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Exhibit
10.38
SHARED COLLATERAL PLEDGE
AGREEMENT
SHARED COLLATERAL PLEDGE
AGREEMENT, dated as of April 24, 2008 (this “ Pledge
Agreement ”), made by and between THE PMI GROUP, INC., a
Delaware corporation (the “ Pledgor ”), and U.S.
BANK NATIONAL ASSOCIATION, as collateral agent (together with any
successor in such capacity, the “ Collateral Agent
”) for the Secured Parties.
WHEREAS, the Pledgor has
entered into a Revolving Credit Agreement, dated as of
October 24, 2006 (as amended, restated, supplemented,
refinanced or replaced from time to time, the “ Credit
Agreement ”), with Bank of America, N.A., as
Administrative Agent (in such capacity, together with its
successors and assigns in such capacity, the “ Credit
Facility Agent ”) and the lenders from time to time party
thereto (the “ Credit Facility Lenders ”),
pursuant to which the Credit Facility Agent and the Credit Facility
Lenders have agreed to make loans and provide other extensions of
credit to the Pledgor from time to time, subject to the terms and
conditions set forth in the Credit Agreement;
WHEREAS, the Pledgor has
entered into an Indenture, dated as of November 3, 2003 (as
amended, restated, modified or otherwise supplemented from time to
time, the “ Indenture ”), with The Bank of New
York, as trustee (in such capacity, together with its successors
and assigns in such capacity, the “ Notes Trustee
”), pursuant to which the Pledgor issued its 6% Senior Notes
due 2016, its 6.625% Senior Notes due 2036 and its 5.568% Senior
Notes due 2008 and may from time to time issue additional notes,
subject to the terms and conditions set forth in the
Indenture;
WHEREAS, contemporaneously
with the execution and delivery of this Pledge Agreement, the
Collateral Agent, the Credit Facility Agent and the Pledgor have
entered into a Collateral Agency Agreement, dated as of the date
hereof (as amended, restated, supplemented or otherwise modified
from time to time, the “ Collateral Agency Agreement
”), pursuant to which the Collateral Agent has agreed to act
as collateral agent on behalf of the Secured Parties, subject to
the terms and conditions set forth therein;
WHEREAS, as required under
the terms of the Credit Agreement and the Indenture, this Pledge
Agreement is being made by the Pledgor in favor of the Collateral
Agent, for the benefit of the Secured Parties, to secure the
payment and performance of the Secured Obligations; and
WHEREAS, capitalized terms
used herein and not otherwise defined herein shall have the
meanings set forth in the Collateral Agency Agreement.
NOW, THEREFORE, in
consideration of the premises set forth herein and in the Credit
Facility Documents and the Indenture, the receipt and sufficiency
of which are hereby acknowledged, the Pledgor hereby agrees with
the Collateral Agent for the benefit of the Secured Parties as
follows:
1. Pledge . As
collateral security for the prompt and complete payment,
performance and observance of all present and future Secured
Obligations, whether at stated maturity, by acceleration or
otherwise (including, without limitation, all interest thereon,
whether accruing prior or subsequent to the commencement of a
bankruptcy or similar proceeding involving the Pledgor as a debtor
and whether or not such interest is an allowed claim in any such
proceeding), the Pledgor hereby assigns, transfers and pledges to
the Collateral Agent, for the benefit of the Secured Parties, and
grants to the Collateral Agent, for the benefit of the Secured
Parties, a first priority security interest in the collateral
described in paragraph 2 below (collectively, the “
Pledged Collateral ”).
2. Description of Pledged
Collateral . (a) The Pledged Collateral is described as
follows and on any separate schedules at any time furnished by the
Pledgor to the Collateral Agent (which schedules are hereby deemed
part of this Pledge Agreement):
(i) all right, title and
interest of the Pledgor as a shareholder in (x) PMI Mortgage
Insurance Co., an Arizona corporation (“ PMI Insurance
”), and (y) all shares of stock, certificates,
instruments or other documents evidencing or representing the same,
all of which are listed on Schedule 1 annexed hereto
(the “ Initial Pledged Securities ”);
(ii) all right, title and
interest of the Pledgor in and to all present and future payments,
proceeds, dividends, distributions, instruments, compensation,
interests and rights with respect to the Pledged Collateral, and
all monies due or to become due and payable to the Pledgor with
respect to the Pledged Collateral or otherwise paid, issued or
distributed from time to time in respect of or in exchange
therefor, and any certificate, instrument or other document
evidencing or representing the same (including, without limitation,
all proceeds of dissolution or liquidation); and
(iii) all proceeds of every
kind and nature, including proceeds of proceeds, of any and all of
the foregoing (including, without limitation, proceeds which
constitute property of the type described above).
(b) The shares of stock,
certificates, instruments or other documents evidencing or
representing the foregoing shall be collectively referred to herein
as the “ Pledged Securities ”.
3. Delivery of
Certificates, Instruments, Etc .
(a) The Pledgor shall
deliver to the Collateral Agent:
(i) all Initial Pledged
Securities concurrently with the execution and delivery of this
Pledge Agreement, and
(ii) all other Pledged
Securities within two (2) days after the Pledgor’s
receipt thereof.
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(b) All Pledged Securities
which are certificated securities shall be in registered form, and
shall be endorsed to the Collateral Agent or accompanied by stock
powers executed in blank.
(c) The Pledgor hereby
irrevocably authorizes the Collateral Agent at any time and from
time to time to sign (if required) and file in any appropriate
filing office, wherever located, any financing statement that
contains any information required by the UCC of the applicable
jurisdiction for the sufficiency or filing office acceptance of any
financing statement. The Pledgor also authorizes the Collateral
Agent to take any and all actions required by applicable laws in
connection with any of the foregoing. The Pledgor shall provide the
Collateral Agent with any information the Collateral Agent shall
reasonably request in connection with any of the
foregoing.
4. Registration . At
any time after receipt by the Collateral Agent of written notice
from the Credit Facility Agent that all Necessary Regulatory
Approvals have been obtained and from time to time thereafter for
so long as an Actionable Default has occurred and is continuing,
the Collateral Agent may cause all or any of the Pledged Securities
to be transferred to or registered in its name or the name of its
nominee or nominees.
5. Representations,
Warranties and Covenants of the Pledgor . The Pledgor hereby
represents, warrants and covenants that:
(a) Pledged Collateral
. The Pledgor is the sole holder of record and the sole beneficial
owner of the Pledged Securities free and clear of any Lien thereon
or affecting the title thereto, except the Lien created hereunder
and any restrictions on transfer arising under insurance laws
applicable to PMI Insurance.
(b) Place of Perfection;
Records; Etc. The jurisdiction of incorporation of the Pledgor
is the state of Delaware, and the Pledgor will not (i) change
said jurisdiction of incorporation, unless it has provided the
Collateral Agent, the Credit Facility Agent and the Notes Trustee
with at least ten (10) days prior written notice thereof,
(ii) merge or consolidate with any person, except as permitted
under the Credit Agreement and the Indenture, (iii) change its
type of organization, except as permitted under the Credit
Agreement and the Indenture or (iv) change its name unless it
has provided the Collateral Agent, the Credit Facility Agent and
the Notes Trustee with at least thirty (30) days prior
written notice thereof.
(c) Sale or Other
Disposition of Pledged Collateral . Except as otherwise
permitted under Section 6(b), the Pledgor will not assign (by
operation of law or otherwise), sell, lease, transfer, pledge or
grant a Lien on the Pledged Collateral in favor of any Person other
than the Collateral Agent or otherwise dispose of or abandon, nor
will it suffer or permit any of the same to occur with respect to,
any Pledged Collateral, and the inclusion of “proceeds”
of the Pledged Collateral under the security interest granted
herein shall not be deemed a consent by the Collateral Agent or any
other Secured Party to any sale or other disposition of any Pledged
Collateral.
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(d) Percentage of
Outstanding Equity . The Pledged Collateral constitutes, and,
so long as this Pledge Agreement remains in effect will continue to
constitute, all of the issued and outstanding equity interests of
PMI Insurance.
(e)
[reserved]
(f) Due Authorization,
Etc., of Stock . The Pledged Securities have been duly
authorized and validly issued and are fully paid and non-assessable
(subject to Section 11 of the Constitution of the State of
Arizona) and are not subject to any options to purchase or similar
rights of any Person.
(g) Authority; Binding
Obligation . The Pledgor has the right and requisite corporate
authority to pledge, assign, deliver and set over the Pledged
Collateral to the Collateral Agent as provided herein. This Pledge
Agreement and the Collateral Agency Agreement have been duly
authorized, executed and delivered by the Pledgor and constitutes a
legal, valid and binding obligation of the Pledgor enforceable
against the Pledgor in accordance with their terms subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors’ rights and to general equity
principles.
(h) Required Consents
. Except as may be required in connection with any disposition of
any portion of the Pledged Collateral by laws affecting the
offering and sale of securities generally and the filing of a
uniform commercial code financing statement in the form annexed
hereto as Exhibit A in the office of the Secretary of State of the
State of Delaware, (i) no consent of any Person (including,
without limitation, any shareholders, partners or creditors of the
Pledgor) and no license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or
declaration with any Governmental Authority is required to be made
or obtained by the Pledgor in connection with (a) the
execution or delivery by the Pledgor, validity or enforceability
against the Pledgor, or the performance by the Pledgor of, this
Pledge Agreement and the Collateral Agency Agreement, (b) the
creation or maintenance by the Pledgor of the security interest
created hereby or the perfection thereof (including the first
priority nature of such security interest) except as provided under
applicable law with respect to the filing of continuation
statements or amendments to financing statements and
(ii) other than the receipt of all Necessary Regulatory
Approvals (before taking any action that requires such approvals),
no consent of any Person (including, without limitation, any
shareholders, partners or creditors of the Pledgor) and no license,
permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with any
Governmental Authority is required to be made or obtained by the
Pledgor in connection with the exercise by the Collateral Agent of
the voting or other rights provided for in this Pledge Agreement or
the remedies in respect of the Pledged Collateral pursuant to this
Pledge Agreement.
(i) Nature of Security
Interest . Upon the delivery of the Pledged Securities to the
Collateral Agent and the filing of a uniform commercial code
financing statement in the form annexed hereto as Exhibit A in the
office of the Secretary of State of the State of Delaware, the
pledge of the Pledged Collateral pursuant to this Pledge Agreement
creates a valid and perfected first priority security interest in
favor of the Collateral Agent for the benefit of the Secured
Parties in the Pledged Collateral, securing the prompt and complete
payment, performance and observance of the Secured Obligations,
subject to no other Lien.
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(j) Modification of
Agreements . It will not, without the prior written consent of
the Collateral Agent, execute any document or instrument or,
without limitation of paragraph 6 hereof, take any other action of
any kind which may, in the reasonable judgment of the Collateral
Agent, impair the benefits of the Secured Parties set forth in or
arising under this Pledge Agreement.
(k) Further Assurances
. It will, at its sole cost and expense, perform all acts and
promptly execute, acknowledge and deliver all such documents and
instruments and take all such actions, in each case, reasonably
requested by the Collateral Agent from time to time to evidence,
perfect, maintain or enforce the Collateral Agent’s first
priority security interest granted herein or otherwise in
furtherance of the provisions of this Pledge Agreement.
6. Voting Rights and
Certain Payments Prior to Default . So long as no Actionable
Default shall have occurred and be continuing and at all times
prior to the receipt by the Collateral Agent of written notice from
the Credit Facility Agent that all Necessary Regulatory Approvals
have been obtained, the Pledgor shall be entitled:
(a) to retain and exercise,
as it shall think fit (but in a manner not inconsistent with the
terms hereof, the Credit Facility Documents, the Indenture
Documents or the Secured Obligations) the voting power with respect
to the Pledged Collateral, and to the extent the Pledged Collateral
becomes registered in the name of the Collateral Agent or its
nominee, the Collateral Agent shall execute or cause to be executed
from time to time, at the expense of the Pledgor, such proxies or
other instruments in favor of the Pledgor or its nominee, in such
form and for such purposes as shall be reasonably required by the
Pledgor and shall be specified in a written request therefor, to
enable it to exercise such voting power with respect to the Pledged
Collateral; provided , however , that the Pledgor
shall not exercise or shall refrain from exercising any such voting
power if it has been notified by the Collateral Agent that, in the
Collateral Agent’s judgment, such action would have a
material adverse effect on the benefits of the Secured Parties set
forth in or arising under this Pledge Agreement; and
(b) except as otherwise
provided in paragraphs 7 and 8 hereof, to receive and retain
for its own account any and all payments, proceeds, dividends,
distributions, monies, compensation, property, assets, instruments
or rights to the extent such are permitted pursuant to the terms of
the Credit Facility Documents and the Indenture Documents, other
than (i) dividends or distributions or returns of capital, in
each case, received upon a Liquidation (as hereinafter defined), or
stock dividends or distributions or (ii) dividends or
distributions or other amounts payable under or in connection with
any recapitalization or restructuring (the dividends, distributions
and amounts in this clause (ii) being “ Extraordinary
Payments ”), paid, issued or distributed from time to
time in respect of the Pledged Collateral.
7. Extraordinary Payments
and Distributions . (a) In case, upon the dissolution or
Liquidation of PMI Insurance (or its successors), any sum shall be
paid or payable as a liquidating dividend or distribution or return
of capital or otherwise upon or with respect to any of the Pledged
Securities or, in the event any other Extraordinary Payment is paid
or payable,
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then and in any such event,
such sum shall be paid over or delivered to the Collateral Agent
promptly, and in any event within five (5) Business Days
after receipt thereof, to be held by the Collateral Agent as
additional collateral hereunder. For purposes of Sections 6 and 7
of this Pledge Agreement, “Liquidation” means, as to
any Person, a sale or other disposition of all or substantially all
of such Person’s assets.
(b) In case any stock
dividend or distribution payable in additional Pledged Collateral
shall be declared with respect to any of the Pledged Collateral, or
any shares of stock or fractions thereof or other equity interests
shall be issued pursuant to any stock split or other transaction
involving any of the Pledged Collateral, or any distribution of
capital shall be made on any of the Pledged Collateral, or any
shares, obligations or other property shall be distributed upon or
with respect to the Pledged Collateral, in each case pursuant to a
recapitalization or reclassification of the capital of the issuer
thereof, or pursuant to the dissolution, Liquidation, bankruptcy or
reorganization of such issuer, or to the merger or consolidation of
such issuer with or into another entity, the shares, obligations or
other property so distributed shall be delivered to the Collateral
Agent promptly, and in any event within five (5) Business
Days after receipt thereof, to be held by the Collateral Agent as
additional collateral hereunder subject to the terms of this Pledge
Agreement, and all of the same shall constitute Pledged Collateral
for all purposes hereof.
8. Voting Rights and
Certain Payments After an Actionable Default . (a) Upon
the occurrence and for so long as an Actionable Default is
continuing and upon the receipt by the Collateral Agent of written
notice from the Credit Facility Agent that all Necessary Regulatory
Approvals have been obtained, all rights of the Pledgor to exercise
or refrain from exercising the voting, managerial and other
consensual rights which it would otherwise be entitled to exercise
pursuant to paragraph 6(a) hereof and to receive the payments,
proceeds, dividends, distributions, monies, compensation, property,
assets, instruments or rights which it would otherwise be
authorized to receive and retain pursuant to paragraph 6(b)
shall, upon receipt by the Pledgor or written notice from the
Collateral Agent, (which notice shall be deemed to have been given
in the case of a bankruptcy of the Pledgor) cease, and thereupon
the Collateral Agent shall be entitled to exercise all voting power
and other rights, powers and privileges with respect to the Pledged
Securities and the other Pledged Collateral and to receive and
retain, as additional collateral hereunder, any and all payments,
proceeds, dividends, distributions, monies, compensation, property,
assets, instruments or rights at any time declared or paid upon or
in respect of any of the Pledged Collateral. The failure on the
part of the Collateral Agent to give any notice to the Pledgor
prior to the exercise of any voting power or other rights, powers
or privileges with respect to the Pledged Collateral shall not
affect the Collateral Agent’s rights under this
paragraph 8.
(b) All payments, proceeds,
dividends, distributions, monies, compensation, property, assets,
instruments or rights which are received by the Pledgor contrary to
the provisions of subparagraph (a) above shall be received and
held in trust for the benefit of the Collateral Agent, shall be
segregated by the Pledgor from other funds of the Pledgor and shall
be forthwith paid over to the Collateral Agent as Pledged
Collateral in the same form as so received (with any necessary
indorsement).
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9. Application of Cash
Collateral . Any cash received and retained by the Collateral
Agent as additional collateral hereunder pursuant to the
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