1
EXHIBIT 10.4
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of May 14, 2001 (as amended,
modified or supplemented from time to time, this "AGREEMENT") between New Valley
Holdings, Inc., a corporation duly organized and validly existing under the laws
of the State of Delaware (the "NV HOLDINGS") and United States Trust Company of
New York, a New York banking corporation, as collateral agent (together with its
successors and assigns, the "COLLATERAL AGENT") on behalf of the holders (the
"HOLDERS") of the 10% Senior Secured Notes due March 31, 2006 (the "NOTES")
issued pursuant to that certain Note Purchase Agreement, dated as of May 14,
2001 (as amended, supplemented or modified from time to time, the "NOTE PURCHASE
AGREEMENT") between BGLS Inc., (the "COMPANY") and the Holders.
Section 1. DEFINITIONS. Terms defined in the Note Purchase
Agreement are used herein as defined therein. In addition, as used herein:
"ACCOUNT CONTROL AGREEMENT" means the Account Control Agreement, dated
as of the date hereof, substantially in the form of Exhibit B-2 to the Note
Purchase Agreement among the Company, the Collateral Agent and Bank of America,
N.A., as amended, modified and supplemented from time to time.
"ACCOUNTS" has the meaning ascribed thereto in Section 3(d) hereof.
"BROOKE HOLDING" means Brooke Group Holding, Inc. a Delaware
corporation, and any successor thereto.
"COLLATERAL" has the meaning ascribed thereto in Section 3 hereof.
"COMMERCIAL TORT CLAIM" means (i) prior to July 1, 2001, a claim of NV
Holdings arising in tort and (ii) on or after July 1, 2001, has the meaning
ascribed thereto in the Uniform Commercial Code.
"COPYRIGHT COLLATERAL" means all Copyrights, whether now owned or
hereafter acquired by NV Holdings.
"COPYRIGHTS" means all copyrights, copyright registrations and
applications for copyright registrations, including, without limitation, all
renewals, extensions, income, royalties, damages and payments now or hereafter
due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past or future infringements thereof, the
right to sue for past, present and future infringements thereof, and all rights
corresponding thereto throughout the world.
"DEPOSIT ACCOUNT" means any deposit account (as defined in the Uniform
Commercial Code).
"DOCUMENTS" has the meaning ascribed thereto in Section 3(k) hereof.
-1-
2
"ENVIRONMENTAL LAWS" means any and all present and future Federal,
state, local and foreign laws, rules or regulations, and any orders or decrees,
in each case as now or hereafter in effect, relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes into the indoor or outdoor
environment, including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or toxic or
hazardous substances or wastes.
"EQUIPMENT" has the meaning ascribed thereto in Section 3(i) hereof.
"EQUITY INTERESTS" means, with respect to any Person, any capital stock
of such Person and shares, interests, participations or other ownership
interests (however designated) of any Person and any rights (other than debt
securities convertible into corporate stock), warrants and options to purchase
any of the foregoing, including (without limitation) each class of common stock
and preferred stock of such Person if such Person is a corporation and each
general and limited partnership interest of such Person if such Person is a
partnership.
"FARM PRODUCTS" has the meaning ascribed thereto in the Uniform
Commercial Code.
"INITIAL PLEDGED NEW VALLEY SHARES" means all Equity Interests of New
Valley represented by the certificates identified in Annex 1 hereto.
"INSTRUMENTS" has the meaning ascribed thereto in Section 3(e) hereof.
"INTELLECTUAL PROPERTY" means, collectively, all Copyright Collateral,
all Patent Collateral and all Trademark Collateral.
"INVENTORY" has the meaning ascribed thereto in Section 3(g) hereof.
"ISSUERS" means, collectively, the respective corporations identified
in Annex 1 hereto under the caption "Issuer".
"MOTOR VEHICLES" means motor vehicles, tractors, trailers and other
like property whether or not the title thereto is governed by a certificate of
title or ownership.
"NEW VALLEY" means New Valley Corporation, a Delaware corporation, and
any successor thereto.
"NEW VALLEY COMMON STOCK" means common shares of New Valley, par value
$.01 per share.
"NEW VALLEY CONVERTIBLE SECURITIES" means any securities or rights that
are convertible into or exchangeable for Equity Interests of New Valley.
-2-
3
"NOTES" has the meaning ascribed thereto in the first paragraph hereof.
"NV HOLDINGS" means New Valley Holdings, Inc., a Delaware corporation,
and any successor thereto.
"PATENT COLLATERAL" means all Patents, whether now owned or hereafter
acquired by NV Holdings.
"PATENTS" means all patents and patent applications, including, without
limitation, the inventions and improvements described and claimed therein
together with the reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, all income, royalties, damages and payments now
or hereafter due and/or payable under and with respect thereto, including,
without limitation, damages and payments for past or future infringements
thereof, the right to sue for past, present and future infringements thereof,
and all rights corresponding thereto throughout the world.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLEDGED STOCK" has the meaning ascribed thereto in Section 3(a)
hereof.
"RESEARCH" means Vector Research Ltd., a Delaware corporation, and any
successor thereto.
"SECURED OBLIGATIONS" means, collectively, all obligations and
liabilities of any kind or nature, present or future, absolute or contingent, of
(i) the Company arising under the Note Documents, (ii) NV Holdings arising under
this Agreement or any other undertaking or agreement delivered by NV Holdings in
connection with any other Note Document, (iii) VTUSA arising under any
undertaking or agreement delivered by VTUSA in connection with any Note
Document, (iv) Brooke Overseas arising under any undertaking or agreement
delivered by Brooke Overseas in connection with any Note Document, (v) New
Valley arising under any undertaking or agreement delivered by New Valley in
connection with any Note Document, (vi) Brooke Holding arising under the Brooke
Holding Pledge Agreement or any other undertaking or agreement delivered by
Brooke Holding, (vii) Research arising under any undertaking, or agreement
delivered by Research in connection with any Note Document, (viii) Vector
arising under the Vector Pledge Agreement or any other undertaking or agreement
delivered by Vector in connection with any other Note Document or (ix) Liggett
arising under any undertaking or agreement delivered by Liggett in connection
with any Note Document.
"STOCK COLLATERAL" means, collectively, the Collateral described in
clauses (a) through (c) of Section 3 hereof and the proceeds of and to any such
property and, to the extent related to any such property or such proceeds, all
books, correspondence, credit files, records, invoices and other papers.
"TRADEMARK COLLATERAL" means all Trademarks, whether now owned or
hereafter acquired by NV Holdings. Notwithstanding the foregoing, the Trademark
Collateral does not and shall not include any Trademark that would be rendered
-3-
4
invalid, abandoned, void or unenforceable by reason of its being included as
part of the Trademark Collateral.
"TRADEMARKS" means all trade names, trademarks and service marks,
logos, trademark and service mark registrations, and applications for trademark
and service mark registrations, including, without limitation, all renewals of
trademark and service mark registrations, all rights corresponding thereto
throughout the world, the right to recover for all past, present and future
infringements thereof, all other rights of any kind whatsoever accruing
thereunder or pertaining thereto, together, in each case, with the product lines
and goodwill of the business connected with the use of, and symbolized by, each
such trade name, trademark and service mark.
"UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as in
effect from time to time in the State of New York.
"VECTOR" means Vector Group Ltd., a Delaware corporation, and any
successor thereto.
"VTUSA" means Vector Tobacco (USA) Ltd., a Delaware corporation, and
any successor thereto.
Section 2. REPRESENTATIONS AND WARRANTIES. NV Holdings
represents and warrants and covenants to the Collateral Agent for the benefit of
the Holders and the Collateral Agent that:
(a) NV Holdings is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation;
(b) NV Holdings has the corporate power and authority and the
legal right to execute and deliver, to perform its obligations under,
and to grant the security interest in the Collateral pursuant to, this
Agreement and has taken all necessary corporate action to authorize its
execution, delivery and performance of, and grant of the security
interest in the Collateral pursuant to, this Agreement;
(c) this Agreement constitutes a legal, valid and binding
obligation of NV Holdings, enforceable in accordance with its terms,
except as enforceability may be affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing;
(d) the execution, delivery and performance by NV Holdings of
this Agreement will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in
respect of any property of NV Holdings under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate
charter or by-laws, or any other agreement or instrument to which NV
-4-
5
Holdings is bound or by which NV Holdings or any of its properties is
bound or affected, (ii) conflict with or result in a breach of any of
the terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or Governmental or Regulatory Authority
applicable to NV Holdings or (iii) violate any provision of any statute
or other rule or regulation of any Governmental or Regulatory Authority
applicable to NV Holdings;
(e) no consent, approval or authorization of, or registration,
filing (other than the filing of any financing statements contemplated
in any Note Document) or declaration with, any Governmental or
Regulatory Authority is required in connection with the execution,
delivery or performance by NV Holdings of this Agreement;
(f) no litigation, investigation or proceeding of or before
any arbitrator or Governmental or Regulatory Authority is pending or,
to the knowledge of NV Holdings, threatened by or against NV Holdings
against any of its properties or revenues with respect to this
Agreement or any of the transactions contemplated hereby;
(g) except for the Security Interest, NV Holdings is the sole
legal and equitable owner of the Collateral, holds the same free and
clear of all Liens, charges, encumbrances and security interests of any
kind and nature and will make no other assignment, pledge, mortgage,
hypothecation, transfer or other disposition of the Collateral, other
than the sale or application of the Collateral in compliance with the
provisions of Sections 8.24 and 13.8 of the Note Purchase Agreement;
(h) NV Holdings has good, right and legal title to the
Collateral and will defend its title thereto against the claims of all
Persons whomsoever and will maintain and preserve the Security Interest
as long as this Agreement shall remain in full force and effect;
(i) no financing statement or other public notice with respect
to all or any part of the Collateral is on file or of record in any
public office, except as have been filed by the Collateral Agent
pursuant to this Agreement or as are permitted by the Note Purchase
Agreement;
(j) except for the filing of UCC-1 financing statements, no
consent or approval of, or other action by, and no notice to or filing
with, any Governmental or Regulatory Authority or securities exchange,
was or is necessary as a condition (i) to the validity of the pledge
provided for herein or for the execution, delivery or performance of
this Agreement by NV Holdings or (ii) other than filings with (A) the
United States Patent and Trademark Office in connection with the
assignment of the Patents, Trademarks and Copyrights or (B) the
-5-
6
Securities Act, and regulations thereunder and any applicable blue sky
laws, for the exercise by the Collateral Agent of the voting or other
rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement;
(k) as of the date hereof: (i) there are 22,813,063 shares of
New Valley Common Stock issued and outstanding and such shares are the
only issued and outstanding Equity Interests of New Valley and (ii)
there are no issued and outstanding New Valley Convertible Securities,
and New Valley is not subject to any obligation, contingent or
otherwise, to issue in the future any additional Equity Interests or
any such New Valley Convertible Securities except:
(1) warrants exercisable for 17,867,566 shares of New
Valley Common Stock; and
(2) options to purchase 1,271,088 shares of New
Valley Common Stock and options to purchase warrants
exercisable for 584,000 shares of New Valley Common Stock.
(l) the Initial Pledged New Valley Shares are duly authorized,
validly issued, fully paid and nonassessable;
(m) except for the Note Documents, NV Holdings is not now and
will not become a party to any voting trust or other agreement or undertaking
with respect to the exercise of the voting or consent rights associated with any
of the Stock Collateral (other than an agreement or undertaking in respect of a
sale of the Stock Collateral, which sale is or will be in compliance with the
provisions of Section 13.8 of the Note Purchase Agreement), and there are no
other restrictions on the exercise of such rights;
(n) except for the Note Documents, NV Holdings is not now and
will not become a party to any agreement or undertaking pursuant to which any
Issuer or any other Person could have the right to purchase any of the Stock
Collateral (other than an agreement or undertaking in respect of a sale of the
Stock Collateral, which sale is or will be in compliance with the provisions of
Section 13.8 of the Note Purchase Agreement), and at the time of delivery of any
Stock Collateral to the Collateral Agent there will not be (and NV Holdings will
not thereafter permit to exist) any other restrictions on the transfer of the
Stock Collateral;
(o) except for the Note Documents, NV Holdings has the right
to vote, pledge and grant a security interest in, or otherwise transfer, the
Collateral free of any liens (except as set forth in (g) above);
(p) the security interests granted pursuant to this Agreement
(i) upon completion of the filings and other actions specified on Annex 2
-6-
7
(which, in the case of all filings and other documents referred to on said
Annex, have been delivered to the Collateral Agent in duly executed form) will
constitute valid perfected security interests in all of the Collateral in favor
of the Collateral Agent enforceable in accordance with the terms hereof against
all creditors of NV Holdings and all Persons purporting to purchase any
Collateral from NV Holdings and (ii) are prior to all other Liens on the
Collateral in existence on the date hereof except for Liens permitted by the
Note Purchase Agreement which have priority over the Liens on the Collateral
held by the Collateral Agent by operation of law;
(q) the grant and perfection of the Security Interest in the
Stock Collateral for the benefit of the Collateral Agent and the Holders, in
accordance with the terms hereof, will not violate the registration requirements
of the Securities Act, any provisions of any other applicable federal, state or
foreign securities laws, or any applicable general corporation law or other
applicable law;
(r) each Issuer is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation
and has full power and authority to own or lease its properties and assets and
to carry on its business;
(s) the stock powers delivered to the Collateral Agent with
respect to the Pledged Stock have been, and at the time of the delivery of any
other stock powers to the Collateral Agent in connection with the pledge of any
additional Stock Collateral such stock powers will be, duly executed;
(t) the pledge of the Initial Pledged Shares pursuant to this
Agreement, together with the transfer of such Initial Pledged Shares to the
Collateral Agent, creates a valid and perfected first priority security interest
in the Stock Collateral, in favor of the Collateral Agent for the benefit of the
Collateral Agent and the Holders, securing the due and punctual payment and
performance in full of the Secured Obligations in accordance with the respective
terms thereof;
(u) NV Holdings is incorporated in the State of Delaware and
the location of its chief executive office or sole place of business on the date
hereof is specified on Annex 3;
(v) none of the Collateral consists of, or is the proceeds (as
defined in the Uniform Commercial Code) of, Farm Products;
(w) on the date hereof, the Inventory and the Equipment (other
than Motor Vehicles) are kept at the locations listed on Annex 3;
-7-
8
(x)
(i) Annex 4 lists all Intellectual Property owned by NV
Holdings in its own name on the date hereof;
(ii) On the date hereof, all material Intellectual Property is
valid, subsisting, unexpired and enforceable, has not been abandoned
and does not infringe the intellectual property rights of any other
Person;
(iii) Except as set forth in Annex 4, on the date hereof, none
of the Intellectual Property is the subject of any licensing or
franchise agreement pursuant to which NV Holdings is the licensor or
franchisor;
(iv) No holding, decision or judgment has been rendered by any
Governmental or Regulatory Authority which would limit, cancel or
question the validity of, or NV Holdings' rights in, any Intellectual
Property in any respect; and
(v) No action or proceeding is pending or, to the knowledge of
NV Holdings threatened, or the date hereof seeking to limit, cancel or
question the validity of any Intellectual Property or NV Holdings'
ownership interest therein;
(y) subject to Section 4.01(b), all Instruments owned by NV
Holdings are listed on Annex 5 and have been delivered to the Collateral Agent;
(z) each Instrument which is a promissory note issued to and
held by NV Holdings (including any promissory note evidencing loans made by NV
Holdings to any of its Affiliates or Associates, any Vector Expanded Affiliate
or any Group Executive) constitutes the legal, valid and binding obligation of
the obligor with respect thereto, enforceable in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing;
(aa) any instruments of assignment and transfer delivered
pursuant to Section 4.01(b) have been, or will be, duly executed;
(bb) all Deposit Accounts of NV Holdings are listed on Annex
6;
(cc) NV Holdings has no Commercial Tort Claims; and
-8-
9
(dd) NV Holdings shall not sell, assign, transfer or otherwise
dispose of, or pledge, hypothecate or otherwise encumber, any of its Equity
Interests in New Valley which are pledged pursuant to the this Agreement, unless
any such sale, assignment, transfer or disposition is in compliance with the
provisions of Section 10.1 and Section 13.8 of the Note Purchase Agreement.
Section 3. COLLATERAL. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) and performance of the Secured Obligations, NV Holdings hereby
pledges and grants to the Collateral Agent for the benefit of the Holders and
the Collateral Agent a security interest in all of NV Holdings' right, title and
interest in the following property, whether now owned by NV Holdings or
hereafter acquired and whether now existing or hereafter coming into existence
(all being collectively referred to herein as "COLLATERAL"):
(a) the shares of capital stock and other Equity Interests of
the Issuers represented by the certificates identified in Annex 1
hereto and all Equity Interests of any other Person, now or hereafter
owned by NV Holdings, in each case together with the certificates
evidencing the same (collectively, the "PLEDGED STOCK");
(b) all shares, securities, moneys or property representing a
dividend on any of the Pledged Stock, or representing a distribution or
return of capital upon or in respect of the Pledged Stock, or resulting
from a split-up, revision, reclassification or other like change of the
Pledged Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or
otherwise in respect of, the Pledged Stock;
(c) without affecting the obligations of NV Holdings under any
provision prohibiting such action hereunder or under the Note Purchase
Agreement, in the event of any consolidation or merger in which an
Issuer or other Subsidiary of NV Holdings is not the surviving
corporation, all shares of each class of the capital stock and all
other Equity Interests of the successor corporation (unless such
successor corporation is NV Holdings itself) formed by or resulting
from such consolidation or merger (the Pledged Stock, together with all
other certificates, shares, securities, properties or moneys as may
from time to time be pledged hereunder pursuant to clause (a) or (b)
above and this clause (c) being herein collectively called the "STOCK
COLLATERAL");
(d) all accounts and general intangibles (each as defined in
the Uniform Commercial Code) of NV Holdings constituting any right to
the payment of money, including (but not limited to) all moneys due and
to become due to NV Holdings in respect of any loans or advances or for
Inventory or Equipment or other goods sold or leased or for services
-9-
10
rendered, all moneys due and to become due to NV Holdings under any
guarantee (including a letter of credit) of the purchase price of
Inventory or Equipment sold by NV Holdings and all tax refunds (such
accounts, general intangibles and moneys due and to become due being
herein called collectively "ACCOUNTS");
(e) all instruments, chattel paper or letters of credit (each
as defined in the Uniform Commercial Code) of NV Holdings evidencing,
representing, arising from or existing in respect of, relating to,
securing or otherwise supporting the payment of, any of the Accounts,
including (but not limited to) promissory notes, drafts, bills of
exchange and trade acceptances (herein collectively called
"INSTRUMENTS");
(f) all Deposit Accounts of NV Holdings;
(g) all inventory (as defined in the Uniform Commercial Code)
of NV Holdings, all goods obtained by NV Holdings in exchange for such
inventory, and any products made or processed from such inventory
including all substances, if any, commingled therewith or added thereto
(herein collectively called "INVENTORY");
(h) all Intellectual Property and all other accounts or
general intangibles not constituting Intellectual Property or Accounts;
(i) all equipment (as defined in the Uniform Commercial Code)
of NV Holdings, including all Motor Vehicles (herein collectively
called "EQUIPMENT");
(j) each contract and other agreement of NV Holdings relating
to the sale or other disposition of Inventory or Equipment;
(k) all documents of title (as defined in the Uniform
Commercial Code) or other receipts of NV Holdings covering, evidencing
or representing Inventory or Equipment (herein collectively called
"DOCUMENTS");
(l) all rights, claims and benefits of NV Holdings against any
Person arising out of, relating to or in connection with Inventory or
Equipment purchased by NV Holdings, including, without limitation, any
such rights, claims or benefits against any Person storing or
transporting such Inventory or Equipment;
(m) all Commercial Tort Claims of NV Holdings;
(n) all securities accounts (as defined in Article 8 of the
Uniform Commercial Code) and the financial assets (as defined in
Article 8 of the Uniform Commercial Code) credited from time to time
thereto; and
-10-
11
(o) all other tangible and intangible personal property and
fixtures of NV Holdings, including, without limitation, all proceeds,
products, offspring, accessions, rents, profits, income, benefits,
substitutions and replacements of and to any of the property of NV
Holdings described in the preceding clauses of this Section 3
(including, without limitation, any proceeds of insurance thereon and
all causes of action, claims and warranties now or hereafter held by NV
Holdings in respect of any of the items listed above) and, to the
extent related to any property described in said clauses or such
proceeds, products and accessions, all books, correspondence, credit
files, records, invoices and other papers, including without limitation
all tapes, cards, computer runs and other papers and documents in the
possession or under the control of NV Holdings or any computer bureau
or service company from time to time acting for NV Holdings.
Section 4. FURTHER ASSURANCES; REMEDIES. In furtherance of the
grant of the pledge and security interest pursuant to Section 3 hereof, NV
Holdings hereby agrees with the Collateral Agent as follows:
4.01. DELIVERY AND OTHER PERFECTION. NV Holdings shall:
(a) if any of the shares, securities, moneys or property
required to be pledged by NV Holdings under clauses (a), (b) and (c) of
Section 3 hereof are received by NV Holdings, hold such Property in
trust and forthwith either (x) transfer and deliver to the Collateral
Agent such shares or securities so received by NV Holdings (together
with the certificates for any such shares and securities duly endorsed
in blank or accompanied by undated stock powers duly executed in blank,
all in form and substance reasonably satisfactory to the Collateral
Agent), all of which thereafter shall be held by the Collateral Agent
(except in the case of cash dividends which shall be transferred to the
Company and held in a Company Account in accordance with the Note
Purchase Agreement), pursuant to the terms of this Agreement, as part
of the Collateral or (y) take such other action as may be necessary or
appropriate or as the Collateral Agent may reasonably request to duly
record the Lien created hereunder in such shares, securities, moneys or
property in said clauses (a), (b) and (c);
(b) deliver and pledge to the Collateral Agent any and all
Instruments pledged hereunder, endorsed and/or accompanied by such
instruments of assignment and transfer in such form and substance as
may be required to perfect the pledge thereof hereunder or as the
Collateral Agent may reasonably request; PROVIDED, that so long as no
Default shall have occurred and be continuing, NV Holdings may retain
for collection in the ordinary course any Instruments received by NV
Holdings in the ordinary course of business and the Collateral Agent
-11-
12
shall, promptly upon request of NV Holdings, make appropriate
arrangements for making any Instrument pledged by NV Holdings hereunder
available to NV Holdings for purposes of presentation, collection or
renewal (any such arrangement to be effected, to the extent deemed
appropriate by the Collateral Agent, against trust receipt or like
document);
(c) give, execute, deliver, file and/or record any financing
statement, continuation statement, notice, instrument, document,
agreement or other papers that may be necessary or desirable or that
the Collateral Agent may reasonably request to create, preserve,
perfect or validate the security interest granted pursuant hereto or to
enable the Collateral Agent to exercise and enforce its rights
hereunder with respect to such pledge and security interest, including,
without limitation, causing any or all of the Stock Collateral to be
transferred of record into the name of the Collateral Agent or its
nominee (and the Collateral Agent agrees that if any Stock Collateral
is transferred into its name or the name of its nominee, the Collateral
Agent will thereafter promptly give to NV Holdings copies of any
notices and communications received by it with respect to the Stock
Collateral), PROVIDED that notices to account debtors in respect of any
Accounts or Instruments shall be subject to the provisions of clause
(g) below;
(d) upon the acquisition after the date hereof by NV Holdings
of any Equipment covered by a certificate of title or ownership, cause
the Collateral Agent to be listed as the lienholder on such certificate
of title and within 120 days of the acquisition thereof deliver
evidence of the same to the Collateral Agent;
(e) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as may be necessary to reflect the security interests granted by
this Agreement;
(f) permit representatives of the Collateral Agent, upon
reasonable notice, at any time during normal business hours to inspect
and make abstracts from its books and records pertaining to the
Collateral, and permit representatives of the Collateral Agent to be
present at NV Holdings' place of business to receive copies of all
communications and remittances relating to the Collateral, and forward
copies of any notices or communications received by NV Holdings with
respect to the Collateral, all to the extent and in such manner as the
Collateral Agent may reasonably request; and
(g) upon the occurrence and during the continuance of any
Default, upon request of the Collateral Agent, promptly notify (and NV
Holdings hereby authorizes the Collateral Agent so to notify) each
account debtor in respect of any Accounts or Instruments that such
Collateral has been assigned to the Collateral Agent hereunder, and
-12-
13
that any payments due or to become due in respect of such Collateral
are to be made directly to the Securities Account.
4.02. OTHER FINANCING STATEMENTS AND LIENS. Without the prior
written consent of the Collateral Agent, NV Holdings shall not file or suffer to
be on file, or authorize or permit to be filed or to be on file, in any
jurisdiction, any financing statement or like instrument with respect to the
Collateral in which the Collateral Agent is not named as the sole secured party.
4.03. PRESERVATION OF RIGHTS. The Collateral Agent shall not
be required to take steps necessary to preserve any rights against third parties
to any of the Collateral.
4.04. SPECIAL PROVISIONS RELATING TO STOCK COLLATERAL.
(a) So long as no Event of Default shall have occurred and be
continuing, NV Holdings shall have the right to exercise all voting,
consensual and other powers of ownership pertaining to the Stock
Collateral for all purposes not inconsistent with the terms of this
Agreement, the Note Purchase Agreement, the Notes or any other
instrument or agreement referred to herein or therein, PROVIDED that NV
Holdings agrees that it will not vote the Stock Collateral in any
manner that is inconsistent with the terms of any Note Document or any
other related instrument or agreement; and the Collateral Agent shall
execute and deliver to NV Holdings or cause to be executed and
delivered to NV Holdings all such proxies, powers of attorney, dividend
and other orders, and all such instruments, without recourse, as NV
Holdings may reasonably request for the purpose of enabling NV Holdings
to exercise the rights and powers that it is entitled to exercise
pursuant to this Section 4.04(a).
(b) If any Account Notice Event shall have occurred, then so
long as such Account Notice Event shall continue, and whether or not
the Collateral Agent exercises any available right to declare any
Secured Obligation due and payable or seeks or pursues any other relief
or remedy available to it under applicable law or under this Agreement,
the Note Purchase Agreement, the Notes or any other agreement relating
to such Secured Obligation, to the extent not already delivered
pursuant to Section 4.01, all dividends and other distributions on the
Stock Collateral shall be paid directly to the Collateral Agent and
deposited by it into the Securities Account subject to the terms of
this Agreement, and, if the Collateral Agent shall so request in
writing, NV Holdings agrees to execute and deliver to the Collateral
Agent appropriate additional dividend, distribution and other orders
and documents to that end.
4.05. EVENTS OF DEFAULT, ETC. Subject to the last sentence of
this Section 4.05, during the period during which (i) with respect to moneys
contained in the NV Holdings Checking Account and all cash dividends and cash
proceeds of any of the Stock Collateral, an Account Notice Event shall have
-13-
14
occurred and be continuing and (ii) with respect to all other Collateral, an
Event of Default shall have occurred and be continuing:
(a) NV Holdings shall, at the request of the Collateral Agent,
assemble the Collateral owned by it at such place or places, reasonably
convenient to both the Collateral Agent and NV Holdings, designated in
its request;
(b) the Collateral Agent may make any reasonable compromise or
settlement deemed desirable with respect to any of the Collateral and
may extend the time of payment, arrange for payment in installments, or
otherwise modify the terms of, any of the Collateral;
(c) the Collateral Agent shall have all of the rights and
remedies with respect to the Collateral of a secured party under the
Uniform Commercial Code (whether or not the Uniform Commercial Code is
in effect in the jurisdiction where the rights and remedies are
asserted) and such additional rights and remedies to which a secured
party is entitled under the laws in effect in any jurisdiction where
any rights and remedies hereunder may be asserted, including, without
limitation, the right, to the maximum extent permitted by law, to
exercise all voting, consensual and other powers of ownership
pertaining to the Collateral as if the Collateral Agent were the sole
and absolute owner thereof (and NV Holdings agrees to take all such
action as may be appropriate to give effect to such right);
(d) the Collateral Agent in its discretion may, in its name or
in the name of NV Holdings or otherwise, demand, sue for, collect or
receive any money or property at any time payable or receivable on
account of or in exchange for any of the Collateral, but shall be under
no obligation to do so; and
(e) the Collateral Agent may, upon ten business days' prior
written notice to NV Holdings of the time and place, with respect to
the Collateral or any part thereof that shall then be or shall
thereafter come into the possession, custody or control of the
Collateral Agent or any of its agents, sell, lease, assign or otherwise
dispose of all or any part of such Collateral, at such place or places
as the Collateral Agent deems best, and for cash or for credit or for
future delivery (without thereby assuming any credit risk), at public
or private sale, without demand of performance or notice of intention
to effect any such disposition or of the time or place thereof (except
such notice as is required above or by applicable statute and cannot be
waived), and the Collateral Agent or anyone else may be the purchaser,
lessee, assignee or recipient of any or all of the Collateral so
disposed of at any public sale (or, to the extent permitted by law, at
any private sale) and thereafter hold the same absolutely, free from
any claim or right of whatsoever kind, including any right or equity of
redemption (statutory or otherwise), of NV Holdings, any such demand,
-14-
15
notice and right or equity being hereby expressly waived and released.
The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to
time by announcement at the time and place fixed for the sale, and such
sale may be made at any time or place to which the sale may be so
adjourned.
The proceeds of each collection, sale or other disposition under this Section
4.05 shall be applied in accordance with Section 4.13 hereof.
4.06. REGISTRATION RIGHTS.
(a) If the Collateral Agent shall determine to exercise its
right to sell any or all of the Stock Collateral, and if in the opinion
of the Collateral Agent it is necessary or advisable to have the Stock
Collateral, or that portion thereof to be sold, registered under the
provisions of the Securities Act, NV Holdings will cause the issuer
thereof to (i) execute and deliver, and cause the directors and
officers of such issuer to execute and deliver, all such instruments
and documents, and do or cause to be done all such other acts as may
be, in the opinion of the Collateral Agent, necessary or advisable to
register the Stock Collateral, or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) use its best efforts
to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the
date of the first public offering of the Stock Collateral, or that
portion thereof to be sold and (iii) make all amendments thereto and/or
to the related prospectus which, in the opinion of the Collateral
Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. NV Holdings
agrees to cause such issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which the
Collateral Agent shall designate and to make available to its security
holders, as soon as practicable, an earnings statement (which need not
be audited) which will satisfy the provisions of Section 11(a) of the
Securities Act.
(b) NV Holdings recognizes that the Collateral Agent may be
unable to effect a public sale of any or all the Stock Collateral, by
reason of certain prohibitions contained in the Securities Act and
applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of
purchasers which will be obliged to agree, among other things, to
acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. NV Holdings
acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale
and, notwithstanding such circumstances, agrees that any such private
sale shall be deemed to have been made in a commercially reasonable
manner. The Collateral Agent shall be under no obligation to delay a
-15-
16
sale of any of the Stock Collateral for the period of time necessary to
permit the issuer thereof to register such securities for public sale
under the Securities Act, or under applicable state securities laws,
even if such issuer would agree to do so.
(c) NV Holdings agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Stock Collateral pursuant to this
Section 4.06 valid and binding and in compliance with any and all other
applicable law. NV Holdings further agrees that a breach of any of the
covenants contained in this Section 4.06 will cause irreparable injury
to the Collateral Agent and the Holders, that the Collateral Agent and
the Holders have no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this
Section 4.06 shall be specifically enforceable against NV Holdings, and
NV Holdings hereby waives and agrees not to assert any defenses against
an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Note Purchase
Agreement.
4.07. DEFICIENCY. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Sections 4.05 or 4.06 hereof
are insufficient to cover the costs and expenses of such realization and the
payment in full of the Secured Obligations, NV Holdings shall remain liable for
any deficiency; PROVIDED, HOWEVER, that the maximum liability of NV Holdings
hereunder shall in no event exceed the amount of Secured Obligations which may
be guaranteed by NV Holdings under applicable laws relating to the insolvency of
debtors.
4.08. REMOVALS, ETC. Without at least 30 days' prior written
notice to the Collateral Agent, NV Holdings shall not (i) maintain any of its
books and records with respect to the Collateral at any office or maintain its
principal place of business at any place, or permit any Inventory or Equipment
to be located anywhere, other than at the address indicated beneath the
signature of NV Holdings to the Note Purchase Agreement or at one of the
locations identified in Annex 3 hereto or in transit from one of such locations
to another, (ii) change its name, or the name under which it does business,
identity or corporate structure to such an extent that any financing statement
filed in connection with this Agreement would become misleading and (iii) change
its jurisdiction of organization or the location of its chief executive office
or sole place of business from that identified in Annex 3.
-16-
17
4.09. MAINTENANCE OF INSURANCE.
(a) At any time NV Holdings holds Material amounts of
Inventory and Equipment, NV Holdings shall maintain, with financially
sound and reputable companies, insurance policies (i) insuring the
Inventory and Equipment (including Motor Vehicles) against loss by
fire, explosion, theft and such other casualties as may be reasonably
satisfactory to the Required Holders and (ii) insuring NV Holdings, the
Collateral Agent and the Holders against liability for personal injury
and property damage relating to such Inventory and Equipment (including
Motor Vehicles), such policies to be in such form and amounts and
having such coverage as may be reasonably satisfactory to the
Collateral Agent and the Required Holders.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof
shall be effective until at least 30 days after receipt by the
Collateral Agent of written notice thereof, (ii) name the Collateral
Agent as insured party or loss payee, (iii) if reasonably requested by
the Collateral Agent, include a breach of warranty clause and (iv) be
reasonably satisfactory in all other respects to the Collateral Agent.
(c) NV Holdings shall deliver to the Collateral Agent and the
Holders a report of a reputable insurance broker with respect to such
insurance substantially concurrently with each delivery of NV Holdings'
audited annual financial statements and such supplemental reports with
respect thereto as the Collateral Agent may from time to time
reasonably request.
4.10. PAYMENT OF OBLIGATIONS. NV Holdings shall pay and
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all taxes, assessments and governmental charges
or levies imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including, without limitation,
claims for labor, materials and supplies) against or with respect to the
Collateral, except that no such charge need be paid if the amount or validity
thereof is currently being contested in good faith by appropriate proceedings,
reserves in conformity with GAAP with respect thereto have been provided on the
books of NV Holdings and such proceedings could not reasonably be expected to
result in the sale, forfeiture or loss of any material portion of the Stock
Collateral or any interest therein. In its reasonable discretion, the Collateral
Agent may discharge taxes and other encumbrances at any time levied or placed on
any of the Collateral, make repairs thereto and pay any necessary filing fees.
NV Holdings agrees to reimburse the Collateral Agent on demand for any and all
expenditures so made. The Collateral Agent shall have no obligation to NV
Holdings to make any such expenditures, nor shall the making thereof relieve NV
Holdings of any default.
Notwithstanding anything to the contrary contained herein, NV Holdings
shall remain liable under each contract or agreement comprised in the Collateral
to be observed or performed by NV Holdings thereunder. The Collateral Agent
-17-
18
shall not have any obligation or liability under any such contract or agreement
by reason of or arising out of this Agreement or the receipt by the Collateral
Agent of any payment relating to any of the Collateral, nor shall the Collateral
Agent be obligated in any manner to perform any of the obligations of NV
Holdings under or pursuant to any such contract or agreement, to make inquiry as
to the nature or sufficiency of any payment received by the Collateral Agent in
respect of the Collateral or as to the sufficiency of any performance by any
party under any such contract or agreement, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to the Collateral Agent or to which the
Collateral Agent may be entitled at any time or times. The Collateral Agent's
sole duty with respect to the custody, safe keeping, and physical preservation
of the Collateral in its possession, under the Uniform Commercial Code of the
applicable jurisdiction or otherwise, shall be to deal with such Collateral in
the same manner as the Collateral Agent deals with similar property for its own
account.
4.11. NOTICES. NV Holdings shall advise the Collateral Agent
and the Holders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or
Liens permitted under the Note Purchase Agreement) on any of the
Collateral which would adversely affect the ability of the Collateral
Agent to exercise any of its remedies hereunder; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the
aggregate value of the Collateral or on the security interests created
hereby.
4.12. PRIVATE SALE. The Collateral Agent shall incur no
liability as a result of the sale of the Collateral, or any part thereof, at any
private sale pursuant to Section 4.05 or 4.06 hereof conducted in a commercially
reasonable manner. NV Holdings hereby waives any claims against the Collateral
Agent arising by reason of the fact that the price at which the Collateral may
have been sold at such a private sale was less than the price that might have
been obtained at a public sale or was less than the aggregate amount of the
Secured Obligations, even if the Collateral Agent accepts the first offer
received and does not offer the Collateral to more than one offeree.
4.13. APPLICATION OF PROCEEDS. Except as otherwise herein
expressly provided, the proceeds of any collection, sale or other realization of
all or any part of the Collateral pursuant hereto, and any other cash at the
time held by the Collateral Agent shall be applied by the Collateral Agent:
FIRST, to the payment of the costs and expenses of such
collection, sale or other realization, including reasonable
out-of-pocket costs and expenses of the Collateral Agent and the fees
and expenses of its agents and counsel and other professional advisors,
and all expenses incurred and advances made by the Collateral Agent in
connection therewith;
-18-
19
NEXT, to the payment in full of the Secured Obligations; and
FINALLY, to the payment to NV Holdings, or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining.
As used in this Section 4, "PROCEEDS" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of NV Holdings or any issuer of or obligor on
any of the Collateral.
4.14. ATTORNEY-IN-FACT. Without limiting any rights or powers
granted by this Agreement to the Collateral Agent while no Event of Default has
occurred and is continuing, upon the occurrence and during the continuance of
any Event of Default the Collateral Agent is hereby appointed the
attorney-in-fact of NV Holdings for the purpose of carrying out the provisions
of this Section 4 and taking any action and executing any instruments that the
Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, so long as the
Collateral Agent shall be entitled under this Section 4 to make collections in
respect of the Collateral, the Collateral Agent shall have the right and power
to receive, endorse and collect all checks made payable to the order of NV
Holdings representing any dividend, payment or other distribution in respect of
the Collateral or any part thereof and to give full discharge for the same.
4.15. TERMINATION. When all Secured Obligations shall have
been paid in full, this Agreement shall terminate, and the Collateral Agent
shall forthwith cause to be assigned, transferred and delivered, against receipt
but without any recourse, warranty or representation whatsoever, any remaining
Collateral and money received in respect thereof, to or on the order of NV
Holdings. The Collateral Agent shall also execute and deliver to NV Holdings
upon such termination such Uniform Commercial Code termination statements,
certificates for terminating the Liens on the Motor Vehicles and such other
documentation as shall be reasonably requested by NV Holdings to effect the
termination and release of the Liens on the Collateral.
4.16. FURTHER ASSURANCES. NV Holdings agrees that, from time
to time it will execute and deliver such further documents and do such other
acts and things as may be necessary or appropriate or as the Collateral Agent
may reasonably request in order fully to effect the purposes of this Agreement.
4.17. RELEASE OF MOTOR VEHICLES. So long as no Default shall
have occurred and be continuing, upon the request of NV Holdings, the Collateral
Agent shall execute and deliver to NV Holdings such instruments as NV Holdings
shall reasonably request to remove the notation of the Collateral Agent as
lienholder on any certificate of title for any Motor Vehicle; PROVIDED that any
such instruments shall be delivered, and the release effective only upon receipt
by the Collateral Agent of a certificate from NV Holdings stating that the Motor
-19-
20
Vehicle the lien on which is to be released is to be sold or has suffered a
casualty loss (with title thereto passing to the casualty insurance company
therefor in settlement of the claim for such loss).
4.18. RECEIPT OF CASH. Subject to Section 8.21(b) of the Note
Purchase Agreement, NV Holdings shall immediately dividend or otherwise transfer
all Cash or cash equivalents it receives to the Company.
4.19. SALE OF NEW VALLEY EQUITY INTERESTS. Other than in
accordance with the Note Purchase Agreement, NV Holdings shall not sell any
Equity Interests in New Valley.
4.20. CERTAIN COVENANTS.
(a) NV Holdings shall not incur any Indebtedness.
(b) The sole function of NV Holdings shall be to hold Equity
Interests in New Valley, and NV Holdings shall not sell any Equity
Interests in New Valley other than in accordance with the Note Purchase
Agreement and this Agreement. NV Holdings shall not conduct any
business activities other than to hold such Equity Interests, to make
such payments and to conduct those incidental and customary activities
required in order to oversee and manage its interests in New Valley.
(c) Except as contemplated in this Agreement, NV Holdings
shall not, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any of its assets, including
without limitation, the New Valley Assets, or any income or profits
therefrom including any dividends and distributions received thereon or
distributable with respect thereto, or interest therein.
(d) NV Holdings shall not make, directly or indirectly, any
Investments in cash or by delivery of Property (x) in any Person,
whether by the acquisition of Indebtedness or other obligation,
security, or Equity Interest, or by loan, advance, extension of credit,
or capital contribution, or otherwise, or (y) in any Property except
(i) purchases of Equity Interests in New Valley so long as such Equity
Interests shall be pledged hereunder, and (ii) Investments in
Publicly-held Companies to the extent received as a result of any
dividend in kind, distribution, spin off, split up, corporate
reorganization, or similar transaction with respect to New Valley in
which such Investment is received without the payment of further
consideration by NV Holdings so long as such Investment is pledged
hereunder.
(e) NV Holdings shall not (i) consolidate with or merge with
or into any other Person, (ii) transfer (by lease, assignment, sale or
otherwise) in a single transaction or through a series of transactions,
all or substantially all of its properties and assets, as an entirety
or substantially as an entirety, to another Person or group of Persons
or (iii) adopt a Plan of Liquidation.
-20-
21
4.21. WAIVER OF SURETYSHIP DEFENSES. To the extent this
Agreement is deemed a guarantee, the liability of NV Holdings hereunder shall be
absolute, unconditional and irrevocable irrespective of, and without being
lessened or limited by:
(a) the occurrence of any Event of Default under, or any lack
of validity, legality or enforceability of any provision of any Note
Document, or any other agreement or document;
(b) the failure of any Holder:
(i) to assert any claim or demand or to enforce any
right or remedy against the Company or any other Person
(including any other guarantor of the Secured Obligations)
under the provisions of any Note Document, or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor of or any other Person pledging collateral
securing any of the Secured Obligations;
(c) any change in the time, manner or place of payment of, or
in any term of, all or any of the Secured Obligations, or any other
extension, compromise, indulgence or renewal of any Secured Obligation;
(d) any reduction, limitation, variation, impairment,
discontinuance or termination of the Secured Obligations for any reason
(other than by reason of any payment which is not required to be
rescinded), including any claim of waiver, release, discharge,
surrender, alteration or compromise, and shall not be subject to (and
NV Holdings hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of
the invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, the
Secured Obligations or otherwise (other than by reason of any payment
which is not required to be rescinded);
(e) any amendment to, rescission, waiver or other modification
of, or any consent to any departure from, any of the terms of the
Secured Obligations or any guarantees or security;
(f) any addition, exchange, release, discharge, realization or
non-perfection of any collateral security in respect of the Secured
Obligations;
(g) any amendment to, rescission, waiver or other modification
of, or release or addition of, or consent to any departure from, any
other guarantee held by the Holders as security for any of the Secured
Obligations;
-21-
22
(h) the loss of or in respect of or the unenforceability of
any other guarantee or other security which the Holders may now or
hereafter hold in respect of the Secured Obligations, whether
occasioned by the fault of the Holders or otherwise;
(i) any change in the name of the Company or in the
constitutive documents, capital structure, capacity or constitution of
the Company, the bankruptcy or insolvency of the Company, the sale of
any or all of the Company's business or assets or the Company being
consolidated, merged or amalgamated with any other Person;
(j) any failure on the part of the Company or any other Person
to perform or comply with any term of the Note Purchase Agreement, the
Notes, any of the Secured Obligations or any other agreement or
document;
(k) any suit or other action brought by any beneficiaries or
creditors of, or by, the Company or any other Person for any reason
whatsoever, including without limitation any suit or action in any way
attacking or involving any issue, matter or thing in respect of any
Note Document, any of the Secured Obligations or any other agreement or
document;
(l) any lack or limitation of status or of power, incapacity
or disability of the Company or any trustee or agent thereof; or
(m) any other circumstance (other than final and indefeasible
payment in full) which might otherwise constitute a defense available
to, or a legal or equitable discharge of, the Company, Brooke Holding,
Vector, any other surety or guarantor.
4.22. RELEASE OF COLLATERAL. The security interest in any
Collateral shall automatically and without any action by the Collateral Agent or
the Holders be released upon any sale of such Collateral by NV Holdings pursuant
to the terms of the Note Purchase Agreement and this Agreement.
Section 5. MISCELLANEOUS.
5.01. NO WAIVER. No failure on the part of the Collateral
Agent to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Collateral Agent of any
right, power or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies herein are
cumulative and are not exclusive of any remedies provided by law.
5.02. NOTICES. All notices, requests, consents and demands
hereunder shall be in writing and telecopied or delivered to the intended
recipient at its "Address for Notices" specified pursuant to Section 19 of the
Note Purchase Agreement (or, in the case of NV Holdings, at the address
-22-
23
specified therein for the Company) and shall be deemed to have been given at the
times specified in said Section 19.
5.03. AMENDMENTS, ETC. The terms of this Agreement may be
waived, altered or amended only by an instrument in writing duly executed by NV
Holdings and the Collateral Agent in accordance with Section 18 of the Note
Purchase Agreement. Any such amendment or waiver shall be binding upon the
Collateral Agent, each holder of any of the Secured Obligations and NV Holdings.
5.04. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of NV
Holdings, the Collateral Agent and each holder of any of the Secured Obligations
(PROVIDED, however, that NV Holdings shall not assign or transfer its rights
hereunder without the prior written consent of the Collateral Agent).
5.05. CAPTIONS. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
5.06. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and either of the parties hereto may execute this Agreement by
signing any such counterpart. Delivery of an executed counterpart of a signature
page of this Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart of this Agreement.
5.07. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York excluding choice-of-law principles of the law
of such State that would require the application of the laws of a jurisdiction
other than such State.
5.08. AGENTS AND ATTORNEYS-IN-FACT. The Collateral Agent may
employ agents and attorneys-in-fact in connection herewith and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith.
5.09. SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Collateral Agent
in order to carry out the intentions of the parties hereto as nearly as may be
possible and (ii) the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
5.10. ENVIRONMENTAL INDEMNIFICATION OF COLLATERAL AGENT AND
HOLDERS. NV Holdings hereby agrees to indemnify the Collateral Agent and the
Holders from, and hold the Collateral Agent and the Holders harmless against,
any losses, liabilities, claims, damages or expenses arising under any
-23-
24
Environmental Law as a result of the past, present or future operations of NV
Holdings or any of its Subsidiaries following the exercise by the Collateral
Agent of any of its rights and remedies under this Agreement.
5.11. INTEGRATION. This Agreement and the other Note Documents
represent the agreement of NV Holdings, the Collateral Agent and the Holders
with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Collateral Agent or
any Holder relative to subject matter hereof and thereof not expressly set forth
or referred to herein or in the other Note Documents.
5.12. ACKNOWLEDGEMENTS. NV Holdings hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Note Documents
to which it is a party;
(b) neither the Collateral Agent nor any Holder has any
fiduciary relationship with or duty to NV Holdings arising out of or in
connection with this Agreement or any of the other Note Documents, and
the relationship between NV Holdings, on the one hand, and the
Collateral Agent and Holders, on the other hand, in connection herewith
or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Note
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Holders or among NV Holdings and the
Holders.
5.13. ADDITIONAL SUBSIDIARIES. NV Holdings shall cause each
new Subsidiary of NV Holdings to execute and deliver an acknowledgment and
undertaking substantially in the form of the acknowledgments and undertakings
attached hereto and to do such other acts and things as the Collateral Agent may
reasonably request in order fully to effect the purposes of this Agreement.
-24-
25
IN WITNESS WHEREOF, the parties hereto have caused this Pledge and
Security Agreement to be duly executed and delivered as of the day and year
first above written.
NEW VALLEY HOLDINGS, INC.
By: /s/ RICHARD J. LAMPEN
-------------------------------------
Name: Richard J. Lampen
Title: Executive Vice President
UNITED STATES TRUST COMPANY OF NEW YORK,
as Collateral Agent
By: /s/ PATRICIA GALLAGHER
-------------------------------------
Name: Patricia Gallagher
Title: Assistant Vice President
-25-
26
ACKNOWLEDGMENT AND UNDERTAKING
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, New Valley Corporation, a Delaware corporation
("NEW VALLEY") hereby acknowledges receipt of a copy of the foregoing Pledge and
Security Agreement dated as of May 14, 2001 and agrees as follows (with
capitalized terms used and not otherwise defined below that are defined in such
Pledge and Security Agreement having the meanings ascribed to such terms
therein):
1. New Valley will promptly note on its books the security interests
granted under such Pledge and Security Agreement in the applicable Pledged
Stock.
2. New Valley hereby waives any rights or requirement at any time
hereafter to receive a copy of such Pledge and Security Agreement in connection
with the registration of any Stock Collateral in the name of the Collateral
Agent or its nominee or the exercise of voting rights by the Collateral Agent.
3. New Valley agrees (a) to take all actions contemplated to be taken
by it under the Pledge and Security Agreement, (b) to comply with all provisions
thereof and (c) not to participate in any transaction that is inconsistent with
its obligations hereunder or thereunder.
The undersigned hereby represents and warrants that (a) the execution,
delivery and performance of this Acknowledgment and Undertaking has been duly
authorized by all necessary action on the part of the undersigned, (b) the
undersigned has duly executed and delivered this Acknowledgment and Undertaking
and (c) this Acknowledgment and Undertaking is its legal, valid and binding
obligation, enforceable against the undersigned in accordance with its terms.
This Acknowledgment and Undertaking shall be governed by, and construed in
accordance with, the law of the State of New York.
This Acknowledgment and Undertaking may not be terminated, revoked,
amended or otherwise modified without the prior written consent of the
Collateral Agent, which is an express third-party beneficiary hereof.
Dated: May 14, 2001
NEW VALLEY CORPORATION
By: /s/ RICHARD J. LAMPEN
-------------------------------
Name: Richard J. Lampen
Title: Executive Vice President
-26-
27
ANNEX 1
PLEDGED STOCK
ISSUER CERTIFICATE NOS. REGISTERED OWNER NUMBER OF SHARES
- ------ ---------------- ---------------- ----------------
New Valley Corporation NV 1709 New Valley Holdings, Inc. 396,996 shares of common
stock, par value $.01
per share.
New Valley Corporation NV 1711 New Valley Holdings, Inc. 12,366,520 shares of
common stock, par value
$.01 per share.
New Valley Corporation W 2095 New Valley Holdings, Inc. 1,190,988 warrants to
purchase shares of
Common Stock, par value
$.01 per share.
New Valley Corporation W 2097 New Valley Holdings, Inc. 618,326 warrants to
purchase shares of
Common Stock, par value
$.01 per share.
28
ANNEX 2
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
UNIFORM COMMERCIAL CODE FILINGS
Delaware Secretary of State
Florida Secretary of State
PATENT AND TRADEMARK FILINGS
None.
ACTIONS WITH RESPECT TO STOCK COLLATERAL
Delivery to Collateral Agents of certificates representing Pledged Stock in the
State of New York along with stock powers endorsed in blank.
OTHER ACTIONS
29
ANNEX 3
CHIEF EXECUTIVE OFFICE
LIST OF LOCATIONS
209 B Baynard Building
3411 Silverside Road
Wilmington, Delaware 19810
30
ANNEX 4
INTELLECTUAL PROPERTY
None.
31
ANNEX 5
INSTRUMENTS
None.
32
ANNEX 6
DEPOSIT ACCOUNTS
Account #01596321075 at Bank of America, N.A.