, the Guaranty and the
other Loan Documents, and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Pledgor, would accrue on such
obligations), fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, determined or undetermined, whether or not jointly owed with
others, and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or
I-4-2
indirectly from Agent or any Bank as a preference, fraudulent transfer or
otherwise (all such obligations and liabilities being the "UNDERLYING DEBT"),
and all obligations of every nature of Pledgor now or hereafter existing under
this Agreement and under any other Loan Document heretofore, now or hereafter
delivered by Pledgor to Agent, and all extensions, renewals, restatements,
supplements, amendments or modifications thereof or thereto (all such
obligations of Pledgor, together with the Underlying Debt, being the "SECURED
OBLIGATIONS").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
------------------------------
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Agent pursuant hereto and shall be in suitable
form for transfer by delivery or, as applicable, shall be accompanied by
Pledgor's endorsement, where necessary, or duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to Agent. Agent
shall have the right, at any time in its discretion and without notice to
Pledgor, to transfer to or to register in the name of Agent or any of its
nominees any or all of the Pledged Collateral, subject only to the revocable
rights specified in Section 7(a). In addition, Agent shall have the right at
any time to exchange certificates or instruments representing or evidencing any
Pledged Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
------------------------------
warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
---------------------------------------------
Shares have been duly authorized and validly issued and are fully paid and non-
assessable.
(b) Description of Pledged Collateral. The Pledged Shares constitute
---------------------------------
all of the issued and outstanding shares of stock of each issuer thereof, except
as otherwise set forth in Schedule II annexed hereto, and there are no
-----------
outstanding warrants, options or other rights to purchase, or other agreements
outstanding with respect to, or property that is now or hereafter convertible
into, or that requires the issuance or sale of, any Pledged Shares.
(c) Ownership of Pledged Collateral. Except for qualifying shares
-------------------------------
held by Pledgor's directors, Pledgor is the legal, record and beneficial owner
of the Pledged Collateral free and clear of any Lien except for the security
interest created by this Agreement.
(d) Governmental Authorizations. No authorization, approval or other
---------------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge by Pledgor of the Pledged
Collateral pursuant to this Agreement and the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the exercise by Agent of the voting or other
rights, or the remedies in respect of the Pledged Collateral, provided for in
this Agreement (except as may be required in connection with a disposition of
Pledged Collateral by laws affecting the offering and sale of securities
generally).
(e) Due Authorization, etc. of Agreement. This Agreement has been
------------------------------------
duly authorized, executed and delivered by Pledgor, and is in full force and
I-4-3
effect and is binding upon and enforceable against Pledgor in accordance with
the terms hereof.
(f) Perfection. Except as otherwise set forth in Schedule III
---------- ------------
annexed hereto, (i) the pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral free of any adverse claim, securing the payment of the
Secured Obligations, and (ii) Agent has "control" of the Pledged Collateral
within the meaning of Section 9115(c) of the Uniform Commercial Code of the
State of California ("UCC").
(g) Margin Regulations. The pledge of the Pledged Collateral pursuant
------------------
to this Agreement does not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
(h) Other Information. All information heretofore, herein or
-----------------
hereafter supplied to Agent by or on behalf of Pledgor with respect to the
Pledged Collateral is accurate and complete in all respects.
SECTION 5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL;
---------------------------------------------------------
ETC. Pledgor shall:
----
(a) not, except as expressly permitted by the Credit Agreement, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) execute or
grant any stock power or endorsement with respect to any of the Pledged
Collateral, or any other document or instrument purporting to assign, transfer
or redeem any of the Pledged Collateral, or otherwise grant any indicia of
"control" (within the meaning of Section 9115(c) of the UCC) with respect to any
of the Pledged Collateral, (iii) create or suffer to exist any Lien upon or with
respect to any of the Pledged Collateral, except for the security interest under
this Agreement, any other security interest granted in favor of Agent or any
other Lien expressly permitted under Section 8.01 of the Credit Agreement, or
(iv) permit any issuer of Pledged Shares to merge or consolidate unless all the
outstanding capital stock of the surviving or resulting corporation is, upon
such merger or consolidation, pledged hereunder and no cash, securities or other
property is distributed in respect of the outstanding shares of any other
constituent corporation;
(b) (i) cause each issuer of Pledged Collateral not to issue any stock
or other securities in addition to or in substitution for the Pledged Collateral
issued by such issuer, except to Pledgor, (ii) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all additional
shares of stock or other securities of each issuer of Pledged Collateral, and
(iii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all shares of stock or other securities of any
Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a Material Subsidiary of Pledgor;
(c) promptly notify Agent of any event of which Pledgor becomes aware
causing loss or depreciation in the value of the Pledged Collateral;
(d) promptly deliver to Agent all written notices received by it with
respect to the Pledged Collateral; and
I-4-4
(e) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Pledged Collateral,
except to the extent the validity thereof is being contested in good faith;
provided, however, that Pledgor shall in any event pay such taxes, assessments,
-------- -------
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgment, writ or warrant of attachment entered or filed
against Pledgor or any of the Pledged Collateral as a result of the failure to
make such payment.
SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
-------------------------------------
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Agent
may request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Agent to exercise and enforce its
rights and remedies hereunder with respect to any Pledged Collateral. Without
limiting the generality of the foregoing, Pledgor will: (i) execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices (including, without limitation, stock powers with respect
to, or other endorsements or instruments necessary to effect the assignment or
other transfer of, any of the Pledged Collateral), as may be necessary or
desirable, or as Agent may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby and (ii) at Agent's
request, appear in and defend any action or proceeding that may affect Pledgor's
title to or Agent's security interest in all or any part of the Pledged
Collateral.
(b) Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 5(b), promptly (and in any event within five Business Days) deliver
to Agent a Pledge Amendment, duly executed by Pledgor, in substantially the form
of Schedule IV annexed hereto (a "PLEDGE AMENDMENT"), in respect of the
-----------
additional Pledged Shares to be pledged pursuant to this Agreement. Pledgor
hereby authorizes Agent to attach each Pledge Amendment to this Agreement and
agrees that all Pledged Shares listed on any Pledge Amendment delivered to Agent
shall for all purposes hereunder be considered Pledged Collateral; provided,
--------
however, that the failure of Pledgor to execute a Pledge Amendment with respect
-------
to any additional Pledged Shares pledged pursuant to this Agreement shall not
impair the security interest of Agent therein or otherwise adversely affect the
rights and remedies of Agent hereunder with respect thereto.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
------------------------------
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Credit
Agreement; provided, however, that Pledgor shall not exercise or refrain from
-------- -------
exercising any such right if Agent shall have notified Pledgor that, in Agent's
judgment, such action would have a material adverse effect on the value of the
Pledged Collateral or any part thereof;
I-4-5
(ii) Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the lien of this Agreement, any and all dividends and interest
paid in respect of the Pledged Collateral; provided, however, that any and all
-------- -------
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with (x) a partial or total
liquidation or dissolution, (y) a reduction of capital, capital surplus or paid-
in-surplus or (z) a quasi-reorganization, and
(C) cash paid, payable or otherwise distributed in respect of
principal or in redemption of or in exchange for any Pledged Collateral,
shall be, and shall forthwith be delivered to Agent to hold as, Pledged
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Agent, be segregated from the other property or funds of Pledgor and
be forthwith delivered to Agent as Pledged Collateral in the same form as so
received (with all necessary endorsements); and
(iii) Agent shall promptly execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies, dividend payment orders and
other instruments as Pledgor may from time to time reasonably request for the
purpose of enabling Pledgor to exercise the voting and other consensual rights
which it is entitled to exercise pursuant to paragraph (i) above and to receive
the dividends, principal or interest payments which it is authorized to receive
and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of any Default or
Event of Default:
(i) upon written notice from Agent to Pledgor, all rights of
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 7(a)(i) shall cease, and
all such rights shall thereupon become vested in Agent who shall thereupon have
the sole right to exercise such voting and other consensual rights;
(ii) all rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain pursuant
to Section 7(a)(ii) shall cease, and all such rights shall thereupon become
vested in Agent who shall thereupon have the sole right to receive and hold as
Pledged Collateral such dividends and interest payments; and
(iii) all dividends, principal and interest payments which are
received by Pledgor contrary to the provisions of paragraph (ii) of this Section
7(b) shall be received in trust for the benefit of Agent, shall be segregated
from other funds of Pledgor and shall forthwith be paid over to Agent as Pledged
Collateral in the same form as so received (with any necessary endorsements).
I-4-6
(c) In order to permit Agent to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section
7(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) Pledgor
shall promptly execute and deliver (or cause to be executed and delivered) to
Agent all such proxies, dividend payment orders and other instruments as Agent
may from time to time reasonably request and (ii) without limiting the effect of
the immediately preceding clause (i), Pledgor hereby grants to Agent an
irrevocable proxy to vote the Pledged Collateral and to exercise all other
rights, powers, privileges and remedies to which a holder of the Pledged
Collateral would be entitled (including, without limitation, giving or
withholding written consents of shareholders, calling special meetings of
shareholders and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Collateral on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Collateral or any officer or agent
thereof), upon the occurrence of an Event of Default or Default and which proxy
shall only terminate upon the payment in full of the Secured Obligations.
SECTION 8. AGENT APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
--------------------------------
irrevocably appoints Agent as Pledgor's attorney-in-fact, with full authority in
the place and stead of Pledgor and in the name of Pledgor, Agent or otherwise,
from time to time in Agent's discretion to take any action and to execute any
instrument that Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including without limitation:
(a) to file one or more financing or continuation statements, or
amendments thereto, or stock powers or other endorsements or instruments of
transfer or assignments in blank, relative to all or any part of the Pledged
Collateral, or to enter into agreements with Agent and any securities
intermediaries described in Section 1 relating to any Pledged Collateral to
protect Agent's security interest therein, in form and substance satisfactory to
Agent, in each case without the signature of Pledgor;
(b) after the occurrence and during the continuation of any Event of
Default, to ask, demand, collect, ▇▇▇ for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Pledged Collateral;
(c) after the occurrence and during the continuation of any Event of
Default, to receive, endorse and collect any instruments made payable to Pledgor
representing any dividend, principal or interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same; and
(d) after the occurrence and during the continuation of any Event of
Default, to file any claims or take any action or institute any proceedings that
Agent may deem necessary or desirable for the collection of any of the Pledged
Collateral or otherwise to enforce the rights of Agent with respect to any of
the Pledged Collateral.
SECTION 9. AGENT MAY PERFORM. If Pledgor fails to perform any
-----------------
agreement contained herein, Agent may itself perform, or cause performance of,
such
I-4-7
agreement, and the expenses of Agent incurred in connection therewith shall
be payable by Pledgor under Section 12(b).
SECTION 10. STANDARD OF CARE. The powers conferred on Agent
----------------
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Pledged Collateral in its possession
and the accounting for moneys actually received by it hereunder, Agent shall
have no duty as to any Pledged Collateral, it being understood that Agent shall
have no responsibility for (a) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relating to
any Pledged Collateral, whether or not Agent has or is deemed to have knowledge
of such matters, (b) taking any necessary steps (other than steps taken in
accordance with the standard of care set forth above to maintain possession of
the Pledged Collateral) to preserve rights against any parties with respect to
any Pledged Collateral, (c) taking any necessary steps to collect or realize
upon the Secured Obligations or any guarantee therefor, or any part thereof, or
any of the Pledged Collateral, or (d) initiating any action to protect the
Pledged Collateral against the possibility of a decline in market value. Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of Pledged Collateral in its possession if such Pledged Collateral
is accorded treatment substantially equal to that which Agent accords its own
property consisting of negotiable securities.
SECTION 11. REMEDIES.
--------
(a) If any Event of Default shall have occurred and be continuing,
Agent may, subject to the terms of the Credit Agreement, exercise in respect of
the Pledged Collateral, in addition to all other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the Uniform Commercial Code as in effect in any
relevant jurisdiction (the "CODE") (whether or not the Code applies to the
affected Pledged Collateral), and Agent may also in its sole discretion, without
notice except as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange or
broker's board or at any of Agent's offices or elsewhere, for cash, on credit or
for future delivery, at such time or times and at such price or prices and upon
such other terms as Agent may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the Pledged Collateral. Agent
or any Bank may be the purchaser of any or all of the Pledged Collateral at any
such sale and Agent, as agent for and representative of the Banks, shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold at any such
public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Pledged Collateral payable by Agent at
such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Pledgor, and Pledgor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Agent may adjourn
any public or private sale from
I-4-8
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by applicable law, Pledgor hereby waives any
claims against Agent arising by reason of the fact that the price at which any
Pledged Collateral may have been sold at any such private sale was less than the
price which might have been obtained at a public sale, even if Agent accepts the
first offer received and does not offer such Pledged Collateral to more than one
offeree. If the proceeds of any sale or other disposition of the Pledged
Collateral are insufficient to pay all of the Secured Obligations, Pledgor shall
be liable for the deficiency and the reasonable fees of any attorneys employed
by Agent to collect such deficiency.
(b) Any cash held by Agent as Pledged Collateral and all cash proceeds
received by Agent in respect of any sale of, collection from, or other realiza
tion upon all or any part of the Pledged Collateral may, in the discretion of
Agent, be held by Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to Agent pursuant to Section
12(b)) in whole or in part by Agent against all or any part of the Secured
Obligations in such order as Agent shall elect. Any surplus of such cash or
cash proceeds held by Agent and remaining after payment in full of all the
Secured Obligations shall be paid over to Pledgor or to whosoever may be
lawfully entitled to receive such surplus.
(c) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended from time to time (the
"SECURITIES ACT"), and applicable state securities laws, Agent may be compelled,
with respect to any sale of all or any part of the Pledged Collateral conducted
without prior registration or qualification of such Pledged Collateral under the
Securities Act and/or such state securities laws, to conduct such sales as
private, not public, sales and to limit purchasers to a restricted group who
will agree, among other things, to acquire the Pledged Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges and agrees that any such private sales may be at
prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including, without limitation, a public offering made
pursuant to an effective registration statement under the Securities Act) and,
notwithstanding such circumstances, Pledgor agrees that any such private sale
shall be conclusively deemed to have been made in a commercially reasonable
manner and that Agent shall have no obligation either to engage in public sales
or to delay the sale of any Pledged Collateral for the period of time necessary
to permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws,
even if such issuer would, or should, agree to so register it. Pledgor further
acknowledges the impossibility of ascertaining the amount of damages which would
be suffered by Agent by reason of the failure by Pledgor to perform any of the
covenants contained in this Section and, consequently, agrees that, if Pledgor
shall fail to perform any of such covenants, it shall pay, as liquidated damages
and not as a penalty, an amount equal to the value of the Pledged Collateral on
the date Agent shall demand compliance with this Section.
(d) If Agent determines to exercise its right to sell any or all of
the Pledged Collateral, upon written request, Pledgor shall and shall cause each
issuer of any Pledged Shares to be sold hereunder from time to time to furnish
to Agent all such information as Agent may request in order to determine the
number of shares and other instruments included in the Pledged Collateral which
may be sold by Agent in exempt transactions under the Securities Act and the
rules and regulations of the
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Securities and Exchange Commission thereunder, as the same are from time to time
in effect.
SECTION 12. INDEMNITY AND EXPENSES.
----------------------
(a) Pledgor agrees to indemnify Agent and each Bank from and against
any and all claims, losses and liabilities in any way relating to, growing out
of or resulting from this Agreement and the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Agent's or such
Bank's gross negligence or willful misconduct as finally determined by a court
of competent jurisdiction.
(b) Pledgor shall pay to Agent upon demand the amount of any and all
costs and expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, that 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 Agent
hereunder, or (iv) the failure by Pledgor to perform or observe any of the
provisions hereof.
SECTION 13. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
-----------------------------------------------
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in full force and effect until the payment in full of all
Secured Obligations, (b) be binding upon Pledgor, its successors and assigns,
and (c) inure, together with the rights and remedies of Agent hereunder, to the
benefit of Agent and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), any Bank may, subject to the terms
of the Credit Agreement, assign or otherwise transfer its interest in the Credit
Agreement in whole or in part to any other Person, and such other Person shall
thereupon become vested with all benefits in respect thereof granted to Banks
herein or otherwise. Upon the payment in full of all Secured Obligations, the
security interest granted hereby shall terminate and all rights to the Pledged
Collateral shall revert to Pledgor. Upon any such termination Agent will, at
Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination and Pledgor shall be
entitled to the return, upon its request and at its expense, against receipt and
without recourse to Agent, of such of the Pledged Collateral as shall not have
been sold or otherwise applied pursuant to the terms hereof.
SECTION 14. AMENDMENTS; ETC. Subject to Section 11.01 of the Credit
---------------
Agreement, no amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by Pledgor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Agent
and, in the case of any such amendment or modification, by Pledgor. Any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given.
SECTION 15. NOTICES. Any notice or other communication herein
-------
required or permitted to be given shall be in writing and may be personally
served or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or five (5) Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of
I-4-10
each party hereto shall be as set forth under such party's name on the signature
pages hereof or, as to either party, such other address as shall be designated
by such party in a written notice delivered to the other party hereto.
SECTION 16. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
-----------------------------------------------------
No failure or delay on the part of Agent in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 17. SEVERABILITY. In case any provision in or obligation
------------
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 18. HEADINGS. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 19. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
--------------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA. Unless otherwise defined herein or in the Credit Agreement, terms
used in Articles 8 and 9 of the UCC are used herein as therein defined.
SECTION 20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE
UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Pledgor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Pledgor at its address provided in Section 15, such
service being hereby acknowledged by Pledgor to be sufficient for personal
jurisdiction in any
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action against Pledgor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of Agent
to bring proceedings against Pledgor in the courts of any other jurisdiction.
SECTION 21. WAIVER OF JURY TRIAL. PLEDGOR AND AGENT HEREBY AGREE TO
--------------------
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Agent each acknowledge that
this waiver is a material inducement for Pledgor and Agent to enter into a
business relationship, that Pledgor and Agent have already relied on this waiver
in entering into this Agreement and that each will continue to rely on this
waiver in their related future dealings. Pledgor and Agent further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 22. WAIVERS BY PLEDGOR. Pledgor hereby waives, for the
------------------
benefit of Banks and Agent:
(a) any right to require Agent or any Bank, as a condition of payment
or performance by Pledgor, to (i) proceed against Company, any other guarantor
of the Secured Obligations or any other Person, (ii) proceed against or exhaust
any security held from Company, any such other guarantor or any other Person,
(iii) proceed against or have resort to any balance of any deposit account or
credit on the books of Agent or any Bank in favor of Company or any other
Person, or (iv) pursue any other remedy in the power of Agent or any Bank
whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of Company including, without limitation, any
defense based on or arising out of the lack of validity or the unenforceability
of the Secured Obligations or any agreement or instrument relating thereto or by
reason of the cessation of the liability of Company from any cause other than
payment in full of the Secured Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(d) any defense based upon Agent's or any Bank's errors or omissions
in the administration of the Secured Obligations, except behavior which amounts
to bad faith;
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(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Pledge Agreement and
any legal or equitable discharge of such Pledgor's obligations hereunder, (ii)
the benefit of any statute of limitations affecting Pledgor's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that Agent
or any Bank protect, secure, perfect or insure any security interest or lien or
any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including acceptance
of this Pledge Agreement, notices of default under the Credit Agreement, the
Loan Documents or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Secured Obligations or any agreement
related thereto, notices of any extension of credit to Company and any right to
consent to any thereof; and
(g) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or which
may conflict with the terms of this Pledge Agreement.
SECTION 23. CERTAIN CALIFORNIA LAW WAIVERS. As used in this
------------------------------
Section 23, any reference to "the principal" includes Company, and any reference
to "the creditor" includes Agent and each Bank. In accordance with Section 2856
of the California Civil Code:
(a) Pledgor agrees (i) to waive any and all rights of subrogation and
reimbursement against Company or against any collateral or security granted by
Company for any of the Secured Obligations and (ii) to withhold the exercise of
any and all rights of subrogation, reimbursement and contribution against
Company, against any other guarantor of any of the Secured Obligations and
against any collateral or security granted by any such other guarantor for any
of the Secured Obligations until the Secured Obligations shall have been paid in
full and all letters of credit issued under the Credit Agreement and the other
Loan Documents shall have expired or been cancelled, all as more fully set forth
in Section 24;
(b) Pledgor waives any and all other rights and defenses available to
such Pledgor by reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of the
California Civil Code, including without limitation any and all rights or
defenses Pledgor may have by reason of protection afforded to the principal with
respect to any of the Secured Obligations, or to any other guarantor of any of
the Secured Obligations with respect to any of such guarantor's obligations
under its guaranty, in either case pursuant to the antideficiency or other laws
of the State of California limiting or discharging the principal's indebtedness
or such guarantor's obligations, including without limitation Section 580a,
580b, 580d, or 726 of the California Code of Civil Procedure; and
(c) Pledgor waives all rights and defenses arising out of an election
of remedies by the creditor, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for any Secured Obligation, has
destroyed Pledgor's rights of subrogation and reimbursement against the
principal by the operation of Section 580d of the Code of Civil Procedure or
otherwise; and even though that election of remedies by the creditor, such as
nonjudicial foreclosure with
I-4-13
respect to security for an obligation of any other guarantor (including any
other Pledgor) of any of the Secured Obligations, has destroyed Pledgor's rights
of contribution against such other guarantor.
No other provision of this Pledge Agreement shall be construed as limiting the
generality of any of the covenants and waivers set forth in this Section 23.
SECTION 24. PLEDGOR'S RIGHTS OF SUBROGATION, CONTRIBUTION, ETC.
--------------------------------------------------
Pledgor hereby waives any claim, right or remedy, direct or indirect, that
Pledgor now has or may hereafter have against Company or any of its assets in
connection with this Pledge Agreement or the performance by Pledgor of its
obligations hereunder, in each case whether such claim, right or remedy arises
in equity, under contract, by statute (including without limitation under
California Civil Code Section 2847, 2848 or 2849), under common law or otherwise
and including without limitation (a) any right of subrogation, reimbursement or
indemnification that Pledgor now has or may hereafter have against Company, (b)
any right to enforce, or to participate in, any claim, right or remedy that
Agent or any Bank now has or may hereafter have against Company, and (c) any
benefit of, and any right to participate in, any collateral or security now or
hereafter held by Agent or any Bank. In addition, until the Secured Obligations
shall have been indefeasibly paid in full and all letters of credit issued under
the Credit Agreement shall have expired or been cancelled, Pledgor shall
withhold exercise of any right of contribution Pledgor may have against any
other guarantor of the Secured Obligations (including without limitation any
such right of contribution under California Civil Code Section 2848). Pledgor
further agrees that, to the extent the waiver or agreement to withhold the
exercise of its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation, reimbursement
or indemnification Pledgor may have against Company or against any collateral or
security, and any rights of contribution Pledgor may have against any such other
guarantor, shall be junior and subordinate to any rights Agent or any Bank may
have against Company, to all right, title and interest Agent or any Bank may
have in any such collateral or security, and to any right Agent or any Bank may
have against such other guarantor. If any amount shall be paid to Pledgor on
account of any such subrogation, reimbursement, indemnification or contribution
rights at any time when all Secured Obligations shall not have been paid in
full, such amount shall be held in trust for Agent on behalf of Banks and shall
forthwith be paid over to Agent for the benefit of Banks to be credited and
applied against the Secured Obligations, whether matured or unmatured, in
accordance with the terms hereof.
SECTION 25. COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
(remainder of page intentionally left blank)
I-4-14
IN WITNESS WHEREOF, Pledgor and Agent have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.
▇▇▇▇ REAL ESTATE SERVICES
By: _____________________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, AS AGENT
By: __________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
I-4-15
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated as of August
28, 1997 between ▇▇▇▇ Real Estate Services, as Pledgor, and Bank of America
National Trust & Savings Association, as Agent.
Part A
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
------------ -------- ------------ ----- -----------
▇▇▇▇ Management
Services, Inc. Common
I-1
SCHEDULE II
Attached to and forming a part of the Pledge Agreement dated as of
August 28, 1997 between ▇▇▇▇ Real Estate Services, as Pledgor, and Bank of
America National Trust & Savings Association, as Agent.
Percentage
Number of Represented Holders
Shares Issued by Pledged of Shares
Stock Issuer and Outstanding Shares Not Pledged
--------------- --------------- ----------- -----------
II-1
SCHEDULE III
Attached to and forming a part of the Pledge Agreement dated as of
August 28, 1997 between ▇▇▇▇ Real Estate Services, as Pledgor, and Bank of
America National Trust & Savings Association, as Agent.
EXCEPTIONS TO PRIORITY OF SECURITY INTEREST
-------------------------------------------
III-1
SCHEDULE IV
PLEDGE AMENDMENT
----------------
This Pledge Amendment, dated as of August 28, 1997, is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated as of August 28, 1997, between the undersigned and Bank
of America National Trust & Savings Association, as Agent (the "PLEDGE
AGREEMENT," capitalized terms defined therein being used herein as therein
defined), and that the Pledged Shares listed on this Pledge Amendment shall be
deemed to be part of the Pledged Shares and shall become part of the Pledged
Collateral under the Pledge Agreement as amended hereby, and shall secure all
Secured Obligations.
[NAME OF PLEDGOR]
By: ___________________________
Title:
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
------------ -------- ------------ ----- -----------
IV-1
EXHIBIT I-5
FORM OF PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "AGREEMENT") is dated as of August 28,
1997 and entered into by and among HOLDPAR A ("HoldPar A"), HOLDPAR B ("HoldPar
B"; together with HoldPar A, "Pledgors" and each a "Pledgor") and WESTMARK REAL
ESTATE ACQUISITION PARTNERSHIP, L.P. ("Westmark"), and BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION, as agent for and representative of (in such
capacity herein called "AGENT") those certain financial institutions (each a
"BANK" and collectively, "BANKS") party to the Credit Agreement (as hereinafter
defined).
RECITALS
A. Each Pledgor is the legal and beneficial owner of the membership
interests (the "PLEDGED INTERESTS") described in Schedule I annexed hereto and
----------
issued by the limited liability company named therein.
B. Pursuant to and subject to the terms and conditions of that certain
Credit Agreement dated as of August 28, 1997 by and among CB Commercial Real
Estate Services Group, Inc., a Delaware corporation, Agent, and Banks (as the
same from time to time may be amended, restated, supplemented or otherwise
modified, the "CREDIT AGREEMENT"), Banks have agreed, among other things, to
provide a revolving credit loan (including a subfacility for letters of credit)
upon the terms and subject to the conditions set forth therein. Except as
otherwise defined herein, all other capitalized terms used herein shall have the
respective meanings given to such terms in the Credit Agreement.
C. It is a condition precedent to the effectiveness of the Credit
Agreement and the making of any Loans that each Pledgor shall have pledged the
collateral, granted the security interests and undertaken the obligations
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Agent and Banks to enter into the Credit Agreement and the other
agreements, documents and instruments to be delivered pursuant thereto and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, each Pledgor hereby agrees with Agent as follows:
SECTION 1. PLEDGE AND GRANT OF SECURITY INTERESTS. Each Pledgor
--------------------------------------
hereby pledges and assigns to Agent for the benefit of the Banks, and hereby
grants to Agent for the benefit of the Banks a security interest in, all of each
Pledgor's right, title and interest in and to the following (the "PLEDGED
COLLATERAL"):
(a) the Pledged Interests and the certificates representing the
Pledged Interests and any interest of each Pledgor in the entries on the books
of any securities intermediary pertaining to the Pledged Interests, and all
dividends, cash, warrants, rights, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all Pledged Interest;
(b) all additional membership interests of, and all securities
convertible into and warrants, options and other rights to purchase or otherwise
acquire, membership interests of any issuer of the Pledged Interests from time
to time acquired by each Pledgor in any manner (which membership interests shall
be deemed to be part of the Pledged Interests), the certificates or other
instruments representing such additional membership interests, securities,
warrants, options or other rights and any interest of each Pledgor in the
entries on the books of any securities intermediary pertaining to such
additional membership interests, securities, warrants, options or other rights,
and all dividends, cash, warrants, rights, instruments 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 such additional membership
interests, securities, warrants, options or other rights;
(c) all membership interests of, and all securities convertible into
and warrants, options and other rights to purchase or otherwise acquire,
membership interests of any Person that, after the date of this Agreement,
becomes, as a result of any occurrence, a Material Subsidiary which is a direct
Subsidiary of each Pledgor (which membership interests shall be deemed to be
part of the Pledged Interests), the certificates or other instruments
representing such membership interests, securities, warrants, options or other
rights and any interest of each Pledgor in the entries on the books of any
securities intermediary pertaining to such membership interests, securities,
warrants, options or other rights, and all dividends, cash, warrants, rights,
instruments 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 such membership interests, securities, warrants, options or other rights; and
(d) to the extent not covered by clauses (a) through (c) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes of
this Agreement, the term "PROCEEDS" includes whatever is receivable or received
when Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and whether
or not occurring by operation of law, and includes, without limitation, proceeds
of any indemnity or guaranty payable to each Pledgor or Agent from time to time
with respect to any of the Pledged Collateral.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
------------------------
Pledged Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. (S)362(a)), of all obligations and
liabilities of every nature of each Pledgor now or hereafter existing under or
arising out of or in connection with the Credit Agreement, the Guaranty and the
other Loan Documents, and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to each Pledgor, would accrue on
such obligations), fees, expenses, indemnities or otherwise, whether voluntary
or involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, determined or undetermined, whether or not jointly owed with
others, and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Agent or any Bank
I-5-2
as a preference, fraudulent transfer or otherwise (all such obligations and
liabilities being the "UNDERLYING DEBT"), and all obligations of every nature of
each Pledgor now or hereafter existing under this Agreement and under any other
Loan Document heretofore, now or hereafter delivered by each Pledgor to Agent,
and all extensions, renewals, restatements, supplements, amendments or
modifications thereof or thereto (all such obligations of each Pledgor, together
with the Underlying Debt, being the "SECURED OBLIGATIONS").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
------------------------------
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Agent pursuant hereto and shall be in suitable
form for transfer by delivery or, as applicable, shall be accompanied by each
Pledgor's endorsement, where necessary, or duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to Agent. Agent
shall have the right, at any time in its discretion and without notice to each
Pledgor, to transfer to or to register in the name of Agent or any of its
nominees any or all of the Pledged Collateral, subject only to the revocable
rights specified in Section 7(a). In addition, Agent shall have the right at
any time to exchange certificates or instruments representing or evidencing any
Pledged Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. each Pledgor represents
------------------------------
and warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
---------------------------------------------
Interests have been duly authorized and validly issued and are fully paid and
non-assessable.
(b) Description of Pledged Collateral. The Pledged Interests
---------------------------------
constitute all of the issued and outstanding membership interests of each issuer
thereof, except as otherwise set forth in Schedule II annexed hereto, and there
-----------
are no outstanding warrants, options or other rights to purchase, or other
agreements outstanding with respect to, or property that is now or hereafter
convertible into, or that requires the issuance or sale of, any Pledged
Interests.
(c) Ownership of Pledged Collateral. Each Pledgor is the legal,
-------------------------------
record and beneficial owner of the Pledged Collateral free and clear of any Lien
except for the security interest created by this Agreement.
(d) Governmental Authorizations. No authorization, approval or other
---------------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge by each Pledgor of the
Pledged Collateral pursuant to this Agreement and the grant by each Pledgor of
the security interest granted hereby, (ii) the execution, delivery or
performance of this Agreement by each Pledgor, or (iii) the exercise by Agent of
the voting or other rights, or the remedies in respect of the Pledged
Collateral, provided for in this Agreement (except as may be required in
connection with a disposition of Pledged Collateral by laws affecting the
offering and sale of securities generally).
(e) Due Authorization, etc. of Agreement. This Agreement has been
------------------------------------
duly authorized, executed and delivered by each Pledgor, and is in full force
and
I-5-3
effect and is binding upon and enforceable against each Pledgor in accordance
with the terms hereof.
(f) Perfection. Except as otherwise set forth in Schedule III
---------- ------------
annexed hereto, (i) the pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral free of any adverse claim, securing the payment of the
Secured Obligations, and (ii) Agent has "control" of the Pledged Collateral
within the meaning of Section 9115(c) of the Uniform Commercial Code of the
State of California ("UCC").
(g) Margin Regulations. The pledge of the Pledged Collateral pursuant
------------------
to this Agreement does not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
(h) Other Information. All information heretofore, herein or
-----------------
hereafter supplied to Agent by or on behalf of each Pledgor with respect to the
Pledged Collateral is accurate and complete in all respects.
SECTION 5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL;
---------------------------------------------------------
ETC. Each Pledgor shall:
----
(a) not, except as expressly permitted by the Credit Agreement, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) execute or
grant any power or endorsement with respect to any of the Pledged Collateral, or
any other document or instrument purporting to assign, transfer or redeem any of
the Pledged Collateral, or otherwise grant any indicia of "control" (within the
meaning of Section 9115(c) of the UCC) with respect to any of the Pledged
Collateral, (iii) create or suffer to exist any Lien upon or with respect to any
of the Pledged Collateral, except for the security interest under this
Agreement, any other security interest granted in favor of Agent or any other
Lien expressly permitted under Section 8.01 of the Credit Agreement, or (iv)
permit any issuer of Pledged Interests to merge or consolidate unless all the
outstanding equity of the surviving or resulting entity, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding securities of any other constituent
entity;
(b) (i) cause each issuer of Pledged Collateral not to issue any
securities in addition to or in substitution for the Pledged Collateral issued
by such issuer, except to each Pledgor, (ii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all additional
securities of each issuer of Pledged Collateral, and (iii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
securities of any Person that, after the date of this Agreement, becomes, as a
result of any occurrence, a Material Subsidiary of each Pledgor;
(c) promptly notify Agent of any event of which each Pledgor becomes
aware causing loss or depreciation in the value of the Pledged Collateral;
(d) promptly deliver to Agent all written notices received by it with
respect to the Pledged Collateral; and
I-5-4
(e) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Pledged Collateral,
except to the extent the validity thereof is being contested in good faith;
provided, however, that each Pledgor shall in any event pay such taxes,
-------- -------
assessments, charges, levies or claims not later than five days prior to the
date of any proposed sale under any judgment, writ or warrant of attachment
entered or filed against each Pledgor or any of the Pledged Collateral as a
result of the failure to make such payment.
SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
-------------------------------------
(a) Each Pledgor agrees that from time to time, at the expense of each
Pledgor, each Pledgor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Agent may request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable Agent to exercise and
enforce its rights and remedies hereunder with respect to any Pledged
Collateral. Without limiting the generality of the foregoing, each Pledgor
will: (i) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices (including, without
limitation, powers with respect to, or other endorsements or instruments
necessary to effect the assignment or other transfer of, any of the Pledged
Collateral), as may be necessary or desirable, or as Agent may request, in order
to perfect and preserve the security interests granted or purported to be
granted hereby and (ii) at Agent's request, appear in and defend any action or
proceeding that may affect each Pledgor's title to or Agent's security interest
in all or any part of the Pledged Collateral.
(b) Each Pledgor further agrees that it will, upon obtaining any
additional securities required to be pledged hereunder as provided in Section
5(b), promptly (and in any event within five Business Days) deliver to Agent a
Pledge Amendment, duly executed by each Pledgor, in substantially the form of
Schedule IV annexed hereto (a "PLEDGE AMENDMENT"), in respect of the additional
-----------
Pledged Interests to be pledged pursuant to this Agreement. each Pledgor hereby
authorizes Agent to attach each Pledge Amendment to this Agreement and agrees
that all Pledged Interests listed on any Pledge Amendment delivered to Agent
shall for all purposes hereunder be considered Pledged Collateral; provided,
--------
however, that the failure of each Pledgor to execute a Pledge Amendment with
-------
respect to any additional Pledged Interests pledged pursuant to this Agreement
shall not impair the security interest of Agent therein or otherwise adversely
affect the rights and remedies of Agent hereunder with respect thereto.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
------------------------------
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Each Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement or the
Credit Agreement; provided, however, that each Pledgor shall not exercise or
-------- -------
refrain from exercising any such right if Agent shall have notified each Pledgor
that, in Agent's judgment, such action would have a material adverse effect on
the value of the Pledged Collateral or any part thereof;
I-5-5
(ii) Each Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the lien of this Agreement, any and all dividends and
interest paid in respect of the Pledged Collateral; provided, however, that any
-------- -------
and all
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with (x) a partial or total
liquidation or dissolution, (y) a reduction of capital, capital surplus or paid-
in-surplus or (z) a quasi-reorganization, and
(C) cash paid, payable or otherwise distributed in respect of
principal or in redemption of or in exchange for any Pledged Collateral,
shall be, and shall forthwith be delivered to Agent to hold as, Pledged
Collateral and shall, if received by each Pledgor, be received in trust for the
benefit of Agent, be segregated from the other property or funds of each Pledgor
and be forthwith delivered to Agent as Pledged Collateral in the same form as so
received (with all necessary endorsements); and
(iii) Agent shall promptly execute and deliver (or cause to be
executed and delivered) to each Pledgor all such proxies, dividend payment
orders and other instruments as each Pledgor may from time to time reasonably
request for the purpose of enabling each Pledgor to exercise the voting and
other consensual rights which it is entitled to exercise pursuant to paragraph
(i) above and to receive the dividends, principal or interest payments which it
is authorized to receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of any Default or
Event of Default:
(i) upon written notice from Agent to each Pledgor, all rights of each
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 7(a)(i) shall cease, and
all such rights shall thereupon become vested in Agent who shall thereupon have
the sole right to exercise such voting and other consensual rights;
(ii) all rights of each Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain pursuant
to Section 7(a)(ii) shall cease, and all such rights shall thereupon become
vested in Agent who shall thereupon have the sole right to receive and hold as
Pledged Collateral such dividends and interest payments; and
(iii) all dividends, principal and interest payments which
are received by each Pledgor contrary to the provisions of paragraph (ii) of
this Section 7(b) shall be received in trust for the benefit of Agent, shall be
segregated from other funds of each Pledgor and shall forthwith be paid over to
Agent as Pledged Collateral in the same form as so received (with any necessary
endorsements).
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(c) In order to permit Agent to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section
7(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) each Pledgor
shall promptly execute and deliver (or cause to be executed and delivered) to
Agent all such proxies, dividend payment orders and other instruments as Agent
may from time to time reasonably request and (ii) without limiting the effect of
the immediately preceding clause (i), each Pledgor hereby grants to Agent an
irrevocable proxy to vote the Pledged Collateral and to exercise all other
rights, powers, privileges and remedies to which a holder of the Pledged
Collateral would be entitled (including, without limitation, giving or
withholding written consents of shareholders, calling special meetings of
shareholders and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Collateral on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Collateral or any officer or agent
thereof), upon the occurrence of an Event of Default or Default and which proxy
shall only terminate upon the payment in full of the Secured Obligations.
SECTION 8. AGENT APPOINTED ATTORNEY-IN-FACT. Each Pledgor hereby
--------------------------------
irrevocably appoints Agent as each Pledgor's attorney-in-fact, with full
authority in the place and stead of each Pledgor and in the name of each
Pledgor, Agent or otherwise, from time to time in Agent's discretion to take any
action and to execute any instrument that Agent may deem necessary or advisable
to accomplish the purposes of this Agreement, including without limitation:
(a) to file one or more financing or continuation statements, or
amendments thereto, or powers or other endorsements or instruments of transfer
or assignments in blank, relative to all or any part of the Pledged Collateral,
or to enter into agreements with Agent and any securities intermediaries
described in Section 1 relating to any Pledged Collateral to protect Agent's
security interest therein, in form and substance satisfactory to Agent, in each
case without the signature of each Pledgor;
(b) after the occurrence and during the continuation of any Event of
Default, to ask, demand, collect, ▇▇▇ for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Pledged Collateral;
(c) after the occurrence and during the continuation of any Event of
Default, to receive, endorse and collect any instruments made payable to each
Pledgor representing any dividend, principal or interest payment or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same; and
(d) after the occurrence and during the continuation of any Event of
Default, to file any claims or take any action or institute any proceedings that
Agent may deem necessary or desirable for the collection of any of the Pledged
Collateral or otherwise to enforce the rights of Agent with respect to any of
the Pledged Collateral.
SECTION 9. AGENT MAY PERFORM. If each Pledgor fails to perform any
-----------------
agreement contained herein, Agent may itself perform, or cause performance of,
I-5-7
such agreement, and the expenses of Agent incurred in connection therewith shall
be payable by each Pledgor under Section 12(b).
SECTION 10. STANDARD OF CARE. The powers conferred on Agent
----------------
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Pledged Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Agent shall have no duty as to any Pledged Collateral, it being understood that
Agent shall have no responsibility for (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Pledged Collateral, whether or not Agent has or is deemed to
have knowledge of such matters, (b) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the Pledged Collateral) to preserve rights against any parties
with respect to any Pledged Collateral, (c) taking any necessary steps to
collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Agent shall be deemed to have exercised reasonable care in the custody
and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Agent accords
its own property consisting of negotiable securities.
SECTION 11. REMEDIES.
--------
(a) If any Event of Default shall have occurred and be continuing,
Agent may, subject to the terms of the Credit Agreement, exercise in respect of
the Pledged Collateral, in addition to all other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the Uniform Commercial Code as in effect in any
relevant jurisdiction (the "CODE") (whether or not the Code applies to the
affected Pledged Collateral), and Agent may also in its sole discretion, without
notice except as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange or
broker's board or at any of Agent's offices or elsewhere, for cash, on credit or
for future delivery, at such time or times and at such price or prices and upon
such other terms as Agent may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the Pledged Collateral. Agent
or any Bank may be the purchaser of any or all of the Pledged Collateral at any
such sale and Agent, as agent for and representative of the Banks, shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold at any such
public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Pledged Collateral payable by Agent at
such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of each Pledgor, and each
Pledgor hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Each Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten days' notice to each Pledgor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. Agent shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given. Agent may
adjourn any
I-5-8
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. To the extent permitted by applicable
law, each Pledgor hereby waives any claims against Agent arising by reason of
the fact that the price at which any Pledged Collateral may have been sold at
any such private sale was less than the price which might have been obtained at
a public sale, even if Agent accepts the first offer received and does not offer
such Pledged Collateral to more than one offeree. If the proceeds of any sale or
other disposition of the Pledged Collateral are insufficient to pay all of the
Secured Obligations, each Pledgor shall be liable for the deficiency and the
reasonable fees of any attorneys employed by Agent to collect such deficiency.
(b) Any cash held by Agent as Pledged Collateral and all cash proceeds
received by Agent in respect of any sale of, collection from, or other realiza
tion upon all or any part of the Pledged Collateral may, in the discretion of
Agent, be held by Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to Agent pursuant to Section
12(b)) in whole or in part by Agent against all or any part of the Secured
Obligations in such order as Agent shall elect. Any surplus of such cash or
cash proceeds held by Agent and remaining after payment in full of all the
Secured Obligations shall be paid over to each Pledgor or to whosoever may be
lawfully entitled to receive such surplus.
(c) Each Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended from time to time (the
"SECURITIES ACT"), and applicable state securities laws, Agent may be compelled,
with respect to any sale of all or any part of the Pledged Collateral conducted
without prior registration or qualification of such Pledged Collateral under the
Securities Act and/or such state securities laws, to conduct such sales as
private, not public, sales and to limit purchasers to a restricted group who
will agree, among other things, to acquire the Pledged Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. each Pledgor acknowledges and agrees that any such private sales may
be at prices and on terms less favorable than those obtainable through a public
sale without such restrictions (including, without limitation, a public offering
made pursuant to an effective registration statement under the Securities Act)
and, notwithstanding such circumstances, each Pledgor agrees that any such
private sale shall be conclusively deemed to have been made in a commercially
reasonable manner and that Agent shall have no obligation either to engage in
public sales or to delay the sale of any Pledged Collateral for the period of
time necessary to permit the issuer thereof to register it for a form of public
sale requiring registration under the Securities Act or under applicable state
securities laws, even if such issuer would, or should, agree to so register it.
each Pledgor further acknowledges the impossibility of ascertaining the amount
of damages which would be suffered by Agent by reason of the failure by each
Pledgor to perform any of the covenants contained in this Section and,
consequently, agrees that, if each Pledgor shall fail to perform any of such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount
equal to the value of the Pledged Collateral on the date Agent shall demand
compliance with this Section.
(d) If Agent determines to exercise its right to sell any or all of
the Pledged Collateral, upon written request, each Pledgor shall and shall cause
each issuer of any Pledged Interests to be sold hereunder from time to time to
furnish to Agent all such information as Agent may request in order to determine
the number of
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interests and other instruments included in the Pledged Collateral which may be
sold by Agent in exempt transactions under the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder, as the same
are from time to time in effect.
SECTION 12. INDEMNITY AND EXPENSES.
----------------------
(a) Each Pledgor agrees to indemnify Agent and each Bank from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Agent's or such Bank's gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.
(b) Each Pledgor shall pay to Agent upon demand the amount of any and
all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that 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 Agent
hereunder, or (iv) the failure by each Pledgor to perform or observe any of the
provisions hereof.
SECTION 13. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
-----------------------------------------------
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in full force and effect until the payment in full of all
Secured Obligations, (b) be binding upon each Pledgor, its successors and
assigns, and (c) inure, together with the rights and remedies of Agent
hereunder, to the benefit of Agent and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Bank may,
subject to the terms of the Credit Agreement, assign or otherwise transfer its
interest in the Credit Agreement in whole or in part to any other Person, and
such other Person shall thereupon become vested with all benefits in respect
thereof granted to Banks herein or otherwise. Upon the payment in full of all
Secured Obligations, the security interest granted hereby shall terminate and
all rights to the Pledged Collateral shall revert to each Pledgor. Upon any
such termination Agent will, at each Pledgor's expense, execute and deliver to
each Pledgor such documents as each Pledgor shall reasonably request to evidence
such termination and each Pledgor shall be entitled to the return, upon its
request and at its expense, against receipt and without recourse to Agent, of
such of the Pledged Collateral as shall not have been sold or otherwise applied
pursuant to the terms hereof.
SECTION 14. AMENDMENTS; ETC. Subject to Section 11.01 of the Credit
---------------
Agreement, no amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by each Pledgor therefrom, shall
in any event be effective unless the same shall be in writing and signed by
Agent and, in the case of any such amendment or modification, by each Pledgor.
Any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which it was given.
SECTION 15. NOTICES. Any notice or other communication herein
-------
required or permitted to be given shall be in writing and may be personally
served or
I-5-10
sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or five (5) Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be
as set forth under such party's name on the signature pages hereof or, as to
either party, such other address as shall be designated by such party in a
written notice delivered to the other party hereto.
SECTION 16. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
-----------------------------------------------------
No failure or delay on the part of Agent in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 17. SEVERABILITY. In case any provision in or obligation
------------
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 18. HEADINGS. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 19. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
--------------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA. Unless otherwise defined herein or in the Credit Agreement, terms
used in Articles 8 and 9 of the UCC are used herein as therein defined.
SECTION 20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST EACH PLEDGOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE
UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT EACH PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN
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CONNECTION WITH THIS AGREEMENT. Each Pledgor hereby agrees that service of
all process in any such proceeding in any such court may be made by registered
or certified mail, return receipt requested, to each Pledgor at its address
provided in Section 15, such service being hereby acknowledged by each Pledgor
to be sufficient for personal jurisdiction in any action against each Pledgor in
any such court and to be otherwise effective and binding service in every
respect. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of Agent to bring proceedings
against each Pledgor in the courts of any other jurisdiction.
SECTION 21. WAIVER OF JURY TRIAL. EACH PLEDGOR AND AGENT HEREBY
--------------------
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Each Pledgor and Agent each acknowledge
that this waiver is a material inducement for each Pledgor and Agent to enter
into a business relationship, that each Pledgor and Agent have already relied on
this waiver in entering into this Agreement and that each will continue to rely
on this waiver in their related future dealings. Each Pledgor and Agent further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 22. WAIVERS BY PLEDGORS. Each Pledgor hereby waives, for
-------------------
the benefit of Banks and Agent:
(a) any right to require Agent or any Bank, as a condition of payment
or performance by such Pledgor, to (i) proceed against Company, any other
guarantor (including any other Pledgor) of the Secured Obligations or any other
Person, (ii) proceed against or exhaust any security held from Company, any such
other guarantor (including any other Pledgor) or any other Person, (iii) proceed
against or have resort to any balance of any deposit account or credit on the
books of Agent or any Bank in favor of Company or any other Person, or (iv)
pursue any other remedy in the power of Agent or any Bank whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of Company including, without limitation, any
defense based on or arising out of the lack of validity or the unenforceability
of the Secured Obligations or any agreement or instrument relating thereto or by
reason of the cessation of the liability of Company from any cause other than
payment in full of the Secured Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
I-5-12
(d) any defense based upon Agent's or any Bank's errors or omissions
in the administration of the Secured Obligations, except behavior which amounts
to bad faith;
(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Pledge Agreement and
any legal or equitable discharge of such Pledgor's obligations hereunder, (ii)
the benefit of any statute of limitations affecting such Pledgor's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that Agent
or any Bank protect, secure, perfect or insure any security interest or lien or
any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including acceptance
of this Pledge Agreement, notices of default under the Credit Agreement, the
Loan Documents or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Secured Obligations or any agreement
related thereto, notices of any extension of credit to Company and any right to
consent to any thereof; and
(g) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or which
may conflict with the terms of this Pledge Agreement.
SECTION 23. CERTAIN CALIFORNIA LAW WAIVERS. As used in this
------------------------------
Section 23, any reference to "the principal" includes Company, and any reference
to "the creditor" includes Agent and each Bank. In accordance with Section 2856
of the California Civil Code:
(a) each Pledgor agrees (i) to waive any and all rights of subrogation
and reimbursement against Company or against any collateral or security granted
by Company for any of the Secured Obligations and (ii) to withhold the exercise
of any and all rights of subrogation, reimbursement and contribution against
Company, against any other guarantor of any of the Secured Obligations and
against any collateral or security granted by any such other guarantor for any
of the Secured Obligations until the Secured Obligations shall have been paid in
full and all letters of credit issued under the Credit Agreement and the other
Loan Documents shall have expired or been cancelled, all as more fully set forth
in subsection 22(c);
(b) each Pledgor waives any and all other rights and defenses
available to such Pledgor by reason of Sections 2787 to 2855, inclusive, 2899
and 3433 of the California Civil Code, including without limitation any and all
rights or defenses such Pledgor may have by reason of protection afforded to the
principal with respect to any of the Secured Obligations, or to any other
guarantor (including any other Pledgor) of any of the Secured Obligations with
respect to any of such guarantor's obligations under its guaranty, in either
case pursuant to the antideficiency or other laws of the State of California
limiting or discharging the principal's indebtedness or such guarantor's
obligations, including without limitation Section 580a, 580b, 580d, or 726 of
the California Code of Civil Procedure; and
(c) each Pledgor waives all rights and defenses arising out of an
election of remedies by the creditor, even though that election of remedies,
such as a
I-5-13
nonjudicial foreclosure with respect to security for any Secured
Obligation, has destroyed such Pledgor's rights of subrogation and reimbursement
against the principal by the operation of Section 580d of the Code of Civil
Procedure or otherwise; and even though that election of remedies by the
creditor, such as nonjudicial foreclosure with respect to security for an
obligation of any other guarantor (including any other Pledgor) of any of the
Secured Obligations, has destroyed such Pledgor's rights of contribution against
such other guarantor.
No other provision of this Pledge Agreement shall be construed as limiting the
generality of any of the covenants and waivers set forth in this Section 23.
SECTION 24. PLEDGORS' RIGHTS OF SUBROGATION, CONTRIBUTION, ETC. Each
--------------------------------------------------
Pledgor hereby waives any claim, right or remedy, direct or indirect, that such
Pledgor now has or may hereafter have against Company or any of its assets in
connection with this Pledge Agreement or the performance by such Pledgor of its
obligations hereunder, in each case whether such claim, right or remedy arises
in equity, under contract, by statute (including without limitation under
California Civil Code Section 2847, 2848 or 2849), under common law or otherwise
and including without limitation (a) any right of subrogation, reimbursement or
indemnification that such Pledgor now has or may hereafter have against Company,
(b) any right to enforce, or to participate in, any claim, right or remedy that
Agent or any Bank now has or may hereafter have against Company, and (c) any
benefit of, and any right to participate in, any collateral or security now or
hereafter held by Agent or any Bank. In addition, until the Secured Obligations
shall have been indefeasibly paid in full and all letters of credit issued under
the Credit Agreement shall have expired or been cancelled, each Pledgor shall
withhold exercise of any right of contribution such Pledgor may have against any
other guarantor (including any other Pledgor) of the Secured Obligations
(including without limitation any such right of contribution under California
Civil Code Section 2848). Each Pledgor further agrees that, to the extent the
waiver or agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification such Pledgor may have
against Company or against any collateral or security, and any rights of
contribution such Pledgor may have against any such other guarantor, shall be
junior and subordinate to any rights Agent or any Bank may have against Company,
to all right, title and interest Agent or any Bank may have in any such
collateral or security, and to any right Agent or any Bank may have against such
other guarantor. If any amount shall be paid to any Pledgor on account of any
such subrogation, reimbursement, indemnification or contribution rights at any
time when all Secured Obligations shall not have been paid in full, such amount
shall be held in trust for Agent on behalf of Banks and shall forthwith be paid
over to Agent for the benefit of Banks to be credited and applied against the
Secured Obligations, whether matured or unmatured, in accordance with the terms
hereof.
SECTION 25. COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
I-5-14
(remainder of page intentionally left blank)
I-5-15
IN WITNESS WHEREOF, each Pledgor and Agent have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
HOLDPAR A
By: _____________________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
HOLDPAR B
By: _____________________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
WESTMARK REAL ESTATE ACQUISITION PARTNERSHIP, L.P.
By: _____________________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
▇-▇-▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ NATIONAL TRUST &
SAVINGS ASSOCIATION, as Agent
By: __________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
I-5-17
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated as of August
28, 1997 among HoldPar A, HoldPar B and Westmark Real Estate Acquisition
Partnership, L.P. as Pledgors, and Bank of America National Trust & Savings
Association, as Agent.
Part A
Class of Certificate Par Number of
Issuer Equity Nos. Value Interests
------ --------- ------------ ----- ------------
Westmark Realty Membership
Advisors LLC Interests
Westmark Real Estate General
Acquisition Partner- Partnership
ship, L.P. Interests
I-1
SCHEDULE II
Attached to and forming a part of the Pledge Agreement dated as of
August 28, 1997 HoldPar A and HoldPar B as Pledgors, and Bank of America
National Trust & Savings Association, as Agent.
Percentage
Number of Represented Holders
Interests Issued by Pledged of Interests
Issuer and Outstanding Interests Not Pledged
------ ---------------- ----------- ------------
II-1
SCHEDULE III
Attached to and forming a part of the Pledge Agreement dated as of
August 28, 1997 HoldPar A and HoldPar B as Pledgors, and Bank of America
National Trust & Savings Association, as Agent.
EXCEPTIONS TO PRIORITY OF SECURITY INTEREST
-------------------------------------------
III-1
SCHEDULE IV
PLEDGE AMENDMENT
----------------
This Pledge Amendment, dated as of August 28, 1997, is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated as of August 28, 1997, between each of the undersigned
and Bank of America National Trust & Savings Association, as Agent (the "PLEDGE
AGREEMENT," capitalized terms defined therein being used herein as therein
defined), and that the Pledged Interests listed on this Pledge Amendment shall
be deemed to be part of the Pledged Interests and shall become part of the
Pledged Collateral under the Pledge Agreement as amended hereby, and shall
secure all Secured Obligations.
[NAME OF PLEDGORS]
By: ___________________________
Title:
Class of Certificate Par Number of
Issuer Equity Numbers Value Interests
------ -------- --------- ----- ------------
IV-1
EXHIBIT I-6
FORM OF PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "AGREEMENT") is dated as of August 28,
1997 and entered into by and between ▇▇▇▇ VON KARMAN, INC., a Delaware
corporation ("PLEDGOR"), and BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, as agent for and representative of (in such capacity herein called
"AGENT") those certain financial institutions (each a "BANK" and collectively,
"BANKS") party to the Credit Agreement (as hereinafter defined).
RECITALS
A. Pledgor is the legal and beneficial owner of the partnership interests
(the "PLEDGED INTERESTS") described in Schedule I annexed hereto and issued by
----------
the partnership named therein (the "PARTNERSHIP").
B. Pursuant to and subject to the terms and conditions of that certain
Credit Agreement dated as of August 28, 1997 by and among Pledgor, Agent, and
Banks (as the same from time to time may be amended, restated, supplemented or
otherwise modified, the "CREDIT AGREEMENT"), Banks have agreed, among other
things, to provide a revolving credit loan (including a subfacility for letters
of credit) upon the terms and subject to the conditions set forth therein.
Except as otherwise defined herein, all other capitalized terms used herein
shall have the respective meanings given to such terms in the Credit Agreement.
C. It is a condition precedent to the effectiveness of the Credit
Agreement and the making of any Loans that Pledgor shall have pledged the
collateral, granted the security interests and undertaken the obligations
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Agent and Banks to enter into the Credit Agreement and the other agreements,
documents and instruments to be delivered pursuant thereto and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Pledgor hereby agrees with Agent as follows:
SECTION 1. PLEDGE AND GRANT OF SECURITY INTERESTS. Pledgor hereby
--------------------------------------
pledges and assigns to Agent for the benefit of the Banks, and hereby grants to
Agent for the benefit of the Banks a security interest in, all of Pledgor's
right, title and interest in and to the following (the "PLEDGED COLLATERAL"):
(a) the Pledged Interests and any and all partnership interests of
Pledgor in the Partnership (collectively, the "PARTNERSHIP INTERESTS"), now
existing or hereafter acquired, including any general and limited partnership
interests, and all distributions, capital and profits, cash, warrants, rights,
certificates, instruments, chattel paper and other rights, property or proceeds
and products from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Interests, all
additional rights to purchase interests in the
I-6-1
Partnership from time to time acquired by Pledgor in any manner (which interests
shall be deemed to be part of the Partnership Interests), the certificates or
other instruments representing such additional interests 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 such additional interests or other
rights; and to the extent not covered by the above, all Proceeds (as defined
below) of any or all of the foregoing;
(b) all additional partnership interests of, and all securities
convertible into and warrants, options and other rights to purchase or otherwise
acquire, partnership interests of any issuer of the Pledged Interests from time
to time acquired by Pledgor in any manner (which interests shall be deemed to be
part of the Pledged Interests), the certificates or other instruments
representing such additional partnership interests, securities, warrants,
options or other rights and any interest of Pledgor in the entries on the books
of any securities intermediary pertaining to such additional partnership
interests, securities, warrants, options or other rights, and all dividends,
cash, warrants, rights, instruments 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 such additional partnership interests, securities, warrants,
options or other rights;
(c) all partnership interests of, and all securities convertible into
and warrants, options and other rights to purchase or otherwise acquire,
partnership interests of any Person that, after the date of this Agreement,
becomes, as a result of any occurrence, a Material Subsidiary which is a direct
Subsidiary of Pledgor (which partnership interests shall be deemed to be part of
the Pledged Interests), the certificates or other instruments representing such
partnership interests, securities, warrants, options or other rights and any
interest of Pledgor in the entries on the books of any securities intermediary
pertaining to such partnership interests, securities, warrants, options or other
rights, and all dividends, cash, warrants, rights, instruments 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 such partnership
interests, securities, warrants, options or other rights; and
(d) all of Pledgor's right, title and interest: (i) as a partner in
and to the Partnership, whether now owned or hereafter acquired, including,
without limitation, any management and voting rights with respect to the
Partnership Interests; and (ii) all other property which, absent this Agreement
would, now or hereafter, be distributable or distributed, transferable or
transferred, payable or paid, or deliverable or delivered to Pledgor as a
partner in the Partnership, whether at any time prior to, or in connection with,
or after the dissolution of the Partnership, if any, including, without
limitation, distributions of cash and of property in kind by the Partnership
(collectively, the "DISTRIBUTIONS").
(e) to the extent not covered by clauses (a) through (d) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes of
this Agreement, the term "PROCEEDS" shall have the meaning assigned to that term
under the California Commercial Code (the "CODE") and, in any event, shall
include, without limitation, any and all (A) proceeds of any indemnity or
guaranty payable to Pledgor or Agent from time to time with respect to any of
the Pledged Collateral and (B) any other amounts from time to time paid or
payable under or in connection with any of the Pledged Collateral.
I-6-2
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
------------------------
Pledged Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. (S)362(a)), of all obligations and
liabilities of every nature of Pledgor now or hereafter existing under or
arising out of or in connection with the Credit Agreement, the Guaranty and the
other Loan Documents, and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Pledgor, would accrue on such
obligations), fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, determined or undetermined, whether or not jointly owed with
others, and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Agent or any Bank as a
preference, fraudulent transfer or otherwise (all such obligations and
liabilities being the "UNDERLYING DEBT"), and all obligations of every nature of
Pledgor now or hereafter existing under this Agreement and under any other Loan
Document heretofore, now or hereafter delivered by Pledgor to Agent, and all
extensions, renewals, restatements, supplements, amendments or modifications
thereof or thereto (all such obligations of Pledgor, together with the
Underlying Debt, being the "SECURED OBLIGATIONS").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
------------------------------
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Agent pursuant hereto and shall be in suitable
form for transfer by delivery or, as applicable, shall be accompanied by
Pledgor's endorsement, where necessary, or duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to Agent. Agent
shall have the right, at any time in its discretion and without notice to
Pledgor, to transfer to or to register in the name of Agent or any of its
nominees any or all of the Pledged Collateral, subject only to the revocable
rights specified in Section 7(a). In addition, Agent shall have the right at
any time to exchange certificates or instruments representing or evidencing any
Pledged Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
------------------------------
warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
---------------------------------------------
Interests have been duly authorized and validly issued and are fully paid and
non-assessable.
(b) Description of Pledged Collateral. The Pledged Interests
---------------------------------
constitute all of the issued and outstanding partnership interests of each
issuer thereof, except as otherwise set forth in Schedule II annexed hereto, and
-----------
there are no outstanding warrants, options or other rights to purchase, or other
agreements outstanding with respect to, or property that is now or hereafter
convertible into, or that requires the issuance or sale of, any Pledged
Interests.
I-6-3
(c) Ownership of Pledged Collateral. Pledgor is the legal, record and
-------------------------------
beneficial owner of the Pledged Collateral free and clear of any Lien except for
the security interest created by this Agreement.
(d) Governmental Authorizations. No authorization, approval or other
---------------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge by Pledgor of the Pledged
Collateral pursuant to this Agreement and the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the exercise by Agent of the voting or other
rights, or the remedies in respect of the Pledged Collateral, provided for in
this Agreement (except as may be required in connection with a disposition of
Pledged Collateral by laws affecting the offering and sale of securities
generally).
(e) Due Authorization, etc. of Agreement. This Agreement has been
------------------------------------
duly authorized, executed and delivered by Pledgor, and is in full force and
effect and is binding upon and enforceable against Pledgor in accordance with
the terms hereof.
(f) Perfection. Except as otherwise set forth in Schedule III
---------- ------------
annexed hereto, (i) the pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral free of any adverse claim, securing the payment of the
Secured Obligations, and (ii) Agent has "control" of the Pledged Collateral
within the meaning of Section 9115(c) of the Uniform Commercial Code of the
State of California ("UCC").
(g) Margin Regulations. The pledge of the Pledged Collateral pursuant
------------------
to this Agreement does not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
(h) Other Information. All information heretofore, herein or
-----------------
hereafter supplied to Agent by or on behalf of Pledgor with respect to the
Pledged Collateral is accurate and complete in all respects.
SECTION 5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL;
---------------------------------------------------------
ETC. Pledgor shall:
----
(a) not, except as expressly permitted by the Credit Agreement, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) execute or
grant any power or endorsement with respect to any of the Pledged Collateral, or
any other document or instrument purporting to assign, transfer or redeem any of
the Pledged Collateral, or otherwise grant any indicia of "control" (within the
meaning of Section 9115(c) of the UCC) with respect to any of the Pledged
Collateral, (iii) create or suffer to exist any Lien upon or with respect to any
of the Pledged Collateral, except for the security interest under this
Agreement, any other security interest granted in favor of Agent or any other
Lien expressly permitted under Section 8.01 of the Credit Agreement, or (iv)
permit any issuer of Pledged Interests to merge or consolidate unless all the
outstanding equity of the surviving or resulting entity is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding securities of any other constituent
entity;
I-6-4
(b) (i) cause each issuer of Pledged Collateral not to issue any
securities in addition to or in substitution for the Pledged Collateral issued
by such issuer, except to Pledgor, (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional securities
of each issuer of Pledged Collateral, and (iii) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all securities of
any Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a Material Subsidiary of Pledgor;
(c) promptly notify Agent of any event of which Pledgor becomes aware
causing loss or depreciation in the value of the Pledged Collateral;
(d) promptly deliver to Agent all written notices received by it with
respect to the Pledged Collateral; and
(e) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Pledged Collateral,
except to the extent the validity thereof is being contested in good faith;
provided, however, that Pledgor shall in any event pay such taxes, assessments,
-------- -------
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgment, writ or warrant of attachment entered or filed
against Pledgor or any of the Pledged Collateral as a result of the failure to
make such payment.
SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
-------------------------------------
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Agent
may request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Agent to exercise and enforce its
rights and remedies hereunder with respect to any Pledged Collateral. Without
limiting the generality of the foregoing, Pledgor will: (i) execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices (including, without limitation, powers with respect to,
or other endorsements or instruments necessary to effect the assignment or other
transfer of, any of the Pledged Collateral), as may be necessary or desirable,
or as Agent may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby and (ii) at Agent's request, appear in
and defend any action or proceeding that may affect Pledgor's title to or
Agent's security interest in all or any part of the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining any additional
securities required to be pledged hereunder as provided in Section 5(b),
promptly (and in any event within five Business Days) deliver to Agent a Pledge
Amendment, duly executed by Pledgor, in substantially the form of Schedule IV
-----------
annexed hereto (a "PLEDGE AMENDMENT"), in respect of the additional Pledged
Interests to be pledged pursuant to this Agreement. Pledgor hereby authorizes
Agent to attach each Pledge Amendment to this Agreement and agrees that all
Pledged Interests listed on any Pledge Amendment delivered to Agent shall for
all purposes hereunder be considered Pledged Collateral; provided, however, that
-------- -------
the failure of Pledgor to execute a Pledge Amendment with respect to any
additional Pledged Interests pledged pursuant to this
I-6-5
Agreement shall not impair the security interest of Agent therein or otherwise
adversely affect the rights and remedies of Agent hereunder with respect
thereto.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
------------------------------
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Credit
Agreement; provided, however, that Pledgor shall not exercise or refrain from
-------- -------
exercising any such right if Agent shall have notified Pledgor that, in Agent's
judgment, such action would have a material adverse effect on the value of the
Pledged Collateral or any part thereof;
(ii) Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the lien of this Agreement, any and all dividends and interest
paid in respect of the Pledged Collateral; provided, however, that any and all
-------- -------
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with (x) a partial or total
liquidation or dissolution, (y) a reduction of capital, capital surplus or paid-
in-surplus or (z) a quasi-reorganization, and
(C) cash paid, payable or otherwise distributed in respect of
principal or in redemption of or in exchange for any Pledged Collateral,
shall be, and shall forthwith be delivered to Agent to hold as, Pledged
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Agent, be segregated from the other property or funds of Pledgor and
be forthwith delivered to Agent as Pledged Collateral in the same form as so
received (with all necessary endorsements); and
(iii) Agent shall promptly execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies, dividend payment orders and
other instruments as Pledgor may from time to time reasonably request for the
purpose of enabling Pledgor to exercise the voting and other consensual rights
which it is entitled to exercise pursuant to paragraph (i) above and to receive
the dividends, principal or interest payments which it is authorized to receive
and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of any Default or
Event of Default:
(i) upon written notice from Agent to Pledgor, all rights of Pledgor
to exercise the voting and other consensual rights which it would otherwise be
entitled to exercise pursuant to Section 7(a)(i) shall cease, and all such
rights shall
I-6-6
thereupon become vested in Agent who shall thereupon have the sole right to
exercise such voting and other consensual rights;
(ii) all rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain pursuant
to Section 7(a)(ii) shall cease, and all such rights shall thereupon become
vested in Agent who shall thereupon have the sole right to receive and hold as
Pledged Collateral such dividends and interest payments; and
(iii) all dividends, principal and interest payments which are
received by Pledgor contrary to the provisions of paragraph (ii) of this Section
7(b) shall be received in trust for the benefit of Agent, shall be segregated
from other funds of Pledgor and shall forthwith be paid over to Agent as Pledged
Collateral in the same form as so received (with any necessary endorsements).
(c) In order to permit Agent to exercise the voting and other consensual
rights which it may be entitled to exercise pursuant to Section 7(b)(i) and to
receive all dividends and other distributions which it may be entitled to
receive under Section 7(a)(ii) or Section 7(b)(ii), (i) Pledgor shall promptly
execute and deliver (or cause to be executed and delivered) to Agent all such
proxies, dividend payment orders and other instruments as Agent may from time to
time reasonably request and (ii) without limiting the effect of the immediately
preceding clause (i), Pledgor hereby grants to Agent an irrevocable proxy to
vote the Pledged Collateral and to exercise all other rights, powers, privileges
and remedies to which a holder of the Pledged Collateral would be entitled
(including, without limitation, giving or withholding written consents of
shareholders, calling special meetings of shareholders and voting at such
meetings), which proxy shall be effective, automatically and without the
necessity of any action (including any transfer of any Pledged Collateral on the
record books of the issuer thereof) by any other Person (including the issuer of
the Pledged Collateral or any officer or agent thereof), upon the occurrence of
an Event of Default or Default and which proxy shall only terminate upon the
payment in full of the Secured Obligations.
SECTION 8. AGENT APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
--------------------------------
irrevocably appoints Agent as Pledgor's attorney-in-fact, with full authority in
the place and stead of Pledgor and in the name of Pledgor, Agent or otherwise,
from time to time in Agent's discretion to take any action and to execute any
instrument that Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including without limitation:
(a) to file one or more financing or continuation statements, or
amendments thereto, or powers or other endorsements or instruments of transfer
or assignments in blank, relative to all or any part of the Pledged Collateral,
or to enter into agreements with Agent and any securities intermediaries
described in Section 1 relating to any Pledged Collateral to protect Agent's
security interest therein, in form and substance satisfactory to Agent, in each
case without the signature of Pledgor;
(b) after the occurrence and during the continuation of any Event of
Default, to ask, demand, collect, ▇▇▇ for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Pledged Collateral;
I-6-7
(c) after the occurrence and during the continuation of any Event of
Default, to receive, endorse and collect any instruments made payable to Pledgor
representing any dividend, principal or interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same; and
(d) after the occurrence and during the continuation of any Event of
Default, to file any claims or take any action or institute any proceedings that
Agent may deem necessary or desirable for the collection of any of the Pledged
Collateral or otherwise to enforce the rights of Agent with respect to any of
the Pledged Collateral.
SECTION 9. AGENT MAY PERFORM. If Pledgor fails to perform any
-----------------
agreement contained herein, Agent may itself perform, or cause performance of,
such agreement, and the expenses of Agent incurred in connection therewith shall
be payable by Pledgor under Section 12(b).
SECTION 10. STANDARD OF CARE. The powers conferred on Agent
----------------
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Pledged Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Agent shall have no duty as to any Pledged Collateral, it being understood that
Agent shall have no responsibility for (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Pledged Collateral, whether or not Agent has or is deemed to
have knowledge of such matters, (b) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the Pledged Collateral) to preserve rights against any parties
with respect to any Pledged Collateral, (c) taking any necessary steps to
collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Agent shall be deemed to have exercised reasonable care in the custody
and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Agent accords
its own property consisting of negotiable securities.
SECTION 11. REMEDIES.
--------
(a) If any Event of Default shall have occurred and be continuing,
Agent may, subject to the terms of the Credit Agreement, exercise in respect of
the Pledged Collateral, in addition to all other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the Uniform Commercial Code as in effect in any
relevant jurisdiction (the "CODE") (whether or not the Code applies to the
affected Pledged Collateral), and Agent may also in its sole discretion, without
notice except as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange or
broker's board or at any of Agent's offices or elsewhere, for cash, on credit or
for future delivery, at such time or times and at such price or prices and upon
such other terms as Agent may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the Pledged Collateral. Agent
or any Bank may be the purchaser of any or all of the Pledged Collateral at any
such sale and Agent, as agent for and representative of the Banks, shall be
I-6-8
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold at any such
public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Pledged Collateral payable by Agent at
such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Pledgor, and Pledgor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. To the extent permitted by applicable
law, Pledgor hereby waives any claims against Agent arising by reason of the
fact that the price at which any Pledged Collateral may have been sold at any
such private sale was less than the price which might have been obtained at a
public sale, even if Agent accepts the first offer received and does not offer
such Pledged Collateral to more than one offeree. If the proceeds of any sale or
other disposition of the Pledged Collateral are insufficient to pay all of the
Secured Obligations, Pledgor shall be liable for the deficiency and the
reasonable fees of any attorneys employed by Agent to collect such deficiency.
(b) Any cash held by Agent as Pledged Collateral and all cash proceeds
received by Agent in respect of any sale of, collection from, or other realiza-
tion upon all or any part of the Pledged Collateral may, in the discretion of
Agent, be held by Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to Agent pursuant to Section
12(b)) in whole or in part by Agent against all or any part of the Secured
Obligations in such order as Agent shall elect. Any surplus of such cash or
cash proceeds held by Agent and remaining after payment in full of all the
Secured Obligations shall be paid over to Pledgor or to whosoever may be
lawfully entitled to receive such surplus.
(c) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended from time to time (the
"SECURITIES ACT"), and applicable state securities laws, Agent may be compelled,
with respect to any sale of all or any part of the Pledged Collateral conducted
without prior registration or qualification of such Pledged Collateral under the
Securities Act and/or such state securities laws, to conduct such sales as
private, not public, sales and to limit purchasers to a restricted group who
will agree, among other things, to acquire the Pledged Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges and agrees that any such private sales may be at
prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including, without limitation, a public offering made
pursuant to an effective registration statement under the Securities Act) and,
notwithstanding such circumstances, Pledgor agrees that any such private sale
shall be conclusively deemed to have been made in a commercially reasonable
manner and that Agent shall have no obligation either to engage in public sales
or to delay the sale of any Pledged Collateral for the period of time necessary
to permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws,
even if such issuer would, or
I-6-9
should, agree to so register it. Pledgor further acknowledges the impossibility
of ascertaining the amount of damages which would be suffered by Agent by reason
of the failure by Pledgor to perform any of the covenants contained in this
Section and, consequently, agrees that, if Pledgor shall fail to perform any of
such covenants, it shall pay, as liquidated damages and not as a penalty, an
amount equal to the value of the Pledged Collateral on the date Agent shall
demand compliance with this Section.
(d) If Agent determines to exercise its right to sell any or all of
the Pledged Collateral, upon written request, Pledgor shall and shall cause each
issuer of any Pledged Interests to be sold hereunder from time to time to
furnish to Agent all such information as Agent may request in order to determine
the number of interests and other instruments included in the Pledged Collateral
which may be sold by Agent in exempt transactions under the Securities Act and
the rules and regulations of the Securities and Exchange Commission thereunder,
as the same are from time to time in effect.
SECTION 12. INDEMNITY AND EXPENSES.
----------------------
(a) Pledgor agrees to indemnify Agent and each Bank from and against
any and all claims, losses and liabilities in any way relating to, growing out
of or resulting from this Agreement and the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Agent's or such
Bank's gross negligence or willful misconduct as finally determined by a court
of competent jurisdiction.
(b) Pledgor shall pay to Agent upon demand the amount of any and all
costs and expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, that 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 Agent
hereunder, or (iv) the failure by Pledgor to perform or observe any of the
provisions hereof.
SECTION 13. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
-----------------------------------------------
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in full force and effect until the payment in full of all
Secured Obligations, (b) be binding upon Pledgor, its successors and assigns,
and (c) inure, together with the rights and remedies of Agent hereunder, to the
benefit of Agent and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), any Bank may, subject to the terms
of the Credit Agreement, assign or otherwise transfer its interest in the Credit
Agreement in whole or in part to any other Person, and such other Person shall
thereupon become vested with all benefits in respect thereof granted to Banks
herein or otherwise. Upon the payment in full of all Secured Obligations, the
security interest granted hereby shall terminate and all rights to the Pledged
Collateral shall revert to Pledgor. Upon any such termination Agent will, at
Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination and Pledgor shall be
entitled to the return, upon its request and at its expense, against receipt and
without recourse to Agent, of such of the Pledged Collateral as shall not have
been sold or otherwise applied pursuant to the terms hereof.
I-6-10
SECTION 14. AMENDMENTS; ETC. Subject to Section 11.01 of the Credit
---------------
Agreement, no amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by Pledgor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Agent
and, in the case of any such amendment or modification, by Pledgor. Any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given.
SECTION 15. NOTICES. Any notice or other communication herein
-------
required or permitted to be given shall be in writing and may be personally
served or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or five (5) Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be
as set forth under such party's name on the signature pages hereof or, as to
either party, such other address as shall be designated by such party in a
written notice delivered to the other party hereto.
SECTION 16. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
-----------------------------------------------------
No failure or delay on the part of Agent in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 17. SEVERABILITY. In case any provision in or obligation
------------
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 18. HEADINGS. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 19. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
--------------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA. Unless otherwise defined herein or in the Credit Agreement, terms
used in Articles 8 and 9 of the UCC are used herein as therein defined.
I-6-11
SECTION 20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE
UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Pledgor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Pledgor at its address provided in Section 15, such
service being hereby acknowledged by Pledgor to be sufficient for personal
jurisdiction in any action against Pledgor in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Agent to bring proceedings against Pledgor in the courts of any other
jurisdiction.
SECTION 21. WAIVER OF JURY TRIAL. PLEDGOR AND AGENT HEREBY AGREE TO
--------------------
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Agent each acknowledge that
this waiver is a material inducement for Pledgor and Agent to enter into a
business relationship, that Pledgor and Agent have already relied on this waiver
in entering into this Agreement and that each will continue to rely on this
waiver in their related future dealings. Pledgor and Agent further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 22. WAIVERS BY PLEDGOR. Pledgor hereby waives, for the
------------------
benefit of Banks and Agent:
(a) any right to require Agent or any Bank, as a condition of payment
or performance by Pledgor, to (i) proceed against Company, any other guarantor
of the Secured Obligations or any other Person, (ii) proceed against or exhaust
any security held from Company, any such other guarantor or any other Person,
(iii) proceed against or have resort to any balance of any deposit account or
credit on the books of Agent or any Bank in favor of Company or any other
Person, or (iv) pursue any other remedy in the power of Agent or any Bank
whatsoever;
I-6-12
(b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of Company including, without limitation, any
defense based on or arising out of the lack of validity or the unenforceability
of the Secured Obligations or any agreement or instrument relating thereto or by
reason of the cessation of the liability of Company from any cause other than
payment in full of the Secured Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(d) any defense based upon Agent's or any Bank's errors or omissions
in the administration of the Secured Obligations, except behavior which amounts
to bad faith;
(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Pledge Agreement and
any legal or equitable discharge of such Pledgor's obligations hereunder, (ii)
the benefit of any statute of limitations affecting Pledgor's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that Agent
or any Bank protect, secure, perfect or insure any security interest or lien or
any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including acceptance
of this Pledge Agreement, notices of default under the Credit Agreement, the
Loan Documents or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Secured Obligations or any agreement
related thereto, notices of any extension of credit to Company and any right to
consent to any thereof; and
(g) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or which
may conflict with the terms of this Pledge Agreement.
SECTION 23. CERTAIN CALIFORNIA LAW WAIVERS. As used in this
------------------------------
Section 23, any reference to "the principal" includes Company, and any reference
to "the creditor" includes Agent and each Bank. In accordance with Section 2856
of the California Civil Code:
(a) Pledgor agrees (i) to waive any and all rights of subrogation and
reimbursement against Company or against any collateral or security granted by
Company for any of the Secured Obligations and (ii) to withhold the exercise of
any and all rights of subrogation, reimbursement and contribution against
Company, against any other guarantor of any of the Secured Obligations and
against any collateral or security granted by any such other guarantor for any
of the Secured Obligations until the Secured Obligations shall have been paid in
full and all letters of credit issued under the Credit Agreement and the other
Loan Documents shall have expired or been cancelled, all as more fully set forth
in Section 24;
(b) Pledgor waives any and all other rights and defenses available to
such Pledgor by reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of the
I-6-13
California Civil Code, including without limitation any and all rights or
defenses Pledgor may have by reason of protection afforded to the principal with
respect to any of the Secured Obligations, or to any other guarantor of any of
the Secured Obligations with respect to any of such guarantor's obligations
under its guaranty, in either case pursuant to the antideficiency or other laws
of the State of California limiting or discharging the principal's indebtedness
or such guarantor's obligations, including without limitation Section 580a,
580b, 580d, or 726 of the California Code of Civil Procedure; and
(c) Pledgor waives all rights and defenses arising out of an election
of remedies by the creditor, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for any Secured Obligation, has
destroyed Pledgor's rights of subrogation and reimbursement against the
principal by the operation of Section 580d of the Code of Civil Procedure or
otherwise; and even though that election of remedies by the creditor, such as
nonjudicial foreclosure with respect to security for an obligation of any other
guarantor (including any other Pledgor) of any of the Secured Obligations, has
destroyed Pledgor's rights of contribution against such other guarantor.
No other provision of this Pledge Agreement shall be construed as limiting the
generality of any of the covenants and waivers set forth in this Section 23.
SECTION 24. PLEDGOR'S RIGHTS OF SUBROGATION, CONTRIBUTION, ETC.
--------------------------------------------------
Pledgor hereby waives any claim, right or remedy, direct or indirect, that
Pledgor now has or may hereafter have against Company or any of its assets in
connection with this Pledge Agreement or the performance by Pledgor of its
obligations hereunder, in each case whether such claim, right or remedy arises
in equity, under contract, by statute (including without limitation under
California Civil Code Section 2847, 2848 or 2849), under common law or otherwise
and including without limitation (a) any right of subrogation, reimbursement or
indemnification that Pledgor now has or may hereafter have against Company, (b)
any right to enforce, or to participate in, any claim, right or remedy that
Agent or any Bank now has or may hereafter have against Company, and (c) any
benefit of, and any right to participate in, any collateral or security now or
hereafter held by Agent or any Bank. In addition, until the Secured Obligations
shall have been indefeasibly paid in full and all letters of credit issued under
the Credit Agreement shall have expired or been cancelled, Pledgor shall
withhold exercise of any right of contribution Pledgor may have against any
other guarantor of the Secured Obligations (including without limitation any
such right of contribution under California Civil Code Section 2848). Pledgor
further agrees that, to the extent the waiver or agreement to withhold the
exercise of its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation, reimbursement
or indemnification Pledgor may have against Company or against any collateral or
security, and any rights of contribution Pledgor may have against any such other
guarantor, shall be junior and subordinate to any rights Agent or any Bank may
have against Company, to all right, title and interest Agent or any Bank may
have in any such collateral or security, and to any right Agent or any Bank may
have against such other guarantor. If any amount shall be paid to Pledgor on
account of any such subrogation, reimbursement, indemnification or contribution
rights at any time when all Secured Obligations shall not have been paid in
full, such amount shall be held in trust for Agent on behalf of Banks and shall
forthwith be paid over to Agent for the benefit of Banks to be
I-6-14
credited and applied against the Secured Obligations, whether matured or
unmatured, in accordance with the terms hereof.
SECTION 25. FURTHER DOCUMENTATION. Pledgor hereby agrees to promptly
---------------------
execute and deliver all further instruments and documents (including any
financing statements, continuations or amendments of such financing statements
and any consents necessary for the authorization of the transactions
contemplated hereby) and take all further action that may be necessary or
desirable, or that Agent may request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Agent
to exercise and enforce the rights and remedies of Agent hereunder with respect
to any Pledged Collateral or to carry out the provisions and purposes hereof.
SECTION 26. COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
(remainder of page intentionally left blank)
I-6-15
IN WITNESS WHEREOF, Pledgor and Agent have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
▇▇▇▇ VON KARMAN, INC.
By: _____________________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, AS AGENT
By: __________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
Facsimile No.: ________________
I-6-16
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated as of August
28, 1997 between CB Commercial Real Estate Services Group, Inc., as Pledgor, and
Bank of America National Trust & Savings Association, as Agent.
Part A
Class of Certificate Par Number of
Issuer Equity Nos. Value Interests
------ --------- ----------- ----- ---------
▇▇▇▇/CC&F
Management General
Services Partnership
Interests
I-1
SCHEDULE II
Attached to and forming a part of the Pledge Agreement dated as of
August 28, 1997 between CB Commercial Real Estate Services Group, Inc., as
Pledgor, and Bank of America National Trust & Savings Association, as Agent.
Percentage
Number of Represented Holders
Interests Issued by Pledged of Interests
Issuer and Outstanding Interests Not Pledged
------ ---------------- ----------- ------------
II-1
SCHEDULE III
Attached to and forming a part of the Pledge Agreement dated as of
August 28, 1997 between CB Commercial Real Estate Services Group, Inc., as
Pledgor, and Bank of America National Trust & Savings Association, as Agent.
EXCEPTIONS TO PRIORITY OF SECURITY INTEREST
-------------------------------------------
III-1
SCHEDULE IV
PLEDGE AMENDMENT
----------------
This Pledge Amendment, dated as of August 28, 1997, is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated as of August 28, 1997, between the undersigned and Bank
of America National Trust & Savings Association, as Agent (the "PLEDGE
AGREEMENT," capitalized terms defined therein being used herein as therein
defined), and that the Pledged Interests listed on this Pledge Amendment shall
be deemed to be part of the Pledged Interests and shall become part of the
Pledged Collateral under the Pledge Agreement as amended hereby, and shall
secure all Secured Obligations.
[NAME OF PLEDGOR]
By: ___________________________
Title:
Class of Certificate Par Number of
Issuer Equity Nos. Value Interests
------ -------- ----------- ----- ----------
IV-1