Exhibit 10.3
[EXECUTION COPY]
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "Agreement"), dated as of February 10, 2005, is
entered into by and between PAHC HOLDINGS CORPORATION, a Delaware corporation
("Pledgor") and HSBC BANK USA, NATIONAL ASSOCIATION ("HSBC"), as collateral
agent (together with its successor(s) thereto in such capacity, "Collateral
Agent") for the Trustee and Noteholders, in light of the following:
WHEREAS, Pledgor, Collateral Agent and HSBC, as Trustee ("Trustee"), have
entered into an Indenture, dated as of February 10, 2005 (as amended, restated,
supplemented or otherwise modified from time to time, the "Indenture"), pursuant
to which Pledgor has issued $29,000,000 aggregate principal amount of its 15%
Senior Secured Notes due 2010 (and, together with any additional notes that may
be issued by Pledgor from time to time thereunder or exchanged therefor or for
such additional notes, the "Notes");
WHEREAS, Pledgor beneficially owns the specified Equity Interests
identified as Pledged Interests in the Persons identified as Issuers listed
under the name of Pledgor on Schedule A attached hereto (or any addendum
thereto);
WHEREAS, Pledgor desires to secure its Obligations under the Notes by
granting to Collateral Agent, for the benefit of itself, the Trustee and the
Noteholders, security interests in the Collateral as set forth herein; and
WHEREAS, to induce the Initial Purchaser to purchase the Notes, each
Noteholder to hold the Notes to be held by it and HSBC to act in its capacities
as Trustee and Collateral Agent, Pledgor desires to pledge, grant, transfer, and
assign to Collateral Agent, for the benefit of itself, the Noteholders and the
Trustee, a security interest in the Pledged Collateral (as hereinafter defined)
to secure the Secured Obligations (as hereinafter defined), as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations, and warranties set forth herein and for other good and valuable
consideration, the parties hereto agree as follows:
1. Definitions And Construction.
(a) Definitions. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Indenture. The
following terms, as used in this Agreement, shall have the following meanings:
"Agreement" has the meaning set forth in the preamble hereto.
"Bankruptcy Code" shall have the meaning ascribed to the term Bankruptcy
Law in the Indenture.
"Chief Executive Office" means the address of the chief executive office of
Pledgor set forth on Schedule B hereto.
"Code" means the Uniform Commercial Code as in effect from time to time in
the State of New York.
"Collateral Agent" has the meaning set forth in the preamble hereto.
"Defeasance" means, with respect to any obligation, the defeasance thereof
pursuant to a "defeasance" or "covenant defeasance" as defined in and described
under Section 8.02 of the Indenture.
"Disposition" shall have the meaning ascribed to the term Asset Sale in the
Indenture, and the words "Dispose", "Disposing" and "Disposal" shall be
interpreted similarly.
"Equity Interests" means all shares, units, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company, or equivalent entity,
whether voting or nonvoting, including general partner partnership interests,
limited partner partnership interests, common stock, preferred stock, or any
other "equity security" (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the SEC under the Exchange Act).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
any successor statute.
"Future Rights" means (a) to the extent of Pledgor's interest therein, all
shares of, all securities convertible or exchangeable into, and all warrants,
options, or other rights to purchase Equity Interests of any other Person in
which Pledgor, after the date of this Agreement, acquires a direct equity
interest, irrespective of whether such Person is or becomes a Subsidiary of
Pledgor; and (b) the certificates or instruments representing such additional
Equity Interests, convertible or exchangeable securities, warrants, and other
rights and all dividends, cash, options, 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 Equity
Interests.
"Holder" has the meaning set forth in Section 3(c) of this Agreement.
"HSBC" has the meaning set forth in the preamble of this Agreement.
"Indenture" has the meaning set forth in the recitals hereto.
"Indenture Documents" means this Agreement, the other Collateral
Agreements, the Indenture and the Notes.
"Issuers" means each of the Persons identified as an Issuer on Schedule A
attached hereto (or any addendum thereto), and any successors thereto, whether
by merger or otherwise.
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"Noteholders" has the meaning ascribed to the term "Holders" set forth in
the Indenture.
"Notes" has the meaning set forth in the recitals hereto.
"Permitted Disposition" means a Disposition consummated in accordance with
the terms of Section 4.16 of the Indenture.
"Pledged Collateral" and "Collateral" mean the Pledged Interests, the
Future Rights, and the Proceeds, collectively; provided, however, that neither
Pledged Collateral nor Collateral shall include any Voting Stock of Phibro
Animal Health until the earlier to occur of (i) the redemption of all of the
outstanding shares of the Series C Preferred Stock of Phibro Animal Health and
(ii) March 1, 2005.
"Pledged Interests" means all of the Equity Interests identified as Pledged
Interests of such Issuer on Schedule A attached hereto (or any addendum
thereto).
"Pledgor" has the meaning set forth in the preamble hereto.
"Proceeds" means all proceeds (including proceeds of proceeds) of the
Pledged Interests and Future Rights including all: (a) rights, benefits,
distributions, premiums, profits, dividends, interest, cash, instruments,
documents of title, accounts, contract rights, inventory, equipment, general
intangibles, deposit accounts, chattel paper, and other property from time to
time received, receivable, or otherwise distributed in respect of or in exchange
for, or as a replacement of or a substitution for, any of the Pledged Interests,
Future Rights, or proceeds thereof (including any cash, Equity Interests, or
other securities or instruments issued after any recapitalization, readjustment,
reclassification, merger or consolidation with respect to the Issuers and any
security entitlements, as defined in the Code, with respect thereto); (b)
"proceeds," as such term is defined in the Code; (c) proceeds of any insurance,
indemnity, warranty, or guaranty (including guaranties of delivery) payable from
time to time with respect to any of the Pledged Interests, Future Rights, or
proceeds thereof; (d) payments (in any form whatsoever) made or due and payable
to Pledgor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Pledged Interests,
Future Rights, or proceeds thereof; and (e) other amounts from time to time paid
or payable under or in connection with any of the Pledged Interests, Future
Rights, or proceeds thereof.
"Record" means information that is inscribed on a tangible medium or which
is stored in an electronic or other medium and is retrievable in perceivable
form.
"SEC" means the United States Securities and Exchange Commission and any
successor thereto.
"Secured Obligations" means all liabilities, obligations, or undertakings
owing by Pledgor to Collateral Agent, the Trustee or any Noteholder of any kind
or description arising out of or outstanding under, advanced or issued pursuant
to, or evidenced by the Indenture, the Notes, this Agreement, or any of the
other Indenture Documents, irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due,
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voluntary or involuntary, whether now existing or hereafter arising, and
including all interest, costs, indemnities, fees (including attorneys fees), and
expenses (including interest, costs, indemnities, fees, and expenses that, but
for the provisions of the Bankruptcy Code, would have accrued irrespective of
whether a claim therefor is allowed) and any and all other amounts which Pledgor
is required to pay pursuant to any of the foregoing, by law, or otherwise.
"Securities Act" has the meaning set forth in Section 9(c).
"Trustee" has the meaning set forth in the recitals hereto.
(b) Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the terms "include" and "including" are not
limiting, and the term "or" has, except where otherwise indicated, the inclusive
meaning represented by the phrase "and/or." The words "hereof," "herein,"
"hereby," "hereunder," and other similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Section, subsection, clause, schedule and exhibit references herein are to this
Agreement unless otherwise specified. All of the exhibits or schedules attached
to this Agreement shall be deemed incorporated herein by reference. Any
reference in this Agreement to any of the following documents includes any and
all alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements thereto or thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth therein): the Indenture, this Agreement, and
the other Indenture Documents. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Collateral Agent, the
Trustee, any Noteholder, or Pledgor, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by Pledgor,
Collateral Agent, the Noteholders and the Trustee, and their respective counsel,
and shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of Collateral
Agent, the Trustee, any Noteholder and Pledgor. Any reference herein to the
payment in full of the Secured Obligations shall mean the payment in full in
cash of all Secured Obligations other than contingent indemnification Secured
Obligations. Any reference herein to any Person shall be construed to include
such Person's successors and assigns. Any requirement of a writing contained
herein shall be satisfied by the transmission of a Record and any Record
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein. In the event of any
direct conflict between the express terms and provisions of this Agreement and
of the Indenture, the terms and provisions of the Indenture shall control;
provided, however, that the inclusion herein of additional obligations on the
part of Pledgor and supplemental rights and remedies in favor of Collateral
Agent, in each case with respect to the Pledged Collateral, shall not be deemed
a conflict with the Indenture.
2. Pledge. Pledgor hereby pledges, grants, transfers, and assigns to
Collateral Agent, for the benefit of Collateral Agent, the Noteholders and the
Trustee, a security interest in all of Pledgor's right, title, and interest in
and to the Pledged Collateral in order to secure prompt repayment of any and all
of the Secured Obligations in accordance with the terms and conditions of the
Indenture Documents to which Pledgor is a party, and in order to secure prompt
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performance by Pledgor of Pledgor's covenants and duties under each Indenture
Document to which Pledgor is a party. Anything contained in this Agreement or
any other Indenture Document to the contrary notwithstanding, except for
Permitted Dispositions and as permitted in Section 3(d) of this Agreement,
Pledgor does not have any authority, express or implied, to Dispose of any item
or portion of the Pledged Collateral.
3. Delivery and Registration of Pledged Collateral.
(a) All certificates or instruments representing or evidencing the
Pledged Collateral shall be promptly delivered by Pledgor to Collateral Agent or
Collateral Agent's designee pursuant hereto at a location designated by
Collateral Agent and shall be held by or on behalf of Collateral Agent pursuant
hereto, and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance reasonably satisfactory to Collateral Agent.
(b) Upon the occurrence and during the continuance of an Event of
Default, Collateral Agent shall have the right, at any time in its discretion
and without notice to any Pledgor, to transfer to or to register on the books of
the Issuers (or of any other Person maintaining records with respect to the
Pledged Collateral) in the name of Collateral Agent for the benefit of the
Secured Parties or any of its nominees any or all of the Pledged Collateral. In
addition, Collateral Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
(c) If, at any time and from time to time, any Pledged Collateral
(including any certificate or instrument representing or evidencing any Pledged
Collateral) is in the possession of a Person other than Collateral Agent or
Pledgor (a "Holder"), then Pledgor shall promptly, at Collateral Agent's option,
either cause such Pledged Collateral to be delivered into Collateral Agent's
possession, or execute and deliver to such Holder a written
notification/instruction, and take all other steps necessary to perfect the
security interest of Collateral Agent in such Pledged Collateral, including
obtaining from such Holder a written acknowledgment that such Holder holds such
Pledged Collateral for Collateral Agent, all pursuant to the Code or other
applicable law governing the perfection of Collateral Agent's security interest
in the Pledged Collateral in the possession of such Holder. Each such
notification/instruction and acknowledgment shall be in form and substance
reasonably satisfactory to Collateral Agent.
(d) Any and all Pledged Collateral (including dividends, interest, and
other cash distributions) at any time received or held by Pledgor shall be so
received or held in trust for Collateral Agent, shall be segregated from other
funds and property of Pledgor and shall be forthwith delivered to Collateral
Agent in the same form as so received or held, with any necessary endorsements;
provided that cash dividends, cash interest or cash distributions received by
Pledgor, if and to the extent they are not prohibited by the Indenture, may be
retained by Pledgor in accordance with Section 4 and used in the ordinary course
of Pledgor's business.
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(e) If at any time and from time to time any Pledged Collateral
consists of an uncertificated security or a security in book entry form, then
Pledgor shall promptly cause such Pledged Collateral to be registered or
entered, as the case may be, in the name of Collateral Agent, for the benefit of
the Secured Parties, or otherwise cause the security interest held by Collateral
Agent, for the benefit of the Secured Parties, to be perfected in accordance
with applicable law.
4. Voting Rights and Dividends.
(a) With respect to Pledgor, so long as (i) no Event of Default shall
have occurred and be continuing or (ii) if an Event of Default has occurred and
is continuing, Pledgor shall not have received the written notice from
Collateral Agent described below in Section 4(b), Pledgor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Pledged Collateral applicable to it or any part thereof for any purpose not
inconsistent with the terms of the Indenture Documents.
(b) Upon the occurrence and during the continuance of an Event of
Default, at the election of Collateral Agent, upon the receipt by Pledgor of
written notice of such election by Collateral Agent, all rights of Pledgor to
exercise the voting and other consensual rights or receive and retain cash
dividends or distributions that it would otherwise be entitled to exercise or
receive and retain, as applicable pursuant to Section 4(a), shall cease, and all
such rights shall thereupon become vested in Collateral Agent, for the benefit
of the Secured Parties, who shall thereupon have the sole right to exercise such
voting or other consensual rights and to receive and retain such cash dividends
and distributions subject to the terms of the Indenture. Upon the receipt of
such written notice, Pledgor shall execute and deliver (or cause to be executed
and delivered) to Collateral Agent all such proxies and other instruments as
Collateral Agent may reasonably request for the purpose of enabling Collateral
Agent to exercise, on behalf of the Secured Parties, the voting and other rights
which it is entitled to exercise, on behalf of the Secured Parties, and to
receive the dividends and distributions that it is entitled to receive and
retain, on behalf of the Secured Parties, pursuant to the preceding sentence.
Following the waiver or cure of any such Event of Default, Collateral Agent
shall, upon the reasonable request and at the expense of Pledgor, execute and
deliver (without recourse, representation or warranty) to Pledgor such
agreements or instruments as Pledgor may reasonably request, to terminate such
proxies and other instruments.
5. Representations and Warranties. Pledgor represents, warrants, and
covenants to Collateral Agent as follows:
(a) Pledgor has taken all steps it deems necessary or appropriate to
be informed on a continuing basis of changes or potential changes affecting the
Pledged Collateral (including rights of conversion and exchange, rights to
subscribe, payment of dividends, reorganizations or recapitalization, tender
offers and voting rights), and Pledgor agrees that none of Collateral Agent, the
Trustee or any Noteholder shall have any responsibility or liability for
informing Pledgor of any such changes or potential changes or for taking any
action or omitting to take any action with respect thereto;
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(b) To the best of Pledgor's knowledge, all information herein or
hereafter supplied to Collateral Agent or any other Secured Party by or on
behalf of Pledgor in writing with respect to the Pledged Collateral is, or in
the case of information hereafter supplied will be, accurate and complete in all
material respects;
(c) Pledgor is and will be the sole legal and beneficial owner of the
Pledged Collateral (including the Pledged Interests and all other Pledged
Collateral acquired by Pledgor after the date hereof) free and clear of any
adverse claim, Lien, or other right, title, or interest of any party, other than
the Liens held by Collateral Agent for the benefit of Collateral Agent, the
Noteholders and the Trustee and the Permitted Liens;
(d) This Agreement and the delivery to Collateral Agent of the Pledged
Interests representing Pledged Collateral (or the delivery to all Noteholders of
the Pledged Interests representing Pledged Collateral of the
notification/instruction referred to in Section 3 of this Agreement), creates a
valid, perfected, and first priority security interest in one hundred percent
(100%) of the Pledged Interests which are in certificated form in favor of
Collateral Agent for the benefit of itself, the Trustee and the Noteholders,
securing payment of the Secured Obligations, and all actions necessary to
achieve such perfection have been duly taken, subject to the laws under which
each Issuer that is a Foreign Subsidiary is organized;
(e) Schedule A to this Agreement is true and correct and complete in
all material respects as of the date hereof; without limiting the generality of
the foregoing, as of the date hereof: (i) except as set forth in Schedule A, all
the Pledged Interests are in certificated form, and, except to the extent
registered in the name of Collateral Agent or its nominee, for the benefit of
the Secured Parties, pursuant to the provisions of this Agreement, are
registered in the name of Pledgor; and (ii) the Pledged Interests as to each of
the Issuers constitute at least the percentage of all the fully diluted issued
and outstanding Equity Interests of such Issuer as set forth in Schedule A to
this Agreement;
(f) The Pledged Interests that are Equity Interests in general
partnerships, limited partnerships or limited liability companies (i) are not
dealt in or traded on securities exchanges or in securities markets, (ii) do not
have terms expressly providing that they are securities governed by Article 8 of
the Code, and (iii) are not investment company securities, and are not,
therefore, "securities" governed by Article 8 of the Code;
(g) There are no presently existing Future Rights or Proceeds (other
than cash dividends and distributions) owned by Pledgor as of the date hereof;
(h) The Pledged Interests have been duly authorized and validly issued
and are fully paid and nonassessable (subject in the case of each Issuer
incorporated under the New York Business Corporation Law, to section 630
thereof);
(i) Neither the pledge of the Pledged Collateral pursuant to this
Agreement nor the extensions of credit represented by the Secured Obligations
violates Regulation T, U or X of the Board of Governors of the Federal Reserve
System; and
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(j) Each direct Subsidiary of Pledgor is an Issuer of Pledged
Interests that have been pledged hereunder.
6. Further Assurances.
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
it will promptly execute and deliver all further instruments and documents, and
take all further action that may be necessary or reasonably desirable, or that
Collateral Agent, on behalf of Collateral Agent, the Noteholders and the
Trustee, may request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable Collateral Agent, on
behalf of Collateral Agent, the Noteholders and the Trustee, 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)
at the request of Collateral Agent, xxxx conspicuously each of its records
pertaining to the Pledged Collateral with a legend, in form and substance
reasonably satisfactory to Collateral Agent, indicating that such Pledged
Collateral is subject to the security interest granted hereby; (ii) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or reasonably desirable, or as
Collateral Agent may reasonably request, in order to perfect and preserve the
security interests granted or purported to be granted hereby; (iii) allow
inspection of the Pledged Collateral and Records related thereto by Collateral
Agent or Persons designated by Collateral Agent, from time to time hereafter;
and (iv) appear in and defend any action or proceeding that may affect Pledgor's
title to or Collateral Agent's security interest in the Pledged Collateral.
(b) Pledgor shall file, or shall cause to be filed, one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Pledged Collateral. A carbon, photographic, or other
reproduction of this Agreement or any financing statement covering the Pledged
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) Pledgor will furnish to Collateral Agent, upon the request of
Collateral Agent: (i) a certificate executed by an authorized officer of
Pledgor, and dated as of the date of delivery to Collateral Agent, itemizing in
such detail as Collateral Agent may request, the Pledged Collateral which, as of
the date of such certificate, has been delivered to Collateral Agent by Pledgor
pursuant to the provisions of this Agreement; and (ii) such statements and
schedules further identifying and describing the Pledged Collateral and such
other reports in connection with the Pledged Collateral as Collateral Agent may
request.
7. Covenants of Pledgor. Pledgor shall:
(a) Perform each and every covenant in the Indenture Documents
applicable to Pledgor;
(b) At all times keep at least one complete set of its records
concerning substantially all of the Pledged Collateral at its Chief Executive
Office as set forth in Schedule B hereto, and not change the location of its
Chief Executive Office or such records without giving Collateral Agent at least
thirty (30) days' prior written notice thereof;
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(c) Upon receipt by Pledgor of any material notice, report, or other
communication from any of the Issuers or any Holder relating to all or any part
of the Pledged Collateral, deliver such notice, report or other communication to
Collateral Agent promptly, but in no event later than five (5) days following
the receipt thereof by Pledgor; and
(d) Not permit any of the Issuers to: (i) authorize the amendment of
or amend the organic documents of such Issuer that is a general partnership,
limited partnership or limited liability company to provide that the Equity
Interests of such Issuer is governed by Article 8 of the Uniform Commercial Code
as adopted by the jurisdiction in which such Issuer is formed, or (ii) authorize
the issuance of or issue certificates evidencing any of the Equity Interests of
such Issuer that is a general partnership, limited partnership or limited
liability company, without giving the Collateral Agent at least thirty (30)
days' prior written notice thereof.
8. Collateral Agent as Pledgor's Attorney-in-Fact.
(a) Pledgor hereby irrevocably appoints Collateral Agent, on behalf of
Collateral Agent, the Noteholders and the Trustee, as Pledgor's
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor, Collateral Agent or otherwise, from time to time at
Collateral Agent's discretion, to take any action and to execute any instrument
that Collateral Agent, on behalf of Collateral Agent, the Noteholders and the
Trustee, may reasonably deem necessary or advisable to accomplish the purposes
of this Agreement, including: (i) upon the occurrence and during the continuance
of an Event of Default, to receive, endorse, and collect all instruments made
payable to Pledgor representing any dividend, interest payment or other
distribution in respect of the Pledged Collateral or any part thereof to the
extent permitted hereunder and to give full discharge for the same and to
execute and file governmental notifications and reporting forms; (ii) to issue
any notifications/instructions Collateral Agent deems necessary pursuant to
Section 3 of this Agreement; or (iii) to arrange for the transfer of the Pledged
Collateral on the books of any of the Issuers or any other Person to the name of
Collateral Agent or to the name of Collateral Agent's nominee.
(b) In addition to the designation of Collateral Agent as Pledgor's
attorney-in-fact in subsection (a), Pledgor hereby irrevocably appoints
Collateral Agent, on behalf of Collateral Agent, the Noteholders and the
Trustee, as Pledgor's agent and attorney-in-fact with power to make, execute and
deliver any and all documents and writings which may be necessary or appropriate
for approval of, or be required by, any regulatory authority located in any
city, county, state or country where Pledgor or any of the Issuers engage in
business, in order to transfer or to more effectively transfer any of the
Pledged Interests or otherwise enforce the rights granted hereunder to
Collateral Agent, the Noteholders and the Trustee, or Collateral Agent for the
benefit thereof.
9. Remedies upon Default. Upon the occurrence and during the continuance of
an Event of Default:
(a) Collateral Agent, on behalf of Collateral Agent, the Noteholders
and the Trustee, may exercise in respect of the Pledged Collateral, in addition
to other rights and
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remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the Code (irrespective of whether
the Code applies to the affected items of Pledged Collateral), and Collateral
Agent, on behalf of Collateral Agent, the Noteholders and the Trustee, may also
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,
broker's board or at any of Collateral 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 Collateral Agent may deem commercially
reasonable, irrespective of the impact of any such sales on the market price of
such Pledged Collateral. To the maximum extent permitted by applicable law,
Collateral Agent may be the purchaser of any or all of the Pledged Collateral at
any such sale and 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 all or any
part of the Secured Obligations as a credit on account of the purchase price of
any Pledged Collateral payable 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 law) all
rights of redemption, stay, or appraisal that 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 (10) calendar days' notice to Pledgor of the time and place of
any public sale or the time after which a private sale is to be made shall
constitute reasonable notification. Collateral Agent shall not be obligated to
make any sale of Pledged Collateral regardless of notice of sale having been
given. Collateral 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 maximum extent permitted by law, Pledgor hereby waives any claims against
Collateral Agent arising because the price at which any Pledged Collateral may
have been sold at such a private sale was less than the price that might have
been obtained at a public sale, even if Collateral Agent accepts the first offer
received and does not offer such Pledged Collateral to more than one offeree.
(b) Pledgor hereby agrees that any sale or other Disposition of the
Pledged Collateral conducted in conformity with reasonable commercial practices
of banks, insurance companies, or other financial institutions in the State of
New York in Disposing of property similar to the Pledged Collateral shall be
deemed to be commercially reasonable.
(c) Pledgor hereby acknowledges that the sale by Collateral Agent of
any Pledged Collateral pursuant to the terms hereof in compliance with the
Securities Act of 1933 as now in effect or as hereafter amended, or any similar
statute hereafter adopted with similar purpose or effect (the "Securities Act"),
as well as applicable "Blue Sky" or other state securities laws may require
strict limitations as to the manner in which Collateral Agent or any subsequent
transferee of the Pledged Collateral may Dispose thereof. Pledgor acknowledges
and agrees that in order to protect Collateral Agent's interest it may be
necessary to sell the Pledged Collateral at a price less than the maximum price
attainable if a sale were delayed or were made in another manner, such as a
public offering under the Securities Act. Pledgor shall not have any objection
to sale in such a manner and agrees that Collateral Agent shall have no
obligation to obtain the maximum possible price for the Pledged Collateral so
long as the sale is conducted in a commercially reasonable manner. Without
limiting the generality of the foregoing, Pledgor
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agrees that, upon the occurrence and during the continuation of an Event of
Default, Collateral Agent may, subject to applicable law, from time to time
attempt to sell all or any part of the Pledged Collateral by a private
placement, restricting the bidders and prospective purchasers to those who will
represent and agree that they are purchasing for investment only and not for
distribution. In so doing, Collateral Agent may solicit offers to buy the
Pledged Collateral or any part thereof for cash, from a limited number of
investors deemed by Collateral Agent, in its reasonable judgment, to be
institutional investors or other responsible parties who might be interested in
purchasing the Pledged Collateral. If Collateral Agent shall solicit such offers
and so long as the sale is conducted in accordance with applicable law, then the
acceptance by Collateral Agent of one of the offers shall be deemed to be a
commercially reasonable method of Disposition of the Pledged Collateral.
(d) If Collateral Agent shall determine to exercise its right to sell
all or any portion of the Pledged Collateral pursuant to this Section, Pledgor
agrees that, upon request of Collateral Agent, Pledgor will, at its own expense:
(i) use its best efforts to execute and deliver, and cause the
Issuers and the directors and officers thereof to execute and deliver, all such
instruments and documents, and to do or cause to be done all such other acts and
things, as may be necessary or, in the opinion of Collateral Agent, advisable to
register such Pledged Collateral under the provisions of the Securities Act, and
to cause the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the related
prospectuses which, in the opinion of Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable
thereto;
(ii) use its best efforts to qualify the Pledged Collateral under
the state securities laws or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Collateral, as requested by
Collateral Agent;
(iii) cause the Issuers to make available to their respective
security holders, as soon as practicable, an earnings statement which will
satisfy the provisions of Section 11(a) of the Securities Act;
(iv) execute and deliver, or cause the officers and directors of
the Issuers to execute and deliver, to any Person, entity or governmental
authority as Collateral Agent may choose, any and all documents and writings
which, in Collateral Agent's reasonable judgment, may be necessary or
appropriate for approval, or be required by, any regulatory authority located in
any city, county, state or country where Pledgor or the Issuers engage in
business, in order to transfer or to more effectively transfer the Pledged
Interests or otherwise enforce Collateral Agent's rights hereunder; and
(v) do or cause to be done all such other acts and things as may
be necessary to make such sale of the Pledged Collateral or any part thereof
valid and binding and in compliance with applicable law.
11
Pledgor acknowledges that there is no adequate remedy at law for failure by it
to comply with the provisions of this Section and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section may be specifically enforced.
(e) PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW:
(i) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO THE TIME
COLLATERAL AGENT DISPOSES OF ALL OR ANY PART OF THE COLLATERAL AS PROVIDED IN
THIS SECTION; (ii) ALL RIGHTS OF REDEMPTION, STAY, OR APPRAISAL THAT IT NOW HAS
OR MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR STATUTE NOW
EXISTING OR HEREAFTER ENACTED; AND (iii) EXCEPT AS SET FORTH IN SUBSECTION (a)
OF THIS SECTION, ANY REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.
10. Application of Proceeds. Upon the occurrence and during the continuance
of an Event of Default, any cash held by Collateral Agent as Pledged Collateral
and all cash proceeds received by Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Pledged
Collateral pursuant to the exercise by Collateral Agent of its remedies as a
secured creditor as provided in Section 9 shall be applied from time to time by
Collateral Agent as provided in the Indenture.
11. Duties of Collateral Agent. The powers conferred on Collateral Agent
hereunder are solely to protect its interests in the Pledged Collateral and
shall not impose on it any duty to exercise such powers. Except as provided in
Section 9-207 of the Code, Collateral Agent shall have no duty with respect to
the Pledged Collateral or any responsibility for taking any necessary steps to
preserve rights against any Persons with respect to any Pledged Collateral.
12. Choice of Law and Venue. THE VALIDITY OF THIS AGREEMENT, ITS
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES
HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER INDENTURE DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE BOROUGH OF
MANHATTAN IN XXX XXXX XX XXX XXXX, XXXXX XX XXX XXXX; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY PLEDGED COLLATERAL OR OTHER PROPERTY
MAY BE BROUGHT, AT COLLATERAL AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE COLLATERAL AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH PLEDGED
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. PLEDGOR AND COLLATERAL AGENT WAIVE,
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12.
12
13. Amendments; Etc. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Pledgor herefrom shall in any event be
effective unless the same shall be in writing and signed by Collateral Agent and
Pledgor, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part of
Collateral Agent to exercise, and no delay in exercising any right under this
Agreement, any other Indenture Document, or otherwise with respect to any of the
Secured Obligations, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement, any other Indenture
Document, or otherwise with respect to any of the Secured Obligations preclude
any other or further exercise thereof or the exercise of any other right. The
remedies provided for in this Agreement or otherwise with respect to any of the
Secured Obligations are cumulative and not exclusive of any remedies provided by
law.
14. Notices. All notices and other communications hereunder to either party
hereto shall be in writing and shall be mailed, sent or delivered in accordance
with the Indenture.
15. Continuing Security Interest. This Agreement shall create a continuing
security interest in the Pledged Collateral and shall: (i) remain in full force
and effect until the payment in full of the Secured Obligations (other than
contingent indemnification obligations) or the Defeasance thereof; (ii) be
binding upon Pledgor and its successors and assigns; and (iii) inure to the
benefit of Collateral Agent and its successors, transferees, and assigns, in
each case other than as expressly permitted pursuant to the terms of the
Indenture Documents. Upon the payment in full of the Secured Obligations (other
than contingent indemnification obligations) or the Defeasance thereof, the
security interests granted herein shall automatically terminate and all rights
to the Pledged Collateral shall revert to Pledgor. Upon any such termination,
Collateral Agent will, at Pledgor's expense, execute and deliver to Pledgor such
documents without recourse, representation or warranty as Pledgor shall
reasonably request to evidence such termination. Such documents shall be
prepared by Pledgor and shall be in form and substance reasonably satisfactory
to Collateral Agent.
16. Pledgor Remains Liable. Anything herein to the contrary
notwithstanding:
(a) Pledgor will remain liable under all agreements (including all
limited liability company agreements) relating to the Pledged Collateral to the
extent set forth therein, and will perform all of its duties and obligations
under such agreements to the same extent as if this Agreement had not been
executed;
(b) the exercise by Collateral Agent of any of its rights hereunder
will not release Pledgor from any of its duties or obligations under any such
agreements; and
(c) none of Collateral Agent, the Trustee or any Noteholder will have
any obligation or liability under any such agreement by reason of this
Agreement, nor will any such Person be obligated to perform any of the
obligations or duties of Pledgor thereunder.
17. Revival and Reinstatement of Obligations. If the incurrence or payment
of the Secured Obligations by Pledgor, any Defeasance thereof or the transfer by
Pledgor to Collateral Agent of any property of Pledgor should for any reason
subsequently be declared to be void or
13
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, and other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if Collateral Agent is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that Collateral Agent is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys' fees of Collateral Agent related thereto, the liability of Pledgor
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
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 or be given any substantive effect.
19. 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.
20. Counterparts; Telefacsimile Execution. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original and all
of which together shall constitute one and the same Agreement. Delivery of an
executed counterpart of this Agreement by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile also
shall deliver an original executed counterpart of this Agreement but the failure
to deliver an original executed counterpart shall not affect the validity,
enforceability, or binding effect hereof.
21. Waiver of Marshaling. Pledgor and Collateral Agent acknowledge and
agree that in exercising any rights under or with respect to the Pledged
Collateral: (i) Collateral Agent is under no obligation to marshal any Pledged
Collateral; (ii) Collateral Agent may, in its absolute discretion, realize upon
the Pledged Collateral in any order and in any manner it so elects; and (iii)
Collateral Agent may, in its absolute discretion, apply the proceeds of any or
all of the Pledged Collateral to the Secured Obligations in any order and in any
manner it so elects in accordance with the Indenture Documents. Pledgor waives
any right to require the marshaling of any of the Pledged Collateral.
22. Waiver of Jury Trial. PLEDGOR AND COLLATERAL AGENT HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. PLEDGOR AND COLLATERAL AGENT REPRESENT THAT EACH
HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
14
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
[Signature page follows.]
15
IN WITNESS WHEREOF, each party hereto have caused this Agreement to be duly
executed and delivered as of the date first written above.
PLEDGOR:
PAHC HOLDINGS CORPORATION,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
ACCEPTED AND AGREED:
HSBC BANK USA, NATIONAL ASSOCIATION,
as Collateral Agent
By: /s/ Herawattee Alli
---------------------------------
Name: Herawattee Alli
Title: Assistant Vice President
SCHEDULE A
TO
PLEDGE AGREEMENT
Pledgor: PAHC HOLDINGS CORPORATION
Pledged Interests
PERCENTAGE
OF CAPITAL
PLEDGOR'S STOCK HELD
NUMBER CERTIFICATE PERCENTAGE BY PLEDGOR CERTIFICATED/
ISSUER / JURISDICTION OF ORGANIZATION OF SHARES CLASS NUMBER(S) OWNERSHIP PLEDGED UNCERTIFICATED
------------------------------------- ---------- ------------------ ----------- ---------- ---------- --------------
Phibro Animal Health Corporation, 5,207 Series A Preferred PA-2 100% 100% Certificated
a New York corporation
11,888.501 Class B Common B565 100% 100% Certificated
Phibro Animal Health Corporation's Series C Preferred Stock is held by Palladium
Investors, and its Class A Common Stock is held one-half by Pledgor and one-half
by Xxxx Xxxxxxxx. The Class A Common Stock shall not be pledged until the
earlier to occur of (i) the redemption of all of the outstanding shares of such
Series C Preferred Stock and (ii) March 1, 2005.
SCHEDULE B
TO
PLEDGE AGREEMENT
PLEDGOR: PAHC Holdings Corporation
ADDRESS OF CHIEF EXECUTIVE OFFICE:
c/o Phibro Animal Health Corporation
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, XX 00000
