EXHIBIT 10.3
PLEDGE AGREEMENT
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PLEDGE AGREEMENT, dated as of April 25, 1996 (as amended, modified or
supplemented from time to time, the "Agreement"), made by each of the
undersigned (each, a "Pledgor" and collectively the "Pledgors"), in favor of
BANQUE PARIBAS, as Collateral Agent (the "Pledgee"), for the benefit of (x) the
Banks (as defined below) and the Agent (as defined below) under, and any other
lender from time to time party to the Credit Agreement hereinafter referred to
(such Banks, the Agent and the other lenders, if any, are hereinafter called the
"Bank Creditors") and (y) if Banque Paribas in its individual capacity, any Bank
or a syndicate of financial institutions organized by Banque Paribas or any such
Bank or an affiliate of Banque Paribas or such Bank enter into one or more
(i) interest rate protection agreements (including, without limitation, interest
rate swaps, caps, floors, collars and similar agreements), (ii) foreign exchange
contracts, currency swap agreements or other similar agreements or arrangements
designed to protect against the fluctuations in currency values and/or (iii)
other types of hedging agreements from time to time (collectively, the "Interest
Rate Protection or Other Hedging Agreements"), with, or guaranteed by, the
Borrower (as defined below) or any of its Subsidiaries, Banque Paribas, any such
Bank or an affiliate of Banque Paribas or such Bank (even if Banque Paribas or
any such Bank ceases to be a Bank under the Credit Agreement for any reason) and
any such institution that participates in such Interest Rate Protection or Other
Hedging Agreements and their subsequent assigns (collectively, the "Other
Creditors" and, together with the Bank Creditors, are herein called the "Secured
Creditors"). Except as otherwise defined herein, terms used herein and defined
in the Credit Agreement shall be used herein as therein defined.
W I T N E S S E T H :
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WHEREAS, Vernitron Corporation (the "Borrower"), the financial
institutions from time to time party thereto (the "Banks") and Banque Paribas,
as Agent (the "Agent"), have entered into a Credit Agreement, dated as of April
25, 1996, providing for the making of Loans and the issuance of, and
participation in, Letters of Credit as contemplated therein (as used herein, the
term "Credit Agreement" means the Credit Agreement described above in this
paragraph, as the same may be amended, modified, extended, renewed, replaced,
restated, supplemented, restructured or refinanced from time to time, and
including any agreement extending the maturity of, refinancing or restructuring
(including, but not limited to, the inclusion of additional borrowers thereunder
that are
Subsidiaries of the Borrower and whose obligations are guaranteed by the
Borrower thereunder or any increase in the amount borrowed) all or any portion
of, the Indebtedness under such agreement or any successor agreements; PROVIDED,
that with respect to any agreement providing for the refinancing of Indebtedness
under the Credit Agreement, such agreement shall only be treated as, or as part
of, the Credit Agreement hereunder if (i) either (A) all obligations under the
Credit Agreement being refinanced shall be paid in full at the time of such
refinancing, and all commitments and letters of credit issued pursuant to the
refinanced Credit Agreement shall have terminated in accordance with their terms
or (B) the Required Banks shall have consented in writing to the refinancing
Indebtedness being treated, along with their Indebtedness, as Indebtedness
pursuant to the Credit Agreement, (ii) the refinancing Indebtedness shall be
permitted to be incurred under the Credit Agreement being refinanced (if such
Credit Agreement is to remain outstanding) and (iii) a notice to the effect that
the refinancing Indebtedness shall be treated as issued under the Credit
Agreement shall be delivered by the Borrower to the Collateral Agent);
WHEREAS, pursuant to the Subsidiaries Guaranty (as amended, modified
or supplemented from time to time, the "Subsidiaries Guaranty"), Subsidiaries of
the Borrower may from time to time jointly and severally guarantee to the
Secured Creditors the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and each Interest Rate
Protection Agreement or Other Hedging Agreement with one or more Other
Creditors;
WHEREAS, the Borrower desires to incur Loans and to have Letters of
Credit issued for its account pursuant to the Credit Agreement;
WHEREAS, the Borrower may at any time and from time to time enter into
one or more Interest Rate Protection or Other Hedging Agreements with one or
more Other Creditors;
WHEREAS, it is a condition to each of the above-described extensions
of credit to the Borrower that each Pledgor shall have executed and delivered
this Agreement to the Pledgee;
WHEREAS, each Pledgor desires to execute this Agreement to satisfy the
conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor
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hereby makes the following representations and warranties to the Pledgee for the
benefit of the Secured Creditors and hereby covenants and agrees with the
Pledgee for the benefit of the Secured Creditors as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor
for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and indebtedness
(including, without limitation, indemnitees, fees and interest thereon) of
such Pledgor owing to the Bank Creditors, now existing or hereafter
incurred under, arising out of or in connection with any Credit Document
and the due performance and compliance by such Pledgor with the terms of
each such Credit Document (all such obligations and liabilities under this
clause (i), except to the extent consisting of obligations or indebtedness
with respect to Interest Rate Protection or Other Hedging Agreements, being
herein collectively called the "Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and indebtedness
(including, without limitation, indemnitees, fees and interest thereon) of
such Pledgor owing to the Other Creditors, now existing or hereafter
incurred under, arising out of or in connection with any Interest Rate
Protection or Other Hedging Agreement (all such obligations and
indebtedness under this clause (ii) being herein collectively called the
"Interest Rate Protection Obligations");
(iii) any and all sums advanced by the Pledgee in accordance with the
terms of this Agreement in order to preserve the Collateral (as defined in
Section 3.4 herein) or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of
any indebtedness, obligations, or liabilities referred to in clauses (i),
(ii) and (iii) above, after an Event of Default (such term, as used in this
Agreement, shall mean any Event of Default under, and as defined in, the
Credit Agreement, or any payment default under any Interest Rate Protection
or Other Hedging Agreement after the expiration of any applicable grace
period and shall in any event include, without limitation, any payment
default on any of the Obligations (as hereinafter defined) after the
expiration of any applicable grace period) shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing or realizing on the
Collateral, or of any exercise by
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the Pledgee of its rights hereunder, together with reasonable attorneys'
fees and court costs; and
(v) all amounts paid by any Indemnitee as to which such Indemnitee has
the right to reimbursement under Section 11 of this Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section 1 being herein collectively called the
"Obligations"; PROVIDED, that it is acknowledged and agreed that the
"Obligations" shall include extensions of credit of the types described above,
whether outstanding on the date of this Agreement or extended from time to time
after the date of this Agreement.
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used herein, (i)
the term "Stock" shall mean (x) with respect to corporations incorporated under
the laws of the United States or any State or territory thereof (each a
"Domestic Corporation"), all of the issued and outstanding shares of capital
stock at any time owned by the Pledgor of any Domestic Corporation and (y) with
respect to corporations not Domestic Corporations (each a "Foreign
Corporation"), all of the issued and outstanding shares of capital stock at any
time owned by the Pledgor of any Foreign Corporation, PROVIDED that, except as
provided in the last sentence of this Section 2, the Pledgor shall not be
required to pledge hereunder more than 65% of the total combined voting power of
all classes of capital stock of any Foreign Corporation entitled to vote and
(ii) the term "Notes" shall mean all promissory notes at any time issued to the
Pledgor by any of its Subsidiaries, Affiliates or any other Person. If and to
the extent that the Pledgee receives or holds stock certificates representing
more than 65% of the total combined voting power of all classes of capital stock
of any Foreign Corporation entitled to vote, the Pledgee agrees to act as bailee
and custodian for the benefit of the Pledgor with respect to any portion of such
capital stock representing more than 65% of the total combined voting power of
all classes of capital stock of any Foreign Corporation entitled to vote except
as otherwise provided in the last sentence of this Section 2. As used herein,
the term "Securities" shall mean all of the Stock and Notes. The Pledgor
represents and warrants, as to the Stock of corporations and promissory notes
owned by the Pledgor, that on the date hereof (a) the Stock consists of the
number and type of shares of the stock of the corporations as described in Annex
A hereto; (b) such Stock constitutes that percentage of the issued and
outstanding capital stock of the issuing corporation as is set forth in Annex A
hereto; (c) the Notes consist of the promissory notes described in Annex B
hereto; and (d) the Pledgor is the holder of record and sole beneficial owner of
the Stock and the Notes and there exist no options or preemption rights in
respect of any of the Stock. If following a change in the relevant sections of
the Code or the regulations, rules, rulings, notices or other official pro-
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nouncements issued or promulgated thereunder which would permit a pledge of
66-2/3% or more of the total combined voting power of all classes of capital
stock of any Foreign Corporation entitled to vote without causing the
undistributed earnings of such Foreign Corporation as determined for Federal
income taxes to be treated as a deemed dividend to the Pledgor for Federal
income tax purposes, then the 65% limitation set forth in clause (i)(y) of
this Section 2, shall no longer be applicable and the Pledgor shall duly
pledge and deliver to the Pledgee such of the Securities not theretofore
required to be pledged hereunder up to the maximum amount of Securities that
may be so pledged without causing the undistributed earnings of such Foreign
Corporation as determined for Federal income tax purposes to be treated as a
deemed dividend to a Pledgor for Federal income tax purposes.
3. PLEDGE OF SECURITIES, ETC.
3.1. PLEDGE. To secure the Obligations and for the purposes set
forth in Section 1, each Pledgor hereby: (i) grants to the Pledgee a security
interest in all of the Collateral owned by the Pledgor; (ii) pledges and
deposits as security with the Pledgee the Securities owned by such Pledgor on
the date hereof, and delivers to the Pledgee certificates or instruments
therefor, duly endorsed in blank in the case of Notes and accompanied by undated
stock powers duly executed in blank by such Pledgor in the case of Stock, or
such other instruments of transfer as are reasonably acceptable to the Pledgee;
and (iii) assigns, transfers, hypothecates, mortgages, charges and sets over to
the Pledgee all of such Pledgor's right, title and interest in and to such
Securities (and in and to all certificates or instruments evidencing such
Securities), in each case to be held by the Pledgee, upon the terms and
conditions set forth in this Agreement.
3.2. SUBSEQUENTLY ACQUIRED SECURITIES. If any Pledgor shall acquire
(by purchase, stock dividend or otherwise) any additional Securities at any time
or from time to time after the date hereof, the Pledgor will forthwith pledge
and deposit such Securities (or certificates or instruments representing such
Securities) as security with the Pledgee and deliver to the Pledgee certificates
therefor or instruments thereof, duly endorsed in blank in the case of Notes and
accompanied by undated stock powers duly executed in blank in the case of Stock,
or such other instruments of transfer as are reasonably acceptable to the
Pledgee, to secure the Obligations and for the purposes set forth in Section 1,
and will promptly thereafter deliver to the Pledgee a certificate executed by
any of the Chairman of the Board, the Chief Financial Officer, the President, a
Vice Chairman, any Vice President or the Treasurer of such Pledgor describing
such Securities and certifying that the same have been duly pledged with the
Pledgee hereunder. Subject to the last sentence of Section 2, the Pledgor shall
not be required at any time to pledge hereunder more than 65% of the
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total combined voting power of all classes of capital stock of any Foreign
Corporation entitled to vote.
3.3. UNCERTIFICATED SECURITIES. Notwithstanding anything to the
contrary contained in Sections 3.1 and 3.2 (other than the last sentence of
Section 3.2), if any Securities (whether now owned or hereafter acquired) are
uncertificated securities, the respective Pledgor shall promptly notify the
Pledgee thereof, and shall promptly take all actions required to perfect the
security interest of the Pledgee under applicable law (including, in any event,
under Sections 8-313 and 8-321 of the New York UCC, if applicable). Each
Pledgor further agrees to take such actions as the Pledgee reasonably deems
necessary or desirable to effect the foregoing and to permit the Pledgee to
exercise any of its rights and remedies hereunder, and agrees to provide an
opinion of counsel satisfactory to the Pledgee with respect to any such pledge
of uncertificated Securities promptly upon request of the Pledgee.
3.4 DEFINITION OF PLEDGED STOCK, PLEDGED NOTES, PLEDGED SECURITIES
AND COLLATERAL. All Stock at any time pledged or required to be pledged
hereunder is hereinafter called the "Pledged Stock," all Notes at any time
pledged or required to be pledged hereunder are hereinafter called the "Pledged
Notes," all of the Pledged Stock and Pledged Notes together are hereinafter
called the "Pledged Securities," which together with all proceeds thereof,
including any securities and moneys received and at the time held by the Pledgee
hereunder, is hereinafter called the "Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
have the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Securities.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until an
Event of Default shall have occurred and be continuing, each Pledgor shall be
entitled to exercise any and all voting and other consensual rights pertaining
to the Pledged Securities owned by it and to give consents, waivers or
ratifications in respect thereof; PROVIDED, that no vote shall be cast or any
consent, waiver or ratification given or any action taken which would violate or
be inconsistent with any of the terms of this Agreement, any other Credit
Document or any Interest Rate Protection or Other Hedging Agreement
(collectively, the "Secured Debt Agreements"), or which would have the effect of
impairing the position or interests of the Pledgee or any Secured Creditor. All
such rights of such Pledgor to vote and to give consents, waivers and
ratifications shall cease in case an Event of Default shall occur and be
continuing, and Section 7 hereof shall become applicable.
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6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default
shall have occurred and be continuing (or would occur as a result thereof), all
cash dividends payable in respect of the Pledged Stock and all payments in
respect of the Pledged Notes shall be paid to the respective Pledgor free and
clear of the security interests created under this Agreement or any other Credit
Document; PROVIDED, that all cash dividends payable in respect of the Pledged
Stock which are reasonably determined by the Pledgee, in its sole discretion, to
represent in whole or in part an extraordinary, liquidating or other
distribution in return of capital shall be paid, to the extent so determined to
represent an extraordinary, liquidating or other distribution in return of
capital, to the Pledgee and retained by it as part of the Collateral. The
Pledgee shall also be entitled to receive directly, and to retain as part of the
Collateral:
(i) all other or additional stock or other securities or property
(other than cash) paid or distributed by way of dividend or otherwise in
respect of the Pledged Stock;
(ii) all other or additional stock or other securities or property
(including cash) paid or distributed in respect of the Pledged Stock by way
of stock-split, spin-off, split-up, reclassification, combination of shares
or similar rearrangement; and
(iii) all other or additional stock or other securities or property
(including cash) which may be paid in respect of the Collateral by reason
of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive proceeds of the Collateral in any form in accordance
with Section 3 of this Agreement. All dividends, distributions or other
payments which are received by any Pledgor contrary to the provisions of this
Section 6 and Section 7 shall be received in trust for the benefit of the
Pledgee, shall be segregated from other property or funds of such Pledgor and
shall be forthwith paid over to the Pledgee as Collateral in the same form as so
received (with any necessary endorsement).
7. REMEDIES IN CASE OF EVENT OF DEFAULT. (a) In case an Event of
Default shall have occurred and be continuing, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement or by any other Secured Debt Agreement or by law) for the protection
and enforcement of its rights in respect of the Collateral, and the Pledgee
shall be entitled, without limitation, to
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exercise the following rights, which each Pledgor hereby agrees to be
commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral payable
to such Pledgor under Section 6;
(ii) to transfer all or any part of the Pledged Securities into the
Pledgee's name or the name of its nominee or nominees;
(iii) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other action to collect upon any
Pledged Note (including, without limitation, to make any demand for payment
of amounts then due and payable thereon);
(iv) to vote all or any part of the Pledged Securities (whether or not
transferred into the name of the Pledgee) and give all consents, waivers
and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner thereof (each Pledgor
hereby irrevocably constituting and appointing the Pledgee the proxy and
attorney-in-fact of such Pledgor, with full power of substitution to do
so); and
(v) at any time or from time to time to sell, assign and deliver, or
grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by each Pledgor to the extent permitted by
applicable law), for cash, on credit or for other property, for immediate
or future delivery without any assumption of credit risk, and for such
price or prices and on such terms as the Pledgee may, in compliance with
any mandatory requirements of applicable law, determine to be commercially
reasonable; PROVIDED, that at least 10 days' notice of the time and place
of any such sale shall be given to such Pledgor. Each Pledgor hereby
waives and releases to the fullest extent permitted by law any right or
equity of redemption with respect to the Collateral, whether before or
after sale hereunder, and all rights, if any, of marshalling the Collateral
and any other security for the Obligations or otherwise. At any such sale,
unless prohibited by applicable law, the Pledgee on behalf of the Secured
Creditors may bid for and purchase all or any part of the Collateral so
sold free from any such right or equity of redemption. Neither the Pledgee
nor any Secured Creditor shall be liable for failure to collect or realize
upon any or all of the Collateral or for any
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delay in so doing nor shall any of them be under any obligation to take any
action whatsoever with regard thereto.
(b) In case the Pledgee shall have instituted any proceeding to
enforce any right, power or remedy under this Agreement by foreclosure, sale,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Pledgee,
then and in such case the relevant Pledgor, the Pledgee and each holder of any
of the Obligations shall be restored to their former positions and rights
hereunder with respect to the Collateral subject to the security interests
created under this Agreement, and all rights, remedies and powers of the Pledgee
shall continue as if no such proceeding had been instituted.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt Agreement or
now or hereafter existing at law or in equity or by statute shall be cumulative
and concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by the Pledgee or any Secured
Creditor of any one or more of the rights, powers or remedies provided for in
this Agreement or any other Secured Debt Agreement or now or hereafter existing
at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any Secured Creditor of all
such other rights, powers or remedies, and no failure or delay on the part of
the Pledgee or any Secured Creditor to exercise any such right, power or remedy
shall operate as a waiver thereof.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee
upon any sale or other disposition of the Collateral pursuant to the terms of
this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing to the Pledgee (or
any Indemnitee, in the case of clause (v) of Section 1 of this Agreement)
of the type described in clauses (iii), (iv) and (v) of Section 1 of this
Agreement;
(ii) second, to the extent moneys remain after the application pursuant
to the preceding clause (i), an amount equal to the outstanding Primary
Obligations shall be paid to the Secured Creditors as provided in Section
9(e), with each Secured Creditor receiving an amount equal to its
outstanding Primary Obligations or, if the proceeds are insufficient to pay
in full all such Primary Obligations, its Pro Rata Share of the amount
remaining to be distributed;
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(iii) third, to the extent proceeds remain after the application pursuant
to the preceding clauses (i) and (ii), an amount equal to the outstanding
Secondary Obligations shall be paid to the Secured Creditors as provided in
Section 9(e), with each Secured Creditor receiving an amount equal to its
outstanding Secondary Obligations or, if the proceeds are insufficient to
pay in full all such Secondary Obligations, its Pro Rata Share of the
amount remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i), (ii) and (iii), to the relevant
Pledgor or as required by applicable law.
(b) For purposes of this Agreement (x) "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Primary Obligations
or Secondary Obligations, as the case may be, and the denominator of which is
the then outstanding amount of all Primary Obligations or Secondary Obligations,
as the case may be, (y) "Primary Obligations" shall mean (i) in the case of the
Credit Document Obligations, all principal of, and interest on, all Loans, all
Unpaid Drawings theretofore made (together with all interest accrued thereon),
the aggregate Stated Amounts of all Letters of Credit issued under the Credit
Agreement, and all Fees and (ii) in the case of the Interest Rate Protection
Obligations, all amounts due under the Interest Rate Protection or Other Hedging
Agreements (other than indemnities, fees (including, without limitation,
attorneys' fees) and similar obligations and liabilities) and (z) "Secondary
Obligations" shall mean all Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (i) first, to their Primary Obligations and (ii)
second, to their Secondary Obligations. If any payment to any Secured Creditor
of its Pro Rata Share of any distribution would result in overpayment to such
Secured Creditor, such excess amount shall instead be distributed in respect of
the unpaid Primary Obligations or Secondary Obligations, as the case may be, of
the other Secured Creditors, with each Secured Creditor whose Primary
Obligations or Secondary Obligations, as the case may be, have not been paid in
full to receive an amount equal to such excess amount multiplied by a fraction
the numerator of which is the unpaid Primary Obligations or Secondary
Obligations, as the case may be, of such Secured Creditor and the denominator of
which is the unpaid Primary Obligations or Secondary Obligations, as the case
may be, of all Secured Creditors entitled to such distribution.
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(d) Each of the Secured Creditors agrees and acknowledges that if the
Bank Creditors are to receive a distribution on account of undrawn amounts with
respect to Letters of Credit issued under the Credit Agreement (which shall only
occur after all outstanding Loans and Unpaid Drawings with respect to such
Letters of Credit have been paid in full), such amounts shall be paid to the
Agent under the Credit Agreement and held by it, for the equal and ratable
benefit of the Bank Creditors, as cash security for the repayment of Obligations
owing to the Bank Creditors as such. If any amounts are held as cash security
pursuant to the immediately preceding sentence, then upon the termination of all
outstanding Letters of Credit, and after the application of all such cash
security to the repayment of all Obligations owing to the Bank Creditors after
giving effect to the termination of all such Letters of Credit, if there remains
any excess cash, such excess cash shall be returned by the Agent to the
Collateral Agent for distribution in accordance with Section 9(a) hereof.
(e) Except as set forth in Section 9(d) hereof, all payments required
to be made hereunder shall be made (i) if to the Bank Creditors, to the Agent
under the Credit Agreement for the account of the Bank Creditors, and (ii) if to
the Other Creditors, to the trustee, paying agent or other similar
representative (each a "Representative") for the Other Creditors or, in the
absence of such a Representative, directly to the Other Creditors.
(f) For purposes of applying payments received in accordance with
this Section 9, the Collateral Agent shall be entitled to rely upon (i) the
Agent under the Credit Agreement and (ii) the Representative for the Other
Creditors or, in the absence of such a Representative, upon the Other Creditors
for a determination (which the Agent, each Representative for any Secured
Creditors and the Secured Creditors agree (or shall agree) to provide upon
request of the Collateral Agent) of the outstanding Primary Obligations and
Secondary Obligations owed to the Bank Creditors or the Other Creditors, as the
case may be. Unless it has actual knowledge (including by way of written notice
from a Bank Creditor or an Other Creditor) to the contrary, the Agent and each
Representative, in furnishing information pursuant to the preceding sentence,
and the Collateral Agent, in acting hereunder, shall be entitled to assume that
no Secondary Obligations are outstanding. Unless it has actual knowledge
(including by way of written notice from an Other Creditor) to the contrary, the
Collateral Agent, in acting hereunder, shall be entitled to assume that no
Interest Rate Protection or Other Hedging Agreements are in existence.
(g) It is understood and agreed that the Pledgors shall remain
jointly and severally liable to the extent of any deficiency between the amount
of the proceeds of the Collateral hereunder and the aggregate amount of the sums
referred to in clauses (i), (ii) and (iii) of Section 9(a).
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10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY.
11.1 INDEMNITY. (a) Each Pledgor jointly and severally agrees to
indemnify, reimburse and hold the Pledgee, each Secured Creditor and their
respective successors, permitted assigns, employees, agents and servants
(hereinafter in this Section 11.1 referred to individually as "Indemnitee," and
collectively as "Indemnities") harmless from any and all liabilities,
obligations, damages, injuries, penalties, claims, demands, actions, suits,
judgments and any and all costs, expenses or disbursements (including attorneys'
fees and expenses) (for the purposes of this Section 11.1 the foregoing are
collectively called "expenses") of whatsoever kind and nature imposed on,
asserted against or incurred by any of the Indemnities in any way relating to or
arising out of this Agreement, any other Secured Debt Agreement or any other
document executed in connection herewith and therewith or in any other way
connected with the administration of the transactions contemplated hereby and
thereby or the enforcement of any of the terms of, or the preservation of any
rights under any thereof, the violation of the laws of any country, state or
other governmental body or unit, any tort or contract claim; provided, that no
Indemnitee shall be indemnified pursuant to this Section 11.1(a) for losses,
damages or liabilities to the extent caused by the gross negligence or willful
misconduct of such Indemnitee. In no event shall any Indemnitee be liable for
any matter or thing in connection with this Agreement other than to account for
moneys actually received by it in connection with the terms hereof. Each
Pledgor agrees that upon written notice by any Indemnitee of the assertion of
such a liability, obligation, damage, injury, penalty, claims, demand, action,
judgment or suit, such Pledgor shall assume full responsibility for the defense
thereof. Each Indemnitee agrees to use its best efforts to promptly notify the
relevant Pledgor of any such assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 11.1(a), each Pledgor
jointly and severally agrees to pay or reimburse the Pledgee for any and all
fees, costs and expenses of whatever kind or nature reasonably incurred in
connection with the creation, preservation or protection of the Pledgee's Liens
on, and security interest in, the Collateral, including, without limitation, all
fees and taxes in connection with the recording or filing
-12-
of instruments and documents in public offices, payment or discharge of any
taxes or Liens upon or in respect of the Collateral (other than Liens permitted
under this Agreement or the Credit Agreement so long as no Event of Default has
occurred and is continuing) and all other reasonable fees, costs and expenses in
connection with protecting, maintaining or preserving the Collateral and the
Pledgee's interest therein, whether through judicial proceedings or otherwise,
or in defending or prosecuting any actions, suits or proceedings arising out of
or relating to the Collateral.
(c) If and to the extent that the obligations of any Pledgor under
this Section 11 are unenforceable for any reason, such Pledgor hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
11.2. INDEMNITY OBLIGATIONS SECURED BY COLLATERAL; SURVIVAL. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Pledgor contained in this Section 11 shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Letters of
Credit and all Interest Rate Protection or Other Hedging Agreements and the
payment of all other Obligations and notwithstanding the discharge thereof.
12. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor agrees
that it will join with the Pledgee in executing and, at such Pledgor's own
expense, file and refile under the UCC such financing statements, continuation
statements and other documents in such offices as the Pledgee may deem necessary
or appropriate and wherever required or permitted by law in order to perfect and
preserve the Pledgee's security interest in the Collateral and hereby authorizes
the Pledgee to file financing statements and amendments thereto relative to all
or any part of the Collateral without the signature of such Pledgor where
permitted by law, and agrees to do such further acts and things and to execute
and deliver to the Pledgee such additional conveyances, assignments, agreements
and instruments as the Pledgee may reasonably require or deem advisable to carry
into effect the purposes of this Agreement or to further assure and confirm unto
the Pledgee its rights, powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee as its attorney-in-fact,
with full authority in the place and stead of such Pledgor and in the name of
such Pledgor or otherwise, from time to time after the occurrence and during the
continuance of an Event of Default, in the Pledgee's discretion to take any
action and to execute any instrument
-13-
which the Pledgee may deem necessary or advisable to accomplish the purposes of
this Agreement.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with
this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed by the parties hereto and each
Secured Creditor, by accepting the benefits of this Agreement, acknowledges and
agrees that the obligations of the Pledgee as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement, are only those expressly set forth in this Agreement. The
Pledgee shall act hereunder on the terms and conditions set forth herein and in
Section 12 of the Credit Agreement.
14. TRANSFER BY PLEDGORS. No Pledgor will sell or otherwise dispose
of, grant any option with respect to, or mortgage, pledge or otherwise encumber
any of the Collateral or any interest therein (except as may be permitted in
accordance with the terms of the Credit Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR. Each
Pledgor represents, warrants and covenants that: (i) it is the legal, record
and beneficial owner of, and has good and marketable title to, all Securities
pledged by it hereunder, subject to no pledge, lien, mortgage, hypothecation,
security interest, charge, option or other encumbrance whatsoever, except the
liens and security interests created by the Credit Agreement and this Agreement;
(ii) it has the requisite corporate power, authority and legal right to pledge
all the Securities pledged by it pursuant to this Agreement; (iii) this
Agreement has been duly authorized, executed and delivered by such Pledgor and
constitutes a legal, valid and binding obligation of such Pledgor enforceable in
accordance with its terms, except to the extent that the enforceability hereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and by equitable
principles (regardless of whether enforcement is sought in equity or at law);
(iv) no consent of any other party (including, without limitation, any
stockholder, limited or general partner or creditor of such Pledgor or any of
its Subsidiaries) and no consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority is required to be obtained by such Pledgor in
connection with the execution, delivery or performance of this Agreement, except
as obtained on or before the date hereof or as permitted to be obtained after
the date hereof by Section 3.1 of this Agreement; (v) the execution, delivery
and performance of this Agreement does not violate any provision of any
applicable law or regulation or of any order, judgment, writ, award or decree of
any court, arbitrator or governmental authority, domestic or foreign, applicable
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to such Pledgor or of the certificate of incorporation or by-laws of such
Pledgor or of any securities issued by such Pledgor or any of its Subsidiaries,
or of any mortgage, indenture, lease, deed of trust, agreement, instrument or
undertaking to which such Pledgor or any of its Subsidiaries is a party or which
purports to be binding upon such Pledgor or any of its Subsidiaries or upon any
of their respective assets and will not result in the creation or imposition of
any lien or encumbrance on any of the assets of such Pledgor or any of its
Subsidiaries except as contemplated by this Agreement; (vi) all the shares of
Stock have been duly and validly issued, are fully paid and nonassessable; (vii)
to the best knowledge of Pledgor, each of its Pledged Notes, when executed by
the obligor thereof, will be the legal, valid and binding obligation of such
obligor, enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by equitable principles (regardless of whether enforcement is sought in
equity or at law); and (viii) the pledge and assignment of the Securities by it
pursuant to this Agreement, together with the delivery of the Securities by it
pursuant to this Agreement, creates a valid and perfected first priority
security interest in such Securities and the proceeds thereof (except to the
extent further action may be required to maintain a perfected security interest
in proceeds after the actual receipt thereof by the Pledgee), subject to no
prior lien or encumbrance or to any agreement (other than as may be created by
any other Credit Document) purporting to grant to any third party a lien or
encumbrance on the property or assets of such Pledgor which would include such
Securities. Each Pledgor covenants and agrees that it will defend the Pledgee's
right, title and security interest in and to the Securities pledged by it
pursuant to this Agreement and the proceeds thereof against the claims and
demands of all persons whomsoever, and such Pledgor covenants and agrees that it
will have like title to and right to pledge any other property at any time
hereafter pledged to the Pledgee as Collateral hereunder and will likewise
defend the right thereto and security interest therein of the Pledgee and the
Secured Creditors.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor hereunder shall remain in full force and effect without regard to, and
shall not be impaired by:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Pledgor, except to
the extent that the enforceability thereof may be limited by such event; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under in respect of this Agreement, any other Credit Document or any
Interest Rate Protection or Other Hedging Agreement, except as specifically set
forth in a waiver granted pursuant to Section 20; or (c) any amendment to or
modification of any Credit Document, or any Interest Rate Protection or Other
Hedg-
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ing Agreement or any security for any of the Obligations; whether or not any
Pledgor shall have notice or knowledge of any of the foregoing, except as
specifically set forth in an amendment or modification executed pursuant to
Section 20.
17. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and any Pledgor shall have received from the Pledgee
a written request or requests that such Pledgor cause any registration,
qualification or compliance under any federal or state securities law or laws to
be effected with respect to all or any part of its Pledged Stock, such Pledgor
as soon as practicable and at its expense shall cause such registration to be
effected (and be kept effective), and shall cause such qualification and
compliance to be effected (and be kept effective) as may be so requested and
shall permit or facilitate the sale and distribution of such Pledged Stock,
including, without limitation, registration under the Securities Act of 1933 as
then in effect (or any similar statute then in effect), appropriate
qualifications under applicable blue sky or other state securities laws and
appropriate compliance with any other government requirements; PROVIDED, that
the Pledgee shall furnish to such Pledgor such information regarding the Pledgee
as such Pledgor may request in writing and as shall be required in connection
with any such registration, qualification or compliance. Such Pledgor will
cause the Pledgee to be kept reasonably advised in writing as to the progress of
each such registration, qualification or compliance and as to the completion
thereof, will furnish to the Pledgee such number of prospectuses, offering
circulars or other documents incident thereto as the Pledgee from time to time
may reasonably request, and will indemnify the Pledgee and all others
participating in the distribution of the Pledged Stock against all claims,
losses, damages and liabilities caused by any untrue statement (or alleged
untrue statement) of a material fact contained therein (or in any related
registration statement, notification or the like) or by any omission (or alleged
omission) to state therein (or in any related registration statement,
notification or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same may have been caused by an untrue statement or omission based upon
information furnished in writing to such Pledgor by the Pledgee expressly for
use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section 7,
such Pledged Securities or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Securities Act of 1933, as then
in effect, the Pledgee may, in its sole and absolute discretion, sell such
Pledged Securities or part thereof by private sale in such manner and under such
circumstances as the Pledgee may deem necessary or advisable in order that such
sale may legally be effected without such registration. Without limiting the
generality of the foregoing, in any such event the Pledgee, in its sole and
absolute discretion: (i) may
-16-
proceed to make such private sale notwithstanding that a registration statement
for the purpose of registering such Pledged Securities or part thereof shall
have been filed under such Securities Act; (ii) may approach and negotiate with
a single possible purchaser to effect such sale; and (iii) may restrict such
sale to a purchaser who will represent and agree that such purchaser is
purchasing for its own account, for investment, and not with a view to the
distribution or sale of such Pledged Securities or part thereof. In the event
of any such sale, the Pledgee shall incur no responsibility or liability for
selling all or any part of the Pledged Securities at a price which the Pledgee,
in its sole and absolute discretion, may in good faith deem commercially
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration of such Pledged Securities for public sale.
18. TERMINATION, RELEASE. (a) After the Termination Date (as
defined below), this Agreement shall terminate (provided that all indemnities
set forth herein including, without limitation, in Section 11 hereof shall
survive any such termination) and the Pledgee, at the request and expense of the
respective Pledgor, will promptly execute and deliver to such Pledgor such
statements, documents or other instruments as may be reasonably requested by
such Pledgor acknowledging the satisfaction and termination of this Agreement
and the security interests created hereby, and will duly assign, transfer and
deliver to such Pledgor (without recourse and without any representation or
warranty) such of the Collateral of such Pledgor as may be in the possession of
the Pledgee and as has not theretofore been sold or otherwise applied or
released pursuant to this Agreement. As used in this Agreement, "Termination
Date" shall mean the date upon which the Total Commitment and all Interest Rate
Protection and Other Hedging Agreements have been terminated, no Note is
outstanding (and all Loans have been paid in full), all Letters of Credit have
been terminated (or cash collateralized to the Pledgee's satisfaction) and all
other Obligations then owing have been paid in full and there shall exist no
unsatisfied claim for reimbursement by any Indemnitee pursuant to Section 11.2.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by the Credit Agreement or is otherwise
released at the direction of the Required Banks (or all the Banks if required by
Section 13.12 of the Credit Agreement), and the proceeds of such sale or sales
or from such release are applied in accordance with the terms of the Credit
Agreement, such Collateral will be sold free and clear of the Liens created by
this Agreement and the Pledgee, at the request and expense of the respective
Pledgor, will duly assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) such of the Collateral of
such Pledgor as is then being (or has been) so sold or released and as may be in
possession of the Pledgee and has not theretofore been released pursuant to this
Agreement.
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(c) At any time that a Pledgor desires that Collateral be released as
provided in the foregoing Section 18(a) or (b), it shall deliver to the Pledgee
a certificate signed by its chief financial officer or another authorized senior
officer stating that the release of the respective Collateral is permitted
pursuant to Section 18(a) or (b). If requested by the Pledgee (although the
Pledgee shall have no obligation to make any such request), the relevant Pledgor
shall furnish appropriate legal opinions (from counsel, which may be in-house
counsel, reasonably acceptable to the Pledgee) to the effect set forth in the
immediately preceding sentence. The Pledgee shall have no liability whatsoever
to any Secured Creditor as the result of any release of Collateral by it as
permitted by this Section 18.
19. NOTICES, ETC. All notices and other communications hereunder
shall be in writing (including telegraphic, telex, facsimile transmission or
cable communication) and shall be delivered, mailed, telegraphed, telexed,
facsimile transmitted or cabled, addressed:
(a) if to any Pledgor, at its address set forth opposite its
signature below;
(b) if to the Pledgee, at:
Banque Paribas
787 Seventh Avenue
New York, New York 10019
Attention: Donald Ercole
Telephone No.: (212) 841-2540
Facsimile No.: (212) 841-2363
(c) if to any Bank Creditor (other than the Pledgee), either (x) to
the Agent, at the address of the Agent specified in the Credit Agreement or
(y) at such address as such Bank Creditor shall have specified in the
Credit Agreement;
(d) if to any Other Creditor to the Representative for the Other
Creditors, at such address as such Representative may have provided to the
Borrower and the Pledgee from time to time, or, in the absence of a
Representative, directly to the Other Creditors at such address as the
Other Creditors shall have specified in writing to the Borrower and the
Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. All such
notices and communications
-18-
shall, when mailed, telegraphed, telexed, facsimile transmitted or cabled or
sent by overnight courier, be effective on the third Business Day following
deposit in the mails, certified, return receipt requested, when delivered to the
telegraph company, cable company or on the day following delivery to an
overnight courier, as the case may be, or sent by telex or facsimile device,
except that notices and communications to the Collateral Agent shall not be
effective until received by the Collateral Agent.
20. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be amended, changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Pledgor and the Pledgee (with
the written consent of the Required Banks (or all the Banks if required by
Section 13.12 of the Credit Agreement)); PROVIDED, that any amendment, change,
waiver, modification or variance affecting the rights and benefits of a single
Class (as defined below) of Secured Creditors (and not all Secured Creditors in
a like or similar manner) shall require the written consent of the Requisite
Creditors (as defined below) of such Class. For the purpose of this Agreement,
the term "Class" shall mean each class of Secured Creditors, I.E., whether (i)
the Bank Creditors as holders of the Credit Document Obligations or (ii) the
Other Creditors as holders of the Interest Rate Protection Obligations. For the
purpose of this Agreement, the term "Requisite Creditors" of any Class shall
mean each of (i) with respect to the Credit Document Obligations, the Required
Banks and (ii) with respect to the Interest Rate Protection Obligations, the
holders of at least a majority of all obligations outstanding from time to time
under the Interest Rate Protection or Other Hedging Agreements.
21. MISCELLANEOUS. (a) This Agreement shall be binding upon the
successors and assigns of each Pledgor and shall inure to the benefit of and be
enforceable by the Pledgee and each Secured Creditor and their respective
successors and assigns.
(b) THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
(c) The headings in this Agreement are for purposes of reference only
and shall not limit or define the meaning hereof.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which shall constitute one
instrument.
22. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent
-19-
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
* * *
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IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
ADDRESS:
645 Madison Avenue VERNITRON CORPORATION,
New York, NY 10022 as a Pledgor
Attention: President
Tel: (212) 593-7900
Fax: (212) 754-6348 By
------------------------------
Title:
7777 Fay Avenue PRECISION AEROTECH, INC.,
Suite 200 as a Pledgor
La Jolla, CA 92037
Attention: President
Tel: (619) 456-2992 By
Fax: (619) 456-3809 ------------------------------
Title:
c/o L&S Machine Co., Inc. L&S AEROTECH, INC.,
*2019 Southwest Boulevard as a Pledgor
Wichita, KS 67277
Attention: President
Tel: (316) 942-0181 By
Fax: (316) 942-6082 ------------------------------
Title:
- -----------------------
*With a copy to:
Vernitron Corporation
645 Madison Avenue
New York, NY 10022
Attention: President
-21-
*6717 Alabama Highway 157 SPEEDRING, INC.,
Cullman, AL 35057 as a Pledgor
Attention: President
Tel: (205) 737-5200
Fax: (205) 737-5203 By
------------------------------
Title:
*2909 Waterview Drive SPEEDRING SYSTEMS, INC.,
Rochester Hills, MI 48309-4600 as a Pledgor
Attention: President
Tel: (810) 853-2540
Fax: (810) 853-2808 By
------------------------------
Title:
BANQUE PARIBAS,
as Pledgee
By
------------------------------
Title:
By
------------------------------
Title:
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