Exhibit 10.3
PLEDGE AND SECURITY
AGREEMENT
PLEDGE AND SECURITY AGREEMENT dated
as of August 17, 2004 made by Affiliated Managers Group, Inc.,
a Delaware corporation (the “ Pledgor ”), to
Bank of America, N.A., as agent (together with any successor agent,
the “ Agent ”) for the Lenders (as defined
below) (the Agent and the Lenders, collectively, the “
Secured Parties ”).
RECITALS
(1)
The Pledgor is entering into an
Amended and Restated Credit Agreement, dated as of August 16,
2004 (said Agreement, as amended, amended and restated,
supplemented or otherwise modified from time to time, the “
Credit Agreement ”), with the lenders from time to
time parties thereto (the “ Lenders ”) and Bank
of America, N.A., as administrative agent for the Lenders (in such
capacity, the “ Administrative Agent ”).
Pursuant to the Credit Agreement, the Lenders have agreed to make
loans and otherwise extend credit to the Pledgor. It is a
condition precedent to the Lenders making any loans or otherwise
extending credit to the Pledgor that the Pledgor execute and
deliver to the Agent this Agreement for the benefit of the Lenders
and the Administrative Agent.
(2)
The Pledgor seeks to remarket
certain of the 6% Senior Notes due November 17, 2004 (the
“ Senior Notes ”), including Senior Notes
originally issued as components of the Pledgor’s Prides,
CUSIP No. 008252504, (the “ Income PRIDES ”),
which remarketing will be on the terms and conditions described in
the Preliminary Remarketing Prospectus Supplement dated
August 9, 2004 (the “ Remarketing ”).
A portion of the net proceeds of the Remarketing will be used in
accordance with Section 6.3 of the Holders Pledge Agreement
(as defined below) to purchase (a) principal strips of U.S.
Treasury securities that mature on or prior to November 15,
2004 in an aggregate principal amount equal to the aggregate
principal amount of the Senior Notes components of the Income
PRIDES on the date of the Remarketing and (b) interest strips of
U.S. Treasury securities that mature on or prior to
November 15, 2004 in an aggregate amount equal to the
aggregate interest payment that would be due on the aggregate due
on the aggregate principal amount of the Senior Notes if the coupon
rate on the remarketed Senior Notes had not been reset pursuant to
the Remarketing (collectively, the “ Treasury
Portfolio ”).
(3)
Following consummation of the
Remarketing, the holders of Income PRIDES the Senior Notes of which
were the subject of the Remarketing will hold (a) Purchase
Contracts (as such term is defined the Purchase Contract Agreement,
dated as of December 21, 2001 (such agreement, as amended,
supplemented or otherwise modified in accordance with its terms
from time to time, the “ Purchase Contract Agreement
”), between the Pledgor and BONY (as successor purchase
contract agent pursuant to the Instrument of Resignation,
Appointment and Acceptance dated January 15, 2003 among the
Company, Wachovia Bank, National Association, and The Bank of New
York (the “ Instrument of Registration ”), as
purchase contract agent thereunder (BONY in such capacity, the
“ Purchase Contract Agent ”, and such Purchase
Contracts, the “ Income PRIDES Purchase Contracts
”)), and (b) an “Applicable Ownership Interest”
(as defined in the Purchase Contract Agreement) in the Treasury
Portfolio. Such
holders have pledged and granted a security
interest in their respective Applicable Ownership Interest and
related securities entitlements pursuant to the Pledge Agreement,
dated as of December 21, 2001 (as amended, supplemented or
otherwise modified in accordance with its terms from time to time,
the “ Holders Pledge Agreement ”), between the
Pledgor and BONY (as successor collateral agent, custodial agent,
securities intermediary and Purchase Contract Agent pursuant to the
Instrument of Resignation), as collateral agent, custodial agent,
securities intermediary and purchase contract agent thereunder,
which security interest secures, inter alia , the payment
and performance of such Income PRIDES Purchase
Contracts.
(4)
The Pledgor has security
entitlements (the “ Pledged Security Entitlements
”) with respect to financial assets (the “ Pledged
Financial Assets ”) consisting of the Treasury Portfolio
and all cash and other property paid or otherwise delivered in
respect thereof and credited from time to time to the account
maintained on behalf of the holders of Income PRIDES, account no.
197742, in the name “The Bank of New York, as Purchase
Contract Agent on behalf of the holders of Income PRIDES of
Affiliated Managers Group, Inc., Collateral Account subject to the
security interest of The Bank of New York, as Collateral Agent, for
the benefit of Affiliated Managers Group, Inc., as pledgee”
(such account, the “ Securities Account ”), with
BONY at its office at 101 Barclay Street, Fl. 8W, New York, New
York.
(5)
Unless otherwise defined in this
Agreement, terms defined in Article 8 or 9 of the Uniform
Commercial Code in effect in the State of New York (the “
UCC ”) and/or the Federal Book Entry Regulations (as
defined below) are used in this Agreement as such terms are defined
in such Article 8 or 9 and/or the Federal Book Entry
Regulations. The term “Federal Book Entry
Regulations” means (a) the federal regulations contained in
Subpart B (“Treasury/Reserve Automated Debt Entry System
(TRADES)”) governing book-entry securities consisting of U.S.
Treasury bonds, notes, bills and other securities (as defined
therein) and Subpart D (“Additional Provisions”) of 31
C.F.R Part 357, 31 C.F.R. §357.2, §357.10 through
§ 357.14 and §357.44 and (b) to the extent
substantially identical to the federal regulations referred to in
clause (a) above (as in effect from time to time), the federal
regulations governing other book-entry securities.
NOW, THEREFORE, in consideration of
the premises contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Grant of
Security . The Pledgor hereby assigns and pledges to the
Agent for the ratable benefit of the Secured Parties, and hereby
grants to the Agent for the ratable benefit of the Secured Parties
a security interest in, the Pledgor’s right, title and
interest in and to the following, in each case whether now owned or
hereafter acquired by the Pledgor and whether now or hereafter
existing or arising (collectively, the “ Collateral
”):
(a)
the Securities Account, the Pledged
Security Entitlements, the Pledged Financial Assets from time to
time credited to the Securities Account, and all interest, 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 Pledged Security Entitlements or such
Pledged Financial Assets;
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(b)
all accounts, payment intangibles
and other general intangibles of the Pledgor arising in respect of
the Income PRIDES Purchase Contracts;
(c)
the following rights and claims
under and with respect to each of the Purchase Contract Agreement
and the Holders Pledge Agreement (collectively, the “
Assigned Agreements ”): (i) all rights of the Pledgor
to receive moneys due and to become due under or pursuant to the
Assigned Agreements, (ii) all rights of the Pledgor to receive
proceeds of any indemnity, warranty or guaranty, (iii) all claims
of the Pledgor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of the
Pledgor to compel performance and otherwise exercise all remedies
under the Assigned Agreements, in the case of each of subclauses
(i) through (iv), solely with respect to the Collateral described
in the preceding clauses (a) and (b); and
(d)
all proceeds of any and all of the
Collateral (including, without limitation, proceeds that constitute
property of the types described in clauses (a) through (c) of this
Section 1 and this clause (d)) and, to the extent not
otherwise included, all (i) payments with respect to any of the
foregoing Collateral and (ii) cash received in respect of any of
the foregoing Collateral.
Notwithstanding anything to the contrary herein,
the security interest granted under this Section 1 is subject
to the terms of the Assigned Agreements.
Section 2. Security
for Obligations . This Agreement secures the payment and
performance of all Obligations (as defined below) now or hereafter
existing, whether direct or indirect, absolute or contingent, and
whether for principal, reimbursement obligations, interest, fees,
premiums, penalties, indemnifications, contract causes of action,
costs, expenses or otherwise. For the purposes of this
Agreement, “ Obligations ” shall mean, (a) the
full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations of the Pledgor now
existing or hereafter incurred under, arising out of or in
connection with the Credit Agreement, the promissory notes issued
by the Pledgor thereunder, and each other agreement, instrument and
document delivered thereunder or in connection therewith
(collectively, the “ Loan Documents ”) and the
due performance and compliance by the Pledgor with the terms of
each such Loan Document; (b) any and all sums advanced by the Agent
in order to preserve the Collateral or to preserve its security
interest in the Collateral; (c) in the event of any proceeding for
the collection or enforcement of any obligations or liabilities,
after an Event of Default (as defined below) shall have occurred
and be continuing, the reasonable expenses of holding, preparing
for sale, selling or otherwise disposing of or realizing on the
Collateral, or of any exercise by the Agent of its rights
hereunder, together with reasonable attorneys’ fees and court
costs; and (d) all amounts paid by any indemnitee as to which such
indemnitee has the right to reimbursement under this
Agreement.
Section 3. Delivery
and Control of Collateral .
(a)
With respect to any Collateral in
which the Pledgor has any right, title or interest and that
constitutes a security entitlement (including, without limitation,
the Pledged Securities Entitlements), the Pledgor will cause the
securities intermediary with respect to such security entitlement
either (i) to identify in its records the Agent as the entitlement
holder of such
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security entitlement against such securities
intermediary or (ii) to agree in writing with the Pledgor and the
Agent that such securities intermediary will comply with
entitlement orders originated by the Agent without further consent
of the Pledgor, such agreement to be in substantially the form of
Exhibit A hereto or otherwise in form and substance
satisfactory to the Agent (such agreement being a “
Control Agreement ”).
(b)
The Agent shall have the right (i)
at any time at which an Event of Default shall have occurred and be
continuing for more than five consecutive Business Days to convert
Collateral consisting of financial assets credited to the
Securities Account to Collateral consisting of financial assets
held directly by the Agent, provided that upon the cessation
(whether by cure, waiver or otherwise) of such Event of Default,
the Agent shall convert all such Collateral to Collateral
consisting of financial assets credited to the Securities Account,
and (ii) at any time to convert Collateral consisting of financial
assets held directly by the Agent to Collateral consisting of
financial assets credited to the Securities Account.
Section 4.
Representations and Warranties . The Pledgor
represents and warrants as follows:
(a)
The Pledgor is the legal and
beneficial owner of the Collateral (other than, for the avoidance
of any doubt, the Treasury Portfolio credited to the Securities
Account) free and clear of any Lien, claim, option or right of
others, except for the security interest created under this
Agreement and any security interest, mortgage, pledge, lien, claim,
charge, encumbrance, title retention agreement, lessor’s
interest in a financing lease or analogous instrument (each and any
of the foregoing a “ Lien ”) created thereon
pursuant to the Holders Pledge Agreement. No effective
financing statement or other instrument similar in effect covering
all or any part of such Collateral or listing the Pledgor as debtor
is on file in any recording
