EXHIBIT 10.44
PLEDGE AND SECURITY AGREEMENT
(FIRC AND FIARC)
THIS PLEDGE AND SECURITY AGREEMENT (FIRC AND FIARC), dated as of July 18,
1997 (as the same may be amended, modified, renewed or extended from time to
time, this "AGREEMENT"), is made by FIRST INVESTORS FINANCIAL SERVICES, INC., a
Texas corporation, as pledgor (the "PLEDGOR") to NATIONSBANK OF TEXAS, N.A., a
national banking association, as agent (the "AGENT") for the ratable benefit of
the financial institutions listed on the signature pages of, and any other
financial institution that may become a party to, the Credit Agreement referred
to below (collectively, the "BANKS"), as secured party (in such capacity, the
Agent is referred to as the "SECURED PARTY").
PRELIMINARY STATEMENTS:
(1) The Pledgor is the owner of the shares (the "PLEDGED SHARES") of stock
described in SCHEDULE I hereto and issued by the corporation named therein.
(2) The Pledgor has previously granted (i) a first priority lien and
security interest to NationsBank of Texas, N.A. (in its individual capacity,
"NATIONSBANK") in and to the outstanding capital stock of FIARC (which stock
constitutes a portion of the Pledged Shares) created by and existing under the
F.I.A.R.C. Pledge and Security Agreement, dated as of October 22, 1996, between
the Pledgor and NationsBank and (ii) a first priority lien and security interest
to NationsBank of Texas, N.A., as agent for the financial institutions that are
or may become parties to the FIRC Agreement (in such capacity, the "FIRC
AGENT"), in and to the outstanding capital stock of FIRC (which stock
constitutes a portion of the Pledged Shares) created by and existing under the
Pledge and Security Agreement, dated as of October 16, 1992, as amended, between
the Pledgor and the FIRC Agent.
(3) The second priority lien and security interest of the Secured Party in
and to the Pledged Shares, created by and existing under this Agreement, is
subordinate, junior and inferior to the first priority lien and security
interest of NationsBank and the FIRC Agent in and to the Pledged Shares.
(4) The Banks, the Agent and the Pledgor have entered into that certain
Credit Agreement, dated as of July 18, 1997 (as hereafter amended, restated,
modified, extended or renewed from time to time, the "CREDIT AGREEMENT"). It is
a condition precedent to the effectiveness of the Credit Agreement that the
Pledgor shall have executed and delivered this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein and for other good and valuable consideration, the
adequacy, receipt and sufficiency of which are hereby acknowledged, and in order
to induce the Banks to make Advances under the Credit Agreement, the Pledgor
hereby agrees as follows:
-1-
SECTION 1. DEFINED TERMS AND RELATED MATTERS.
(a) The capitalized terms used herein which are defined in the
Credit Agreement and not otherwise defined herein shall have the meanings
specified therein.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement.
(c) Unless otherwise defined herein or in the Credit Agreement, the
terms defined in Articles 8 and 9 of the Uniform Commercial Code as
enacted in the State of Texas (the "UCC") are used herein as therein
defined.
SECTION 2. PLEDGE. The Pledgor hereby pledges and delivers to the Secured
Party, for the ratable benefit of the Banks, and hereby grants to the Secured
Party, for the ratable benefit of the Banks, a security interest in, the
property described in subsections (a) and (b) of this Section 2 (the "PLEDGED
COLLATERAL"):
(a) the Pledged Shares and the certificates representing the Pledged
Shares, and all dividends, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares; and
(b) all additional shares of stock of any issuers of the Pledged
Shares from time to time acquired by the Pledgor in any manner, and the
certificates representing such additional shares, and all dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
shares.
The inclusion of proceeds in this Agreement does not authorize the Pledgor
to sell, dispose of or otherwise use the Pledged Collateral in any manner not
specifically authorized hereby.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures the prompt and
complete (a) payment of all obligations of the Pledgor to the Agent and to any
or each Bank now or hereafter existing under the Credit Agreement, the Notes and
the other Loan Documents, as any of the same may be hereafter amended, restated,
modified, extended or renewed from time to time, with or without notice to the
Pledgor, (b) payment by Pledgor of all of its obligations under this Agreement,
(c) performance of all covenants and conditions by the Pledgor, FIRC, FIARC,
FIFSG or any other Person contained in any Loan Document to which it is a party
(including, without limitation, the covenants and conditions contained herein),
whether for principal, interest, fees, expenses or otherwise (all such
obligations, covenants and conditions described in the foregoing clauses (a),
(b) and (c) being hereinafter collectively referred to as the "OBLIGATIONS").
-2-
SECTION 4. BAILEE OF PLEDGED COLLATERAL; DELIVERY OF PLEDGED COLLATERAL.
(a) Pursuant to Section 9.305 of the UCC, the Pledgor will promptly
deliver to NationsBank and the FIRC Agent written notice, in the form
attached hereto as EXHIBIT A, of the Secured Party's interest in and to
the Pledged Shares and request that each of NationsBank and the FIRC Agent
act as bailee for the Secured Party with respect to the Pledged Shares,
and in such capacity, to hold the Pledged Shares to perfect the second
priority lien and security interest of the Secured Party in and to the
Pledged Shares.
(b) Except as provided in subsection (a) above, all certificates or
instruments representing or evidencing the Pledged Collateral have been
delivered to and held by or on behalf of the Secured Party pursuant hereto
in suitable form for transfer by delivery, or accompanied by duly executed
instruments of transfer or assignment, in blank, all in form and substance
satisfactory to the Secured Party. The Secured Party shall have the right
at any time to exchange certificates or instruments representing or
evidencing the Pledged Collateral in its possession for certificates or
instruments of smaller or larger denominations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Pledgor is a corporation duly organized, legally existing
and in good standing under the laws of the jurisdiction in which it is
incorporated and is duly qualified or licensed as a foreign corporation in
all jurisdictions where the Property owned or the business transacted by
it makes such qualification necessary and where the failure to be so
qualified would have a material adverse effect on (i) the financial
condition, business, properties or operations of the Pledgor or (ii) the
ability of the Pledgor to perform its obligations under this Agreement or
under any other Loan Document to which it is a party on a timely basis or
which would otherwise impair the ability of Pledgor to perform its
obligations under this Agreement.
(b) This Agreement constitutes the legal, valid and binding
obligation of the Pledgor enforceable against the Pledgor in accordance
with and subject to the terms and conditions contained therein, except as
enforcement may be (i) limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and (ii) subject to the general effect of
general principles of equity.
(c) Neither the execution and delivery of this Agreement nor the
performance by the Pledgor of its obligations hereunder will conflict
with, result in or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon the property of the
Pledgor (other than pursuant to this Agreement), nor violate any law,
rule, regulation or any judgment, order, writ, injunction or decree of any
court, administrative agency or other governmental authority, or any
agreement or other instrument known to the Pledgor or to which the Pledgor
is a party or by which its property is bound. It is not
-3-
necessary for the Pledgor to obtain approval from any court to enter into
this Agreement or to execute, deliver and perform the obligations created
hereunder.
(d) The Pledgor has received, or will receive, direct or indirect
benefit from the making of this Agreement.
(e) There are no actions, suits or proceedings pending or, to the
knowledge of the Pledgor, threatened against or affecting the Pledgor
which, if adversely determined, would have a material adverse effect on
(i) the financial condition, business, properties or operations of Pledgor
or (ii) the ability of Pledgor to perform its obligations under this
Agreement or under the other Loan Documents to which it is a party on a
timely basis or which would otherwise impair the ability of Pledgor to
perform its obligations under this Agreement.
(f) The Pledgor is not in default in any manner in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in any material agreement to which the Pledgor is a
party, the non-performance, non-observance or non-fulfillment of which
would have a material adverse effect on (i) the financial condition,
business, properties or operations of Pledgor or (ii) the ability of
Pledgor to perform its obligations under this Agreement or under the other
Loan Documents to which it is a party on a timely basis or which would
otherwise impair the ability of Pledgor to perform its obligations under
this Agreement.
(g) The Pledgor is not in violation of any Governmental Requirement
which violation (in the event such violation was asserted by any Person)
would have a material adverse effect on (i) the financial condition,
business, properties or operations of Pledgor or (ii) the ability of
Pledgor to perform its obligations under this Agreement or under the other
Loan Documents to which it is a party on a timely basis or which would
otherwise impair the ability of Pledgor to perform its obligations under
this Agreement.
(h) The Pledged Shares have been duly authorized and validly issued
and are fully paid and nonassessable under the laws of the jurisdiction of
incorporation of each issuer thereof.
(i) The Pledgor is the legal owner of the Pledged Collateral
referred to in subsection (a) of Section 2 hereof and holds such Pledged
Collateral free and clear of any Lien, other than Permitted Liens, and the
Pledgor has not sold, granted any option with respect to, assigned,
transferred or otherwise disposed of any of its respective rights or
interests in or to the Pledged Collateral.
(j) This Agreement and the delivery of the Pledged Collateral to the
Secured Party create a valid second priority Lien in the Pledged
Collateral securing the payment of the Obligations.
-4-
(k) No authorization, approval or other action by, and no notice to
or filing with, any Governmental Authority which has not been received is
required for (i) the pledge by the Pledgor of the Pledged Collateral
pursuant to this Agreement; (ii) the execution, delivery or performance of
this Agreement by the Pledgor; or (iii) the exercise by the Secured Party
of the voting or other rights provided for in this Agreement or the
remedies in respect of the Pledged Collateral pursuant to this Agreement
(except as may be required in connection with such disposition by laws
affecting the offering and sale of securities generally).
(l) The Pledged Shares constitute 100% of the issued and outstanding
shares of stock of each issuer thereof.
SECTION 6. FURTHER ASSURANCES. The Pledgor agrees that at any time and
from time to time, at the expense of the Pledgor, the Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action that may be reasonably required, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Secured Party to exercise and enforce the Banks' rights and remedies hereunder
with respect to any of the Pledged Collateral, and, subject to the first
priority security interests of NationsBank and the FIRC Agent in and to the
Pledged Shares, for the Secured Party to have "control" of the Pledged
Collateral as provided in Section 8.106 of the UCC and to be a "protected
purchaser" as provided in Section 8.303 of the UCC, including, without
limitation, to deliver the Pledged Collateral within the meaning of Section
8.301 of the UCC.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no Default or
Event of Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise any and all
voting and other consensual rights (including, without limitation,
the right to give consents, waivers and notifications in respect of
the Pledged Collateral) pertaining to the Pledged Collateral or any
part thereof; PROVIDED, HOWEVER, that no vote shall be cast or
consent, waiver or ratification given or action taken which would be
inconsistent with or violate any provision of this Agreement or any
other Loan Document; and PROVIDED FURTHER that the Pledgor shall
give the Secured Party at least ten (10) days' written notice of the
manner in which it intends to exercise, or the reasons for
refraining from exercising, any voting or other consensual rights
pertaining to the Pledged Collateral or any part thereof, which
might have a material adverse effect on the value of the Pledged
Collateral or any part thereof; and
(ii) The Pledgor shall be entitled to receive and retain any
and all dividends and interest paid in respect of the Pledged
Collateral to the extent permitted by the Credit Agreement;
PROVIDED, HOWEVER, that any and all
(A) dividends and interest paid or payable other than in
cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange
for, any Pledged Collateral,
-5-
(B) dividends and other distributions hereafter paid or
payable in cash in respect of any Pledged Collateral in connection
with a partial or total liquidation or dissolution, and
(C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral,
shall be, and shall be forthwith delivered to the Secured Party to
hold as, Pledged Collateral and shall, if received by the Pledgor,
be received in trust for the benefit of the Secured Party, be
segregated from the other property or funds of the Pledgor and be
forthwith delivered to the Secured Party as Pledged Collateral in
the same form as so received (with any necessary indorsement).
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) The Secured Party may, after acceleration of the Notes
pursuant to Section 8.01 of the Credit Agreement, and without notice
to the Pledgor, transfer or register in the name of the Secured
Party or any of its nominees, for the equal and ratable benefit of
the Banks, any or all shares of the Pledged Collateral held by the
Secured Party hereunder, and the Secured Party or its nominee may
thereafter, after delivery of notice to the Pledgor, exercise any
and all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any shares of the
Pledged Collateral as if it were the absolute owner thereof,
including, without limitation, the right to exchange at its
discretion any and all of the Pledged Collateral upon the merger,
consolidation, reorganization, recapitalization or other
readjustment of any corporation issuing any of such shares or upon
the exercise by any such issuer or the Secured Party of any right,
privilege or option pertaining to any shares of the Pledged
Collateral, and in connection therewith, to deposit and deliver any
and all of the Pledged Collateral with any committee, depository,
transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to
account for property actually received by it, but the Secured Party
shall have no duty to exercise, and the Banks shall not have any
duty to request the exercise of, any of the aforesaid rights,
privileges or options, and neither the Secured Party nor any Banks
shall be responsible for any failure to do so or delay in so doing.
(ii) All rights of the Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to
exercise pursuant to Section 7(a)(i) and to receive the dividends
and interest payments which it would otherwise be authorized to
receive and retain pursuant to Section 7(a)(ii) shall cease, and all
such rights shall thereupon become vested in the Secured Party which
shall thereupon have the sole right to exercise such voting and
other consensual rights and to receive and hold as Pledged
Collateral such dividends and interest payments.
-6-
(iii) All dividends and interest payments which are received
by the Pledgor contrary to the provisions of Section 7(b)(ii) shall
be received in trust for the benefit of the Secured Party, shall be
segregated from other funds of the Pledgor, and shall be forthwith
paid over to the Secured Party as Pledged Collateral in the same
form as so received (with any necessary endorsement).
(iv) The Pledgor shall execute and deliver (or cause to be
executed and delivered to the Secured Party) all such proxies and
other instruments as the Secured Party may reasonably request for
the purpose of enabling the Secured Party to exercise the voting and
other rights which it is entitled to exercise pursuant to paragraph
(ii) above and to receive the dividends or interest payments which
it is entitled to receive and retain pursuant to paragraph (iii)
above.
SECTION 8. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES.
(a) The Pledgor shall not sell, exchange or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral or create
or permit to exist any Lien, other than Permitted Liens, upon or with
respect to any of the Pledged Collateral.
(b) The Pledgor agrees that it will (i) cause each issuer of the
Pledged Shares not to issue any stock or other securities in addition to
or in substitution for the Pledged Shares issued by such issuer, except to
the Pledgor, and (ii) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all additional shares of stock
or other securities of each issuer of the Pledged Shares.
SECTION 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby
irrevocably appoints the Secured Party as the Pledgor's attorney-in-fact,
effective upon and during the continuance of an Event of Default, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor,
the Secured Party, the Banks or otherwise, from time to time in the Secured
Party's discretion, to take any action and to execute any instrument which the
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
(a) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Pledged Collateral;
(b) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with subsection (a) above; and
(c) to file any claims or take any action or institute any
proceedings which the Secured Party may deem necessary or desirable for
the collection of any of the Pledged Collateral or otherwise to enforce
the rights of the Banks and the Secured Party with respect to any of the
Pledged Collateral.
-7-
SECTION 10. SECURED PARTY MAY PERFORM. If the Pledgor fails to perform any
agreement contained herein, the Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Secured Party
incurred in connection therewith shall be payable by the Pledgor under Section
15(b).
SECTION 11. POSSESSION; REASONABLE CARE. Subject to the first priority
security interests of NationsBank and the FIRC Agent in and to the Pledged
Shares, the Secured Party shall hold in its possession all Pledged Collateral
pledged, assigned or transferred hereunder and from time to time constituting a
portion of the Pledged Collateral, except as from time to time any documents or
instruments may be required for recordation or for the purpose of enforcing or
realizing upon any right or value thereby represented. Subject to the first
priority security interests of NationsBank and the FIRC Agent in and to the
Pledged Shares, the Secured Party may, from time to time, in its sole
discretion, appoint one or more agents (which in no case shall be the Pledgor or
an affiliate of the Pledgor) to hold physical custody, for the account of the
Secured Party, of any or all of the Pledged Collateral. The Secured Party shall
be deemed to have exercised reasonable care in the custody and preservation of
the Pledged Collateral in its possession if the Pledged Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property, it being understood that the Secured Party shall not have any
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not the Secured Party has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against any parties with respect to any Pledged Collateral.
SECTION 12. REMEDIES. Subject to the first priority security interests of
NationsBank and the FIRC Agent in and to the Pledged Shares, if any Event of
Default shall have occurred and be continuing and the Notes shall have been
accelerated pursuant to Section 8.01 of the Credit Agreement:
(a) The Secured Party may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party upon default under the UCC (whether or not the UCC applies to the
affected Pledged Collateral), or under the laws of any other applicable
jurisdiction, and the Secured Party 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 the Secured Party's offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as the Secured Party may
deem commercially reasonable. The Pledgor agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days' notice to
the Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Secured Party shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given. The
Secured Party 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.
-8-
(b) Any cash held by the Secured Party as Pledged Collateral and all
cash proceeds received by the Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the Pledged
Collateral may, in the discretion of the Secured Party, be held by the
Secured Party as collateral for, and then or at any time thereafter
applied in whole or in part by the Secured Party against, the Obligations
in such order as the Secured Party shall select. Any surplus of such cash
or cash proceeds and interest accrued thereon, if any, held by the Secured
Party and remaining after payment in full of all the Obligations shall be
paid over to the Pledgor or to whomsoever may be lawfully entitled to
receive such surplus; PROVIDED THAT the Secured Party shall have no
obligation to invest or otherwise pay interest on any amounts held by it
in connection with or pursuant to this Agreement.
(c) All rights and remedies of the Secured Party and the Banks
expressed herein are in addition to all other rights and remedies
possessed by the Secured Party and the Banks in the Loan Documents and any
other agreement or instrument relating to the Obligations.
SECTION 13. REGISTRATION RIGHTS, PRIVATE SALES, ETC. (a) If the Secured
Party shall determine to exercise its right to sell all or any of the Pledged
Collateral pursuant to Section 12, the Pledgor agrees that, upon request of the
Secured Party, the Pledgor will use its best efforts to cause the officers and
directors of each issuer of the Pledged Shares at its expense to cooperate fully
with the Secured Party in conformity with requirements imposed by law for the
availability of an exemption from registration under the Securities Act of 1933,
as amended from time to time (the "Securities Act") and in the Secured Party's
determination that such exemption is not reasonably available for such sale, the
Pledgor shall use its best efforts to:
(i) execute and deliver, and cause each issuer of the Pledged
Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents,
and to use its best efforts to do or cause to be done all such other
acts and things, as may be necessary or, in the opinion of the
Secured Party, advisable to register such Pledged Collateral under
the provisions of the Securities Act, or the securities laws of any
relevant jurisdiction outside the United States, and to use its best
efforts 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 to facilitate the
sale or other disposition of the Pledged Collateral, or that portion
thereof to be sold, and to make all amendments and supplements
thereto and to the related prospectuses which, in the opinion of the
Secured Party, are necessary or advisable, all in conformity with
the requirements of the Securities Act, and the rules and
regulations of the Securities Act, and the rules and regulations of
the Securities and Exchange Commission, applicable thereto or, where
relevant, the laws, rules and regulations of such other jurisdiction
applicable thereto;
(ii) use its best efforts to qualify the Pledged Collateral
under the state securities or "Blue Sky" laws, if applicable
thereto, and to obtain all necessary governmental approvals for the
sale of the Pledged Collateral, as requested by the Secured Party;
-9-
(iii) cause each issuer of the Pledged Shares to make
available to its security holders, as soon as practicable, an
earnings statement which will satisfy the provisions of Section
11(a) of the Securities Act; and
(iv) 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.
(b) The Pledgor recognizes that the Secured Party may be unable to
effect a public sale of any or all of the Pledged Collateral by reason of
certain prohibitions contained in the laws of any jurisdiction outside the
United States or in the Securities Act and applicable state securities
laws, but may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire such Pledged Collateral for their own account for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale may result in
prices and other terms less favorable to the seller than if such sale were
a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall, to the extent permitted by law, be deemed to have
been made in a commercially reasonable manner. Neither the Secured Party
nor the Banks shall be under any obligation to delay a sale of any of the
Pledged Collateral for the period of time necessary to permit the issuer
of such securities to register such securities under the laws of any
jurisdiction outside the United States, under the Securities Act or under
any applicable state securities laws, even if the issuer would agree to do
so.
(c) The Pledgor further agrees to do or cause to be done, to the
extent that the Pledgor may legally do so, all such other acts and things
as may be necessary to make such sales or resales of any portion or all of
the Pledged Collateral valid and binding and in compliance with any and
all applicable laws, regulations, orders, writs, injunctions, decrees or
awards of any and all courts, arbitrators or governmental
instrumentalities, domestic or foreign, having jurisdiction over any such
sale or sales, all at the Pledgor's expense. The Pledgor further agrees
that a breach of any of the covenants contained in this Section 13 will
cause irreparable injury to the Secured Party and the Banks and that the
Secured Party and the Banks have no adequate remedy at law in respect of
such breach and, as a consequence, agrees that each and every covenant
contained in this Section 13 shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees, to the fullest extent
permitted by law, not to assert as a defense against an action for
specific performance of such covenants that (i) the Pledgor's failure to
perform such covenants will not cause irreparable injury to the Secured
Party or the Banks, or (ii) the Secured Party or the Banks has an adequate
remedy at law in respect of such breach. The Pledgor further acknowledges
the impossibility of ascertaining the amount of damages which would be
suffered by the Secured Party and the Banks by reason of a breach of any
of the covenants contained in this Section 13 and, consequently, agrees
that, if the Pledgor shall breach any of such covenants and the Secured
Party shall sue for damages for such breach, the Pledgor shall pay to the
Secured Party, as liquidated damages and not as a penalty, an aggregate
amount equal to the
-10-
value of the Pledged Collateral on the date the Secured Party or the Banks
shall demand compliance with this Section 13.
(d) To the fullest extent permitted by applicable law, the Pledgor
agrees to indemnify, protect and save harmless the Secured Party, the
Banks and any controlling persons thereof within the meaning of the
Securities Act from and against any and all liabilities, suits, claims,
costs and expenses (including counsel fees and disbursements) arising
under the Securities Act, the Securities and Exchange Act of 1934, as
amended, or at common law, or pursuant to any other applicable law in
connection with the aforesaid registration, insofar as such liabilities,
suits, claims, costs and expenses arise out of, or are based upon, any
untrue statement or alleged untrue statement of a material fact contained
in the aforesaid registration statement, or the aforesaid registration
statement as amended or supplemented, or arises out of, or is based upon,
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading; PROVIDED, HOWEVER, that the Pledgor shall not be liable in any
such case to the extent that any such liabilities, suits, claims, costs
and expenses arise out of, or are based upon, any untrue statement or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
PROVIDED, FURTHER, that the Pledgor shall not be liable in any such case
to the extent that any such liabilities, suits, claims, costs and expenses
arise out of, or are based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in the aforesaid
registration statement, or the aforesaid registration statement as amended
or supplemented, in reliance upon and in conformity with written
information furnished to the Pledgor by the Secured Party or such Bank
specifically for inclusion therein. The foregoing indemnity agreement is
in addition to any liability that the Pledgor may otherwise have to the
Secured Party, any such Bank or any such controlling person.
SECTION 14. INDEMNITY, EXPENSES AND INTEREST.
(a) To the fullest extent permitted by law, the Pledgor agrees to
indemnify the Secured Party and the Banks, their employees, agents or
Affiliates from and against any and all claims, losses, costs, expenses,
damages and liabilities (including, without limitation, reasonable
attorneys' fees and costs) growing out of or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), and any
act or omission in connection therewith (including, without limitation,
any liabilities, claims, costs, expenses, losses or damages arising or
resulting, directly or indirectly from the negligence of the Secured Party
and the Banks, their employees, agents and Affiliates) (collectively, the
"Indemnified Liabilities"), to the extent that the Indemnified Liabilities
arise out of or by reason of claims made by Persons other than the Secured
Party or the Banks, except claims, losses, costs, expenses, damages or
liabilities resulting from the gross negligence or willful misconduct of
the Secured Party or any Bank. It is the intention of the parties that
this indemnification shall be unlimited, and that it shall include but not
be limited to, any and all direct, indirect, incidental, consequential and
punitive damages, including, without limitation, those arising or
resulting from the negligence of the Secured Party and the Banks, whether
such negligence be sole, joint or concurrent, active or passive.
-11-
(b) The Pledgor agrees upon demand to pay to the Secured Party the
amount of any and all expenses, including the fees and disbursements of
its counsel and of any experts and agents, which the Secured Party may
incur in connection with (i) the preparation, execution, delivery,
modification, amendment, filing, recording and direct administration of
this Agreement; (ii) the custody, preservation, use or operation of, or
the sale of, collection from, or other realization upon, any of the
Pledged Collateral; (iii) the exercise or enforcement of any of the rights
of the Secured Party hereunder; (iv) the failure by the Pledgor to perform
or observe any of the provisions hereof; and (v) costs and expenses
associated with due diligence, transportation, computer, duplication,
appraisals, audits, insurance and consultants incurred in connection with
or reasonably related to the transactions contemplated hereunder.
(c) The Pledgor agrees to pay interest on any expenses or other sums
due to the Secured Party hereunder that are not paid when due at a rate
per annum equal to the lesser of (i) the Highest Lawful Rate or (ii) two
percent (2%) above the Base Rate.
SECTION 15. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Pledgor herefrom shall in any
event be effective unless the same shall be in writing and signed by the Secured
Party and the Majority Banks, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 16. NOTICES. All directions, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at, or, if a telecopy number is provided, telecopied (with
transmission confirmed by telephone) to, or mailed by first class or registered
mail, postage prepaid, to (i) in the case of the Pledgor, 675 Bering, Suite 710,
Houston, Texas 77057, Attention: Chief Financial Officer, Telephone: (713)
977-2600, Telecopy: (713) 260-0028; (ii) in the case of the Secured Party, 700
Louisiana Street, Houston, Texas 77002, Attention: Vice President, Corporate
Finance Group, Telephone: (713) 247-6679, Telecopy: (713) 247-6360; and (iii) to
any Bank, at the address set forth under the heading "Domestic Lending Office"
on the signature pages of the Credit Agreement. Any such address or telephone or
telecopy number may be changed by the applicable Person by written notice to
each other Person referred to in clauses (i) through (iii).
SECTION 17. SECURITY INTEREST ABSOLUTE. All rights of the Secured Party
and the Banks, all obligations of the Pledgor hereunder and the security
interest hereunder shall, to the extent permitted by applicable law, be absolute
and unconditional, irrespective of:
(a) any lack of validity or enforceability of the Credit Agreement,
the Notes or any of the other Loan Documents;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations or any other amendment or
waiver of or any consent to any departure from the Credit Agreement, the
Notes or any of the other Loan Documents;
-12-
(c) any exchange, release or nonperfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Obligations; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor, FIRC, FIARC, FIFSG
or any other Person that is a party to any Loan Document in respect of the
Obligations.
SECTION 18. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES. This
Agreement and the delivery of the Pledged Collateral to the Secured Party shall
create a continuing security interest in the Pledged Collateral and shall (a)
remain in full force and effect until termination of the obligations of the
Banks to make the Advances under the Credit Agreement and payment in full
thereafter of the Obligations; (b) be binding upon the Pledgor, its legal
representatives, successors and assigns; and (c) inure to the benefit of the
Secured Party, the Banks and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), the Banks
may assign or otherwise transfer the Notes to any other Person in accordance
with the terms and provisions set forth in Section 10.07 of the Credit
Agreement, and such Person shall thereupon become vested with all the rights and
benefits in respect thereof granted to the Banks, herein or otherwise. Upon the
termination of the obligations of the Banks to make Advances and the payment in
full thereafter of the Obligations, the Pledgor shall be entitled to the return,
upon its request and at its expense, of such of the Pledged Collateral as shall
not have been sold or otherwise applied pursuant to the terms hereof.
SECTION 19. WAIVER OF MARSHALLING. All rights of marshalling of assets of
the Pledgor, including any such right with respect to the Pledged Collateral,
are hereby waived by the Pledgor.
SECTION 20. LIMITATION BY LAW. All rights, remedies and powers provided in
this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they will not render this Agreement invalid, unenforceable, in whole or in part,
or not entitled to be recorded, registered or filed under the provisions of any
applicable law.
SECTION 21. SEPARABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Should any clause, sentence, paragraph, subsection or
Section of this Agreement be judicially declared to be invalid, unenforceable or
void, such decision will not have the effect of invalidating or voiding the
remainder of this Agreement, and the parties hereto agree that the part or parts
of this Agreement so held to be invalid, unenforceable or void will be deemed to
have been stricken herefrom by the parties hereto, and the remainder will have
the same force and effectiveness as if such stricken part or parts had never
been included herein.
-13-
SECTION 22. CAPTIONS. The captions in this Agreement have been inserted
for convenience only and shall be given no substantive meaning or significance
whatever in construing the terms and provisions of this Agreement.
SECTION 23. NO WAIVER; REMEDIES. No failure on the part of the Secured
Party or any Bank to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 24. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 25. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(A) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS).
(B) THE PLEDGOR IRREVOCABLY AND UNCONDITIONALLY:
(I) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF,
TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE
OF TEXAS, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF TEXAS, AND APPELLATE COURTS FROM ANY THEREOF;
(II) WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT
SUCH PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT
TO
PLEAD OR CLAIM THE SAME;
(III) AGREES THAT SERVICE OF PROCESS IN ANY SUCH LEGAL ACTION
OR PROCEEDING MAY BE EFFECTED BY MAILING OF A COPY THEREOF (BY
REGISTERED OR CERTIFIED MAIL OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL POSTAGE PREPAID) TO THE PLEDGOR AT 675 BERING, SUITE 710,
HOUSTON, TEXAS 77057, OR AT SUCH OTHER ADDRESS OF WHICH THE SECURED
PARTY SHALL HAVE BEEN NOTIFIED IN WRITING PURSUANT TO SECTION 16.
-14-
(IV) NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN SHALL IN
ANY WAY AFFECT THE RIGHT OF THE SECURED PARTY OR ANY BANK OR THE
PLEDGOR TO BRING ANY ACTION ARISING OUT OF OR RELATING TO THE NOTES
OR THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COMPETENT COURT
ELSEWHERE HAVING JURISDICTION OVER THE PLEDGOR OR THE SECURED PARTY,
AS THE CASE MAY BE, OR ITS PROPERTY.
SECTION 26. WAIVER OF JURY TRIAL. EACH OF THE SECURED PARTY, THE PLEDGOR,
AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 27. NO INSOLVENCY PETITION AGAINST FIRC OR FIARC. The Pledgor
hereby covenants and agrees that, prior to the date which is one year and one
day after the payment in full of the obligations, it will not institute against,
or join any other person in instituting against, FIRC or FIARC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law. This Section
27 shall survive the termination of this agreement.
SECTION 28. FINAL AGREEMENT. THIS WRITTEN PLEDGE AND SECURITY AGREEMENT
AND THE OTHER LOAN DOCUMENTS EXECUTED BY THE PLEDGOR REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
-15-
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered,
effective as of the date first above written.
FIRST INVESTORS FINANCIAL SERVICES, INC.,
as Pledgor
By: BENNIE H. DUCK
Name: Bennie H. Duck
Title: Vice President Treasure
[Signature Page - Pledge and Security Agreement (FIRC and FIARC) - Page 1 of 1]
SCHEDULE I
PERCENTAGE OF
ISSUED AND
STOCK OUTSTANDING
CLASS OF CERTIFICATE NUMBER OF COMMON
STOCK ISSUER STOCK NO(S). PAR VALUE SHARES STOCK OF ISSUER
- --------------------------------------------------------------------------------------------
F.I.R.C., Inc. Common 1 $1.00 1,000 100%
First Investors Financial Common 1 $1.00 1,000 100%
Services, Inc.
SI-1
EXHIBIT A
FORM OF NOTICE LETTER
[LETTERHEAD OF NATIONSBANK]
July 18, 1997
NOTICE LETTER
NationsBank of Texas, N.A. (in its
individual capacity and as FIRC
Agent), as Bailee for the Agent
700 Louisiana
Houston, Texas 77002
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of July 18,
1997, by and among First Investors Financial Services, Inc., a Texas corporation
(the "BORROWER"), the financial institutions listed on the signature pages
thereof (each individually a "BANK" and collectively, the "BANKS"), and
NationsBank of Texas, N.A., agent for the Banks (in such capacity, the "AGENT")
(as the same may be amended, restated, extended, modified or renewed from time
to time, the "CREDIT AGREEMENT").
The Borrower has previously granted (i) a first priority lien and security
interest to NationsBank of Texas, N.A. (in its individual capacity,
"NATIONSBANK") in and to the outstanding capital stock of First Investors Auto
Receivables Corporation, a Delaware corporation (the "FIARC STOCK"), created by
and existing under the F.I.A.R.C. Pledge and Security Agreement, dated as of
October 22, 1996, between the Borrower and NationsBank and (ii) a first priority
lien and security interest to NationsBank of Texas, N.A., as agent for the
financial institutions that are or may become parties to the FIRC Agreement (as
defined in the Credit Agreement) (in such capacity, the "FIRC AGENT"), in and to
the outstanding capital stock of F.I.R.C., Inc., a Delaware corporation (the
"FIRC STOCK" and together with the FIARC Stock, the "PLEDGED SHARES"), created
by and existing under the Pledge and Security Agreement, dated as of October 16,
1992, as amended, between the Borrower and the FIRC Agent.
Pursuant to Section 9.305 of the Uniform Commercial Code of the State of
Texas, notice is hereby given to each of NationsBank and the FIRC Agent that, in
connection with the transactions contemplated by the Credit Agreement, the
Borrower has entered into that certain Pledge and Security Agreement (FIRC and
FIARC), dated as of July 18, 1997, with the Agent, pursuant to which
A-1
NationsBank of Texas, N.A. (in its
individual capacity and as FIRC
Agent), as Bailee for the Agent
Page 2
July 18, 1997
the Borrower has granted to the Agent a second priority lien and security
interest in and to the Pledged Shares.
The Borrower hereby requests that each of NationsBank and the FIRC Agent,
and each of NationsBank and the FIRC Agent hereby agrees, to act as bailee for
the Agent with respect to the Pledged Shares, and in such capacity, to hold the
Pledged Shares to perfect the second priority lien and security interest of the
Agent in and to the Pledged Shares.
Please indicate your acceptance and agreement to the matters contained in
this Notice Letter by executing an enclosed copy of this Notice Letter in the
space provided below and returning an original counterpart to the Agent.
NATIONSBANK OF TEXAS, N.A., as Agent
By:
Name:
Title:
FIRST INVESTORS FINANCIAL SERVICES,
INC., a Texas corporation
By:
Tommy A. Moore, Jr.
President
A-2
NationsBank of Texas, N.A. (in its
individual capacity and as FIRC
Agent), as Bailee for the Agent
Page 3
July 18, 1997
Acknowledged and accepted as of the date
first above written
NationsBank of Texas, N.A. (in its individual
capacity and as FIRC Agent), as Bailee for
the Agent
By:
Name:
Title:
A-3