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Exhibit 10.8
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of April 11, 1997 (as amended,
modified or supplemented from time to time, this "Agreement"), made by each of
the undersigned (each a "Pledgor" and, collectively, the "Pledgors"), in favor
of THE CHASE MANHATTAN BANK, as Collateral Agent (the "Pledgee"), for the
benefit of the Secured Creditors (as defined below). Except as otherwise
defined herein, terms used herein and defined in the Credit Agreement (as
defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Superior National Insurance Group, Inc. ("SNIG"),
SNTL Acquisition Corp. (the "Borrower"), various financial institutions from
time to time party thereto (the "Banks"), and The Chase Manhattan Bank, as
Administrative Agent (together with any successor agent, the "Administrative
Agent", and together with the Banks, the "Bank Creditors"), have entered into a
Credit Agreement, dated as of April 11, 1997 (as amended, modified or
supplemented from time to time, the "Credit Agreement"), providing for the
making of Loans to the Borrower as contemplated therein;
WHEREAS, the Borrower desires to incur Loans pursuant to the
Credit Agreement;
WHEREAS, the Borrower may from time to time be party to one or
more (i) interest rate agreements, interest rate cap agreements, interest rate
collar agreements or other similar agreements or arrangements, (ii) foreign
exchange contracts, currency swap agreements or similar agreements or
arrangements designed to protect against the fluctuations in currency values
and\or (iii) other types of hedging agreements from time to time (each such
agreement or arrangement with an Other Creditor (as hereinafter defined), an
"Interest Rate Protection Agreement or Other Hedging Agreement"), with a Bank
or an affiliate of a Bank (each such Bank or affiliate, even if the respective
Bank subsequently ceases to be a Bank under the Credit Agreement for any
reason, together with such Bank's or affiliate's successors and
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assigns, collectively, the "Other Creditors," and together with Bank Creditors,
the "Secured Creditors");
WHEREAS, pursuant to the SNIG Guaranty, SNIG has guaranteed to
the Secured Creditors the payment when due of all obligations and liabilities
of the Borrower under or with respect to the Credit Documents and the Interest
Rate Protection Agreements or Other Hedging Agreements;
WHEREAS, it is a condition precedent to the making of Loans to
the Borrower under the Credit Agreement that each Pledgor shall have executed
and delivered to the Pledgee this Agreement;
WHEREAS, each Pledgor desires to execute this Agreement to
satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to
each Pledgor, the receipt and sufficiency of which are hereby acknowledged,
each Pledgor hereby makes the following representations and warranties to the
Pledgee and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each
Pledgor for the benefit of the Secured Creditors to
secure:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
liabilities (including obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due) of such
Pledgor, now existing or hereafter incurred under, arising out of or
in connection with any Credit Documents to which such Pledgor is a
party (the Credit Documents, together with Interest Rate Protection
Agreements and Other Hedging Agreements being hereinafter collectively
called the "Secured Debt Agreements") and the due performance and
compliance by such Pledgor with the terms of each such Credit Document
(all such obligations and liabilities under this clause (i), except to
the extent consisting of obligations or indebtedness with respect to
Interest Rate Protection Agreements or Other Hedging Agreements, being
herein collectively called the "Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations
(including obligations
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which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of such Pledgor,
now existing or hereafter incurred under, arising out of or in
connection with any Interest Rate Protection Agreement or Other
Hedging Agreement, including, in the case of SNIG, all obligations of
such Pledgor under its Guaranty in respect of Interest Protection
Agreements or other Hedging Agreements (all such obligations and
liabilities under this clause (ii) being herein collectively called
the "Other Obligations");
(iii) any and all sums advanced by such Pledgee in order to
preserve the Collateral (as hereinafter defined) or preserve its
security interest in the Collateral;
(iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of such
Pledgor referred to in clauses (i), (ii) and (iii) above, after an
Event of Default (such term, as used in this Agreement, shall mean any
Event of Default under, and as defined in, the Credit Agreement, or
any payment default by the Borrower under any Interest Rate Protection
Agreement or Other Hedging Agreement and shall in any event include,
without limitation, any payment default (after the expiration of any
applicable grace period) on any of the Obligations (as hereinafter
defined)) shall have occurred and be continuing, the reasonable
expenses of retaking, holding, preparing for sale or lease, selling or
otherwise disposing or realizing on the Collateral, or of any exercise
by the Pledgee of its rights hereunder, together with reasonable
attorneys' fees and court costs; and
(v) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of
this Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section 1 being herein collectively called the
"Obligations".
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used
herein: (i) the term "Stock" shall mean (x) with respect to corporations
incorporated under the laws of the United States or any State or territory
thereof (each a "Domestic Corporation"), all of the issued and outstanding
shares of capital stock, stock options, warrants and any other equity interests
of any Domestic Corporation at any time owned by each Pledgor and (y) with
respect to corporations which are not Domestic Corporations (each a "Foreign
Corporation"), all of the issued and outstanding shares of capital stock, stock
options, warrants and any other equity interests at any time owned by any
Pledgor of any Foreign Corporation, provided that, except as provided
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in the last sentence of this Section 2, such Pledgor shall not be required to
pledge hereunder more than 65% of the total combined voting power of all
classes of capital stock of any Foreign Corporation entitled to vote, (ii) the
term "Notes" shall mean (x) all Intercompany Notes at any time issued to each
Pledgor and (y) all other promissory notes from time to time issued to, or held
by, each Pledgor provided that except as provided in the last sentence of this
Section 2, no Pledgor shall be required to pledge hereunder any promissory
notes issued to such Pledgor by any Subsidiary of such Pledgor which is a
Foreign Corporation and and (iii) the term "Securities" shall mean all of the
Stock and Notes. Each Pledgor represents and warrants that on the date hereof
(i) each Subsidiary of such Pledgor, and the direct ownership thereof, is
listed in Annex A hereto; (ii) the Stock held by such Pledgor consists of the
number and type of shares of the stock of the corporations as described in
Annex B hereto; (iii) such Stock constitutes that percentage of the issued and
outstanding capital stock of the issuing corporation as is set forth in Annex B
hereto; (iv) the Notes held by such Pledgor consist of the promissory notes
described in Annex C hereto where such Pledgor is listed as the lender; and (v)
on the date hereof, such Pledgor owns no other Securities. In the
circumstances and to the extent provided in Section 6.18 of the Credit
Agreement, the 65% limitation set forth in clause (i)(y) and the limitation in
the proviso of clause (ii) in each case of this Section 2 and in Section 3.2
hereof shall no longer be applicable and such Pledgor shall duly pledge and
deliver to the Pledgee such of the Securities not theretofore required to be
pledged hereunder.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations and for the purposes
set forth in Section 1 hereof, each Pledgor hereby: (i) grants to the Pledgee
a security interest in all of the Collateral owned by such Pledgor; (ii)
pledges and deposits as security with the Pledgee the Securities owned by such
Pledgor on the date hereof, and delivers to the Pledgee certificates or
instruments therefor, duly endorsed in blank in the case of Notes and
accompanied by undated stock powers duly executed in blank by such Pledgor in
the case of Stock, or such other instruments of transfer as are acceptable to
the Pledgee; and (iii) assigns, transfers, hypothecates, mortgages, charges and
sets over to the Pledgee all of such Pledgor's right, title and interest in and
to such Securities (and in and to all certificates or instruments evidencing
such Securities), to be held by the Pledgee, upon the terms and conditions set
forth in this Agreement.
3.2. Subsequently Acquired Securities. If any Pledgor shall
acquire (by purchase, stock dividend or otherwise) any additional Securities at
any time or from time to time after the date hereof, such Pledgor will
forthwith pledge and deposit such Securities (or certificates or instruments
representing such Securities) as security with
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the Pledgee and deliver to the Pledgee certificates therefor or instruments
thereof, duly endorsed in blank in the case of Notes and accompanied by undated
stock powers duly executed in blank in the case of Stock, or such other
instruments of transfer as are acceptable to the Pledgee, and will promptly
thereafter deliver to the Pledgee a certificate executed by any Authorized
Officer of such Pledgor describing such Securities and certifying that the same
have been duly pledged with the Pledgee hereunder. Subject to the last
sentence of Section 2 hereof, no Pledgor shall be required at any time to
pledge hereunder any Stock which is more than 65% of the total combined voting
power of all classes of capital stock of any Foreign Corporation entitled to
vote.
3.3. Uncertificated Securities. Notwithstanding anything to
the contrary contained in Sections 3.1 and 3.2 hereof, if any Securities
(whether now owned or hereafter acquired) are uncertificated securities, the
respective Pledgor shall promptly notify the Pledgee thereof, and shall
promptly take all actions required to perfect the security interest of the
Pledgee under applicable law (including, in any event, under Sections 8-313 and
8-321 of the New York UCC, if applicable). Each Pledgor further agrees to take
such actions as the Pledgee deems reasonably necessary or desirable to effect
the foregoing and to permit the Pledgee to exercise any of its rights and
remedies hereunder, and agrees to provide an opinion of counsel reasonably
satisfactory to the Pledgee with respect to any such pledge of uncertificated
Securities promptly upon request of the Pledgee.
3.4 Definitions of Pledged Stock, Pledged Notes, Pledged
Securities and Collateral. (a) All Stock at any time pledged or required to be
pledged hereunder is hereinafter called the "Pledged Stock," all Notes at any
time pledged or required to be pledged hereunder are hereinafter called the
"Pledged Notes," and all of the Pledged Stock and Pledged Notes together are
hereinafter called the "Pledged Securities." The Pledged Securities, together
with all Other Collateral (as hereinafter defined), and together with all
proceeds of such Pledged Securities and other Collateral, including any
securities and moneys received and at the time held by the Pledgee hereunder,
is hereinafter called the "Collateral." For purposes of this Agreement, the
term "Other Collateral" shall mean all of the right, title and interest of each
Pledgor in, to and under all of the following, whether now existing or
hereafter from time to time acquired: (i) all accounts receivable (except, in
the case of SNIG, those accounts receivable pledged in connection with or
otherwise subject to the 1996 Loan Documents), (ii) all contracts, together
with all contract rights arising thereunder (including, without limitation, all
rights under Management Agreements, Reinsurance Agreements and the Transaction
Documents) (except (x) in the case of SNIG, those contracts and contract rights
pledged in connection with or otherwise subject to the 1996 Loan Documents and
(y) contracts, and the contract rights arising thereunder, between any Pledgor
and any Regulated
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Insurance Company), (iii) all inventory, (iv) all equipment, (v) all
trademarks, service marks and trade names together with the registrations and
right to all renewals thereof, and the goodwill of the business of each Pledgor
symbolized by all trademark, service marks and trade names (vi) all copyrights,
(vii) all computer programs of each Pledgor and all intellectual property
rights therein and all other proprietary information of each Pledgor,
including, but not limited to, trade secrets, (viii) all other goods, general
intangibles, chattel paper, documents and instruments, and (ix) all proceeds
and products of any and all of the foregoing.
(b) Nothing in this Agreement is to be construed as a pledge
of any tangible or intangible asset or right of a Regulated Insurance Company,
however, this Agreement includes the pledge of capital stock of each Regulated
Insurance Company. Notwithstanding anything to the contrary contained herein
(i) SNIG is not pledging any capital stock of SNCHC or its general partnership
interest in SNAC and (ii) SNCHC is not pledging its general partnership
interest in SNAC.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Pledged Securities, which may be held (in
the discretion of the Pledgee) in the name of such Pledgor, endorsed or
assigned in blank or in favor of the Pledgee or any nominee or nominees of the
Pledgee or a sub-agent appointed by the Pledgee. The Pledgee agrees to
promptly notify the relevant Pledgor after the appointment of any sub-agent;
provided, however, that the failure to give such notice shall not affect the
validity of such appointment.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
(i) an Event of Default shall have occurred and be continuing and (ii) written
notice thereof shall have been given by the Pledgee to the relevant Pledgor
(provided, that if an Event of Default specified in Section 8.05 of the Credit
Agreement shall occur, no such notice shall be required), each Pledgor shall be
entitled to exercise any and all voting and other consensual rights pertaining
to the Pledged Securities and to give all consents, waivers or ratifications in
respect thereof subject to the terms of Section 7; provided, that no vote shall
be cast or any consent, waiver or ratification given or any action taken which
would violate or be inconsistent with any of the terms of any Secured Debt
Agreement, or which would have the effect of impairing the position or
interests of the Pledgee or any other Secured Creditor. All rights of such
Pledgor to vote and to give consents, waivers and ratifications shall cease in
case an Event of Default shall occur and be continuing and, to the extent
applicable, written notice thereof shall have been given as provided in clause
(ii) above, in which case Section 7 shall become applicable.
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6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of
Default shall have occurred and be continuing, all cash dividends payable in
respect of the Pledged Stock and all payments in respect of the Pledged Notes
shall be paid to the respective Pledgor; provided, that all cash dividends
payable in respect of the Pledged Stock which are determined by the Pledgee to
represent in whole or in part an extraordinary, liquidating or other
distribution in return of capital shall be paid, to the extent so determined to
represent an extraordinary, liquidating or other distribution in return of
capital, to the Pledgee and retained by it as part of the Collateral. The
Pledgee shall also be entitled to receive directly, and to retain as part of
the Collateral:
(i) all other or additional stock or other securities or
property (other than cash) paid or distributed by way of dividend or
otherwise in respect of the Pledged Stock;
(ii) all other or additional stock or other securities or
property (including cash), which may be paid or distributed in respect
of the Pledged Stock by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement; and
(iii) all other or additional stock or other securities or
property (including cash) which may be paid in respect of the
Collateral by reason of any consolidation, merger, exchange of stock,
conveyance of assets, liquidation or similar corporate reorganization.
All dividends, distributions or other payments which are received by any
Pledgor in contravention of the provisions of this Section 6 or Section 7 shall
be received in trust for the benefit of the Pledgee, shall be segregated from
other property or funds of such Pledgor and shall be forthwith paid over to the
Pledgee as Collateral in the same form as so received (with any necessary
endorsement).
7. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement or by any other Secured Debt Agreement or by law) for the protection
and enforcement of its rights in respect of the Collateral, including, without
limitation, all the rights and remedies of a secured party upon default under
the Uniform Commercial Code of the State of New York, and the Pledgee shall be
entitled, without limitation, to exercise the following rights, which each
Pledgor hereby agrees to be commercially reasonable:
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(i) to receive all amounts payable in respect of the
Collateral payable such Pledgor under Section 6 hereof;
(ii) to transfer all or any part of the Pledged Securities
into the Pledgee's name or the name of its nominee or nominees (the
Pledgee agrees to promptly notify the relevant Pledgor after such
transfer; provided, however, that the failure to give such notice
shall not affect the validity of such transfer);
(iii) to accelerate any Pledged Note which may be accelerated
in accordance with its terms, and take any other action to collect
upon any Pledged Note (including, without limitation, to make any
demand for payment thereon);
(iv) subject to the giving of written notice to the relevant
Pledgor in accordance with clause (ii) of Section 5 hereof, to vote
all or any part of the Pledged Stock (whether or not transferred into
the name of the Pledgee) and give all consents, waivers and
ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner thereof (each
Pledgor hereby irrevocably constituting and appointing the Pledgee the
proxy and attorney-in-fact of such Pledgor, with full power of
substitution to do so); and
(v) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to
redeem or otherwise (all of which are hereby waived by each Pledgor),
for cash, on credit or for other property, for immediate or future
delivery without any assumption of credit risk, and for such price or
prices and on such terms as the Pledgee in its absolute discretion may
determine; provided, that at least 10 days' notice of the time and
place of any such sale shall be given to such Pledgor. Each Pledgor
hereby waives and releases to the fullest extent permitted by law any
right or equity of redemption with respect to the Collateral, whether
before or after sale hereunder, and all rights, if any, of marshalling
the Collateral and any other security for the Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the
Pledgee on behalf of the Secured Creditors may bid for and purchase
all or any part of the Collateral so sold free from any such right or
equity of redemption. Neither the Pledgee nor any Secured Creditor
shall be liable for failure to collect or realize upon any or all of
the Collateral or for any delay in so doing nor shall any of them be
under any obligation to take any action whatsoever with regard
thereto.
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Any and all remedies and rights notwithstanding, in the event of a default and
acceleration of the Obligations hereunder and under the Credit Agreement,
neither the Collateral Agent nor any Secured Creditor shall vote, sell, or in
any manner exercise control as to any Regulated Insurance Company pledged as
Collateral without first filing for and obtaining written prior approval
pursuant to California Insurance Code Section 1215.2.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy
of the Pledgee provided for in this Agreement or any other Secured Debt
Agreement or now or hereafter existing at law or in equity or by statute shall
be cumulative and concurrent and shall be in addition to every other such
right, power or remedy. The exercise or beginning of the exercise by the
Pledgee or any other Secured Creditor of any one or more of the rights, powers
or remedies provided for in this Agreement or any other Secured Debt Agreement
or now or hereafter existing at law or in equity or by statute or otherwise
shall not preclude the simultaneous or later exercise by the Pledgee or any
other Secured Creditor of all such other rights, powers or remedies, and no
failure or delay on the part of the Pledgee or any other Secured Creditor to
exercise any such right, power or remedy shall operate as a waiver thereof.
The Secured Creditors agree that this Agreement may be enforced only by the
action of the Administrative Agent or the Pledgee, in each case acting upon the
instructions of the Required Banks (or, after the date on which all Credit
Document Obligations have been paid in full, the holders of at least the
majority of the outstanding Other Obligations) and that no other Secured
Creditor shall have any right individually to seek to enforce or to enforce
this Agreement or to realize upon the security to be granted hereby, it being
understood and agreed that such rights and remedies may be exercised by the
Administrative Agent or the Pledgee or the holders of at least a majority of
the outstanding Other Obligations, as the case may be, for the benefit of the
Secured Creditors upon the terms of this Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral pursuant to the
terms of this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing the
Pledgee of the type provided in clauses (iii) and (iv) of the
definition of Obligations;
(ii) second, to the extent proceeds remain after the
application pursuant to the preceding clause (i), an amount equal to
the outstanding Obligations shall be paid to the Secured Creditors as
provided in Section 9(c) hereof with each
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Secured Creditor receiving an amount equal to its outstanding
Obligations or, if the proceeds are insufficient to pay in full all
such Obligations, its Pro Rata Share (as defined below) of the amount
remaining to be distributed; and
(iii) third, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) and (ii) and
following the termination of this Agreement pursuant to Section 18
hereof, to the relevant Pledgor or, to the extent directed by such
Pledgor or a court of competent jurisdiction, to whomever may be
lawfully entitled to receive such surplus.
(b) For purposes of this Agreement, "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such Secured Creditor's
Obligations and the denominator of which is the then outstanding amount of all
Obligations.
(c) All payments required to be made to the Bank Creditors
hereunder shall be made to the Administrative Agent under the Credit Agreement
for the account of the Bank Creditors and all payments required to be made to
the Other Creditors hereunder shall be made directly to the respective Other
Creditor.
(d) For purposes of applying payments received in accordance
with this Section 9, the Pledgee shall be entitled to rely upon (i) the
Administrative Agent under the Credit Agreement and (ii) the Other Creditors
for a determination (which the Administrative Agent, each Other Creditor and
the Secured Creditors agree (or shall agree) to provide upon request of the
Collateral Agent) of the outstanding Obligations owed to the Bank Creditors or
the Other Creditors, as the case may be. Unless it has actual knowledge
(including by way of written notice from a Bank Creditor or an Other Creditor)
to the contrary, the Administrative Agent under the Credit Agreement, in
furnishing information pursuant to the preceding sentence, and the Collateral
Agent, in acting hereunder, shall be entitled to assume that (x) no Credit
Document Obligations other than principal, interest and regularly accruing fees
are owing to any Bank Creditor and (y) no Interest Rate Protection Agreement or
Other Hedging Agreement, or Other Obligations in respect thereof, are in
existence.
(e) It is understood and agreed that the Pledgors shall
remain liable to the extent of any deficiency between the amount of the
proceeds of the Collateral hereunder and the aggregate amount of the
Obligations.
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10. PURCHASERS OF COLLATERAL. Upon any sale of the
Collateral by the Pledgee hereunder (whether by virtue of the power of sale
herein granted, pursuant to judicial process or otherwise), the receipt of the
Pledgee or the officer making the sale shall be a sufficient discharge to the
purchaser or purchasers of the Collateral so sold, and such purchaser or
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Pledgee or such officer or be answerable in any
way for the misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i)
to indemnify and hold harmless the Pledgee in such capacity and each other
Secured Creditor from and against any and all claims, demands, losses,
judgments and liabilities of whatsoever kind or nature, and (ii) to reimburse
the Pledgee and each other Secured Creditor for all costs and expenses,
including attorneys' fees, growing out of or resulting from this Agreement or
the exercise by the Pledgee of any right or remedy granted to it hereunder or
under any other Secured Debt Agreement except, with respect to clauses (i) and
(ii) above, for those arising from the Pledgee's or such other Secured
Creditor's gross negligence or willful misconduct. In no event shall the
Pledgee be liable, in the absence of gross negligence or willful misconduct on
its part, for any matter or thing in connection with this Agreement other than
to account for moneys actually received by it in accordance with the terms
hereof. If and to the extent that the obligations of the Pledgors under this
Section 11 are unenforceable for any reason, each Pledgor hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
12. FURTHER ASSURANCES, POWER OF ATTORNEY. (a) Each Pledgor
agrees that it will join with the Pledgee in executing and, at the Pledgor's
own expense, file and refile under the applicable UCC or appropriate local
equivalent, such financing statements, continuation statements and other
documents in such offices as the Pledgee may deem necessary or appropriate and
wherever required or permitted by law in order to perfect and preserve the
Pledgee's security interest in the Collateral and hereby authorizes the Pledgee
to file financing statements and amendments thereto relative to all or any part
of the Collateral without the signature of such Pledgor where permitted by law,
and agrees to do such further acts and things and to execute and deliver to the
Pledgee such additional conveyances, assignments, agreements and instruments as
the Pledgee may reasonably require or deem advisable to carry into effect the
purposes of this Agreement or to further assure and confirm unto the Pledgee
its rights, powers and remedies hereunder. The Pledgors will pay any
applicable filing fees, recordation taxes and related expenses relating to its
Collateral.
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(b) Each Pledgor hereby appoints the Pledgee as such
Pledgor's attorney-in-fact, with full authority in the place and stead of such
Pledgor and in the name of such Pledgor or otherwise, from time to time after
the occurrence and during the continuance of an Event of Default, in the
Pledgee's discretion to take any action and to execute any instrument which the
Pledgee may reasonably deem necessary or advisable to accomplish the purposes
of this Agreement.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed that the
obligations of the Pledgee as holder of the Collateral and interests therein
and with respect to the disposition thereof, and otherwise under this
Agreement, are only those expressly set forth in this Agreement. The Pledgee
shall act hereunder on the terms and conditions set forth herein and in Section
10 of the Credit Agreement.
14. TRANSFER BY THE PLEDGORS. Except for sales of Collateral
permitted pursuant to the Credit Agreement, no Pledgor will sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except in accordance
with the terms of this Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGORS.
(a) Each Pledgor represents, warrants and covenants that (i) it is the legal,
record and beneficial owner of, and has good and marketable title to, all
Securities pledged by it hereunder, subject to no pledge, lien, mortgage,
hypothecation, security interest, charge, option or other encumbrance
whatsoever, except the liens and security interests created by this Agreement;
(ii) it has full power, authority and legal right to pledge all the Securities
pledged by it pursuant to this Agreement; (iii) this Agreement has been duly
authorized, executed and delivered by such Pledgor and constitutes a legal,
valid and binding obligation of such Pledgor enforceable against it in
accordance with its terms, except to the extent that the enforceability hereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and by equitable
principles (regardless of whether enforcement is sought in equity or at law);
(iv) no consent of any other party (including, without limitation, any
stockholder or creditor of such Pledgor or any of its Subsidiaries) and no
consent, license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority is required to be obtained by such Pledgor in connection with the
execution, delivery or performance of this Agreement, or in connection with the
exercise of its rights and remedies pursuant to this Agreement, except (x) as
may be
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required in connection with the disposition of the Securities by laws affecting
the offering and sale of securities generally, (y) those approvals required to
be obtained from the Department of Insurance pursuant to the Credit Agreement,
all of which approvals have been obtained or (z) in connection with the
exercise of rights and remedies pursuant to this Agreement, those approvals
required to be obtained pursuant to California Insurance Code Section 1215.2;
(v) the execution, delivery and performance of this Agreement by such Pledgor
does not violate any provision of any applicable law or regulation or of any
order, judgment, writ, award or decree of any court, arbitrator or governmental
authority, domestic or foreign, or of the certificate of incorporation or
by-laws of such Pledgor or of any securities issued by such Pledgor or any of
its Subsidiaries, or of any mortgage, indenture, lease, deed of trust,
agreement, instrument or undertaking to which such Pledgor or any of its
Subsidiaries is a party or which purports to be binding upon such Pledgor or
any of its Subsidiaries or upon any of their respective assets and will not
result in the creation or imposition of any lien or encumbrance on any of the
assets of such Pledgor or any of its Subsidiaries except as contemplated by
this Agreement; (vi) all of the shares of Pledged Stock have been duly and
validly issued, are fully paid and nonassessable; (vii) each of the Pledged
Notes is the legal, valid and binding obligation of the respective obligor,
enforceable against such obligor in accordance with its terms, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by equitable principles (regardless of whether
enforcement is sought in equity or at law); and (viii) the pledge and
assignment of the Securities pursuant to this Agreement, together with the
delivery of such Securities pursuant to this Agreement (which delivery has been
made), creates a valid and perfected first security interest in such Securities
and the proceeds thereof, subject to no prior lien or encumbrance or to any
agreement purporting to grant to any third party a lien or encumbrance on the
property or assets of such Pledgor which would include the Securities. Each
Pledgor covenants and agrees that it will defend the Pledgee's right, title and
security interest in and to the Securities and the proceeds thereof against the
claims and demands of all persons whomsoever; and such Pledgor covenants and
agrees that it will have like title to and right to pledge any other property
at any time hereafter pledged to the Pledgee as Collateral hereunder and will
likewise defend the right thereto and security interest therein of the Pledgee
and the other Secured Creditors.
(b) Each Pledgor represents, warrants, and covenants that all
filings, registrations and recordings necessary or appropriate to create,
preserve and perfect the security interest granted by such Pledgor to the
Pledgee hereby in respect of the Collateral have been accomplished and the
security interest granted to the Pledgee pursuant to this Agreement in and to
the Collateral creates a perfected security interest therein
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prior to the rights of all other Persons therein and subject to no other Liens
and is entitled to all the rights, priorities and benefits afforded by the
Uniform Commercial Code or other relevant law as enacted in any relevant
jurisdiction to perfected security interests.
(c) Each Pledgor represents, warrants, and covenants that as
of the date hereof, there is no financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) covering or
purporting to cover any interest of any kind in the Collateral, and so long as
the Total Commitment has not been terminated or any Note remains unpaid or any
of the Obligations remain unpaid or any Interest Rate Protection Agreement or
Other Hedging Agreement remains in effect or any Obligations are owed with
respect thereto, such Pledgor will not execute or authorize to be filed in any
public office any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements relating to the
Collateral, except financing statements filed or to be filed in respect of and
covering the security interests granted hereby by such Pledgor.
(d) Each Pledgor represents, warrants and covenants that the
chief executive office of such Pledgor is located at the address or addresses
indicated on Annex D hereto for such Pledgor. Such Pledgor will not move its
chief executive office except to such new location as such Pledgor may
establish in accordance with the last sentence of this Section 15(d). No
Pledgor shall establish a new chief executive office until (i) it shall have
given to the Pledgee not less than 30 days' prior written notice of its
intention to do so, clearly describing such new location and providing such
other information in connection therewith as the Pledgee may reasonably request
and (ii) with respect to such new location, it shall have taken all action,
satisfactory to the Pledgee, to maintain the security interest of the Pledgee
in the Collateral intended to be granted hereby at all times fully perfected
and in full force and effect.
(e) Each Pledgor represents, warrants and covenants that such
Pledgor shall not change its legal name or assume or operate in any
jurisdiction under any trade, fictitious or other name except new names
established in accordance with the last sentence of this Section 15(e). No
Pledgor shall assume or operate in any jurisdiction under any new trade,
fictitious or other name until (i) it shall have given to the Pledgee not less
than 30 days' prior written notice of its intention to do so, clearly
describing such new name and the jurisdictions in which such new name shall be
used and providing such other information in connection therewith as the
Pledgee may request and (ii) with respect to such new name, it shall have taken
all action requested by the Pledgee, to maintain the security interest of the
Pledgee in the Collateral intended to be granted hereby at all times fully
perfected and in full force and effect.
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16. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of
each Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (i) any renewal,
extension, amendment or modification of or addition or supplement to or
deletion from any Secured Debt Agreement or any other instrument or agreement
referred to therein, or any assignment or transfer of any thereof; (ii) any
waiver, consent, extension, indulgence or other action or inaction under or in
respect of any such agreement or instrument or this Agreement; (iii) any
furnishing of any additional security to the Pledgee or its assignee or any
acceptance thereof or any release of any security by the Pledgee or its
assignee; (iv) any limitation on any party's liability or obligations under any
such instrument or agreement or any invalidity or unenforceability, in whole or
in part, of any such instrument or agreement or any term thereof; or (v) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to such Pledgor or any Subsidiary
of such Pledgor, or any action taken with respect to this Agreement by any
trustee or receiver, or by any court, in any such proceeding, whether or not
such Pledgor shall have notice or knowledge of any of the foregoing.
17. REGISTRATION, ETC. (a) If an Event of Default shall
have occurred and be continuing and any Pledgor shall have received from the
Pledgee a written request or requests that such Pledgor cause any registration,
qualification or compliance under any Federal or state securities law or laws
to be effected with respect to all or any part of the Pledged Stock, such
Pledgor as soon as practicable and at its expense will use its reasonable
efforts to cause such registration to be effected (and be kept effective) and
will use its reasonable efforts to cause such qualification and compliance to
be effected (and be kept effective) as may be so requested and as would permit
or facilitate the sale and distribution of such Pledged Stock, including,
without limitation, registration under the Securities Act of 1933 as then in
effect (or any similar statute then in effect), appropriate qualifications
under applicable blue sky or other state securities laws and appropriate
compliance with any other government requirements; provided, that the Pledgee
shall furnish to such Pledgor such information regarding the Pledgee as such
Pledgor may request in writing and as shall be required in connection with any
such registration, qualification or compliance. Such Pledgor will cause the
Pledgee to be kept reasonably advised in writing as to the progress of each
such registration, qualification or compliance and as to the completion
thereof, will furnish to the Pledgee such number of prospectuses, offering
circulars or other documents incident thereto as the Pledgee from time to time
may reasonably request, and will indemnify the Pledgee, each other Secured
Creditor and all others participating in the
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distribution of the Pledged Stock against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances under which made, not misleading, except
insofar as the same may have been caused by an untrue statement or omission
based upon information furnished in writing to such Pledgor by the Pledgee or
such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to
exercise its right to sell all or any part of the Pledged Securities pursuant
to Section 7 hereof, such Pledged Securities or the part thereof to be sold
shall not, for any reason whatsoever, be effectively registered under the
Securities Act of 1933, as then in effect, the Pledgee may, in its sole and
absolute discretion, sell such Pledged Securities or part thereof by private
sale in such manner and under such circumstances as the Pledgee may deem
necessary or advisable in order that such sale may legally be effected without
such registration; provided, that at least 10 days' notice of the time and
place of any such sale shall be given to such Pledgor. Without limiting the
generality of the foregoing, in any such event the Pledgee, in its sole and
absolute discretion: (i) may proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under such Securities Act;
(ii) may approach and negotiate with a single possible purchaser to effect such
sale; and (iii) may restrict such sale to a purchaser who will represent and
agree that such purchaser is purchasing for its own account, for investment,
and not with a view to the distribution or sale of such Pledged Securities or
part thereof. In the event of any such sale, the Pledgee shall incur no
responsibility or liability for selling all or any part of the Pledged
Securities at a price which the Pledgee, in its sole and absolute discretion,
may in good xxxxx xxxx reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might be realized if the sale
were deferred until after registration as aforesaid.
18. TERMINATION, RELEASE. (a) After the Termination Date
(as defined below), this Agreement shall terminate (provided that all
indemnities set forth herein including, without limitation, in Section 11
hereof shall survive any such termination) and the Pledgee, at the request and
expense of the respective Pledgor, will promptly execute and deliver to such
Pledgor a proper instrument or instruments acknowledging the satisfaction and
termination of this Agreement, and will duly release from the security interest
created hereby and assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) such of the
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Collateral as may be in the possession of the Pledgee and as has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement. As used in this Agreement, "Termination Date" shall mean the date
upon which the Total Commitment and all Interest Rate Protection Agreements or
Other Hedging Agreements have been terminated, no Note (as defined in the
Credit Agreement) is outstanding and all other Obligations (other than
indemnities described in Section 11 hereof and in Section 11.13 of the Credit
Agreement which are not then due and payable) have been paid in full.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by Section 7.02 of the Credit Agreement or is
otherwise released at the direction of the Required Banks (or all the Banks if
required by Section 11.12 of the Credit Agreement), the Pledgee, at the request
and expense of such Pledgor will duly release from the security interest
created hereby and assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) such of the Collateral as
is then being (or has been) so sold or released and as may be in possession of
the Pledgee and has not theretofore been released pursuant to this Agreement.
(c) At any time that a Pledgor desires that Collateral be
released as provided in the foregoing Section 18(a) or (b), it shall deliver to
the Pledgee a certificate signed by an Authorized Officer of such Pledgor
stating that the release of the respective Collateral is permitted pursuant to
Section 18(a) or (b).
19. NOTICES, ETC. All notices and other communications
hereunder shall be in writing and shall be delivered or mailed by first class
mail, postage prepaid, or telecopied, addressed:
(a) if to any Pledgor, at its address set forth opposite its
signature below;
(b) if to the Pledgee, at:
The Chase Manhattan Bank
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Telephone No.:(000) 000-0000
Telecopier No.:(000) 000-0000
(c) if to any Bank (other than the Pledgee), at such address
as such Bank shall have specified in the Credit Agreement;
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(d) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to each Pledgor and the
Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Pledgor and the Pledgee (with
the written consent of either (x) the Required Banks (or all the Banks if
required by Section 11.12 of the Credit Agreement) at all times prior to the
time on which all Credit Document Obligations have been paid in full or (y) the
holders of at least a majority of the outstanding Other Obligations at all
times after the time on which all Credit Document Obligations have been paid in
full); provided, that any change, waiver, modification or variance affecting
the rights and benefits of a single Class (as defined below) of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors (as defined below) of
such Class. For the purpose of this Agreement, the term "Class" shall mean
each class of Secured Creditors, i.e., whether (i) the Bank Creditors as
holders of the Credit Document Obligations or (ii) the Other Creditors as
holders of the Other Obligations. For the purpose of this Agreement, the term
"Requisite Creditors" of any Class shall mean each of (i) with respect to the
Credit Document Obligations, the Required Banks and (ii) with respect to the
Other Obligations, the holders of at least a majority of all obligations
outstanding from time to time under the Interest Rate Protection Agreements or
Other Hedging Agreements.
21. PLEDGOR'S DUTIES. It is expressly agreed, anything
herein contained to the contrary notwithstanding, that each Pledgor shall
remain jointly and severally liable to perform all of the obligations, if any,
assumed by it with respect to the Collateral, and the Pledgee shall not have
any obligations or liabilities with respect to any Collateral by reason of or
arising out of this Agreement, nor shall the Pledgee be required or obligated
in any manner to perform or fulfill any of the obligations of any of the
Pledgors under or with respect to any Collateral.
22. MISCELLANEOUS. This Agreement shall be binding upon the
successors and assigns of each Pledgor and shall inure to the benefit of and be
enforceable by the Pledgee and its successors and assigns. THIS AGREEMENT
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE STATE OF NEW YORK. The headings in this Agreement are for purposes of
reference only and shall not limit or define the
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meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which shall constitute one
instrument.
IN WITNESS WHEREOF, the Pledgors and the Pledgee have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
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Address:
00000 Xxxxxx Xxxx SUPERIOR NATIONAL INSURANCE
Xxxxxxxxx, XX 00000 GROUP, INC., as a Pledgor
Attention: J. Xxxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000 By /s/ J. XXXXX XXXXXX
------------------------
Title: CFO
00000 Xxxxxx Xxxx SNTL ACQUISITION CORP.,
Xxxxxxxxx, XX 00000 as a Pledgor
Attention: J. Xxxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000 By /s/ J. XXXXX XXXXXX
------------------------
Title: CFO
00000 Xxxxxx Xxxx PACIFIC INSURANCE BROKERAGE, INC.
Xxxxxxxxx, XX 00000 as a Pledgor
Attention: J. Xxxxx Xxxxxx
Tel: (000) 000-0000 By: /s/ J. XXXXX XXXXXX
Fax: (000) 000-0000 ---------------------------
Title: CFO
00000 Xxxxxx Xxxx INFONET MANAGEMENT SYSTEMS, INC.,
Xxxxxxxxx, XX 00000 as a Pledgor
Attention: J. Xxxxx Xxxxxx
Tel: (000) 000-0000 By: /s/ J. XXXXX XXXXXX
Fax: (000) 000-0000 ---------------------------
Title: CFO
00000 Xxxxxx Xxxx SN INSURANCE SERVICES, INC.,
Xxxxxxxxx, XX 00000 as a Pledgor
Attention: J. Xxxxx Xxxxxx
Tel: (000) 000-0000 By: /s/ J. XXXXX XXXXXX
Fax: (000) 000-0000 ----------------------------
Title: CFO
00
XXX XXXXX XXXXXXXXX BANK,
as Pledgee
By /s/ XXXXX XXXXXXX
------------------------
Title: Vice President
