STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement ("Agreement") is entered into as of the 7th
day of May, 1997, by and between AMERICAN CONSOLIDATED LABORATORIES, INC.
("ACL"), a North Carolina corporation, and SIRROM INVESTMENTS, INC. ("Sirrom"),
a Tennessee corporation, as agent pursuant to that certain Intercreditor
Agreement of even date herewith by and between TULLIS-DICKERSON CAPITAL FOCUS,
L.P. ("TDCF"), Sirrom and Grantors (the "Intercreditor Agreement") ("Sirrom" and
"TDCF" are collectively referred to hereinafter as "Lenders").
WHEREAS, ACL is liable either as borrower or as guarantor on each of
the obligations evidenced by (1) that certain Loan Agreement and Secured
Promissory Note dated December 18, 1996, payable to the order of Sirrom in the
original principal amount of $520,000; and (2) that certain Loan Agreement and
Amended and Restated Promissory Note of even date herewith payable to the order
of TDCF in the original principal amount of $550,000; and (3) a loan to be made
by Sirrom (the "Sirrom Loan") in the original principal amount of $1,575,000
pursuant to that certain Loan Agreement and Secured Promissory Note of even date
herewith (all of the foregoing loan agreements, notes and all other documents
executed in connection with said transactions are collectively referred to as
the "Loan Documents" and all of the obligations evidenced thereby are
collectively referred to as the "Loans"); and
WHEREAS, one condition to Sirrom's agreement to make the Sirrom Loan is
that Lenders must be provided a first priority perfected pledge of certain stock
owned by ACL;
NOW, THEREFORE, as an inducement to cause Sirrom to make the Sirrom
Loan, and for other valuable consideration, the receipt and sufficiency of which
are acknowledged, it is agreed as follows:
1. Definition of Secured Indebtedness. As used herein, "Secured
Indebtedness" shall mean the obligations of ACL under this Agreement and all
present and future debts and other obligations of ACL to Lenders, whether
arising by contract, tort, guaranty, overdraft, or otherwise; whether or not the
advances or events creating such debts or other obligations are presently
foreseen; whether such obligations were originally payable to Lenders or are
acquired by Lenders from another person or entity; and regardless of the class
of the debts or other obligations, be they otherwise secured or unsecured.
Without limiting the foregoing, the "Secured Indebtedness" specifically includes
the Loans, as evidenced by the Loan Documents, and all modifications, extensions
and renewals thereof.
2. Pledge of Stock. To secure the payment of the Secured Indebtedness,
ACL
hereby pledges to Sirrom, as agent pursuant to the Intercreditor Agreement, for
the benefit of Lenders, and grants to Sirrom, as agent pursuant to the
Intercreditor Agreement, for the benefit of Lenders, a security interest in the
shares of the common stock of the corporations listed in Exhibit A hereto (each
an "Issuer"), as evidenced by the certificates described in Exhibit A attached
hereto, together with all dividends, distributions and other rights of payment
arising therefrom or with respect thereto and proceeds thereof (collectively the
"Pledged Stock").
3. Perfection. Lenders' security interest in the Pledged Stock shall be
perfected by Sirrom's possession of the certificates evidencing the same. Sirrom
shall also be provided with stock powers covering the Pledged Stock executed in
blank by ACL.
4. Warranties. ACL warrants to Lenders that the following warranties
are presently true and covenants that they shall remain true at and "as of" all
times hereafter until Sirrom releases the Pledged Stock:
(a) Title. ACL is the sole legal and equitable owner of the
Pledged Stock, and ACL's absolute title thereto is not the subject of any claim
or challenge threatened or asserted by any third party.
(b) Valid Stock. The Pledged Stock has been validly issued and
is fully paid for and non-assessable.
(c) No Liens or Restrictions. The Pledged Stock is not and
will not be subject to any security interest, lien, restriction of transfer,
"buy-sell" agreement, voting agreement, redemption agreement, option or other
agreements, except for those restrictions and agreements, if any, that are noted
on the stock certificates, and Permitted Liens (as defined in the Loan
Agreement).
(d) Valid Lien. This Agreement provides Lenders with a valid
pledge of, and a valid first priority security interest in, the Pledged Stock.
(e) Percentage of Ownership of Issuer. The Pledged Stock
represents the percentage of the total outstanding shares of each Issuer's stock
as set forth in Exhibit A hereto.
(f) No Other Classes of Stock. Each Issuer has only one class
of stock outstanding.
(g) No Options. No Issuer has any options, warrants or
convertible debt instruments outstanding that could require the issuance of
additional stock.
5. Covenants. ACL covenants with Lenders as follows:
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(a) Additional Stock. ACL shall receive any stock issued or
delivered as a result of ownership of the Pledged Stock as Lenders' agent and
shall deliver the same immediately to Sirrom upon receipt. Such additional stock
shall become part of the Pledged Stock hereunder upon issuance.
(b) No Further Encumbrance. ACL shall not sell or transfer any
or all of the Pledged Stock or grant or suffer the attachment of any Encumbrance
to any or all of the Pledged Stock.
(c) Notices. If Lenders so request, ACL shall forward promptly
after ACL's receipt to Lenders, copies of all proxy solicitations, meeting
notices, and other writings pertaining to the Pledged Stock.
6. Record Ownership. Lenders may, at any time and in its sole
discretion following the occurrence and during the continuation of a default
under this Agreement, cause any or all of the Pledged Stock to be transferred of
record into Lenders' name or into the name of a nominee. ACL hereby appoints
Sirrom as ACL's attorney-in-fact for the purpose of so transferring record
ownership of the Pledged Stock. The mere transfer of record ownership shall be
for preservation of Lenders' rights only and shall not be considered a sale or
disposition of the Pledged Stock or an acquisition thereof in full or partial
satisfaction of the Secured Indebtedness, unless Lenders specifically so provide
in writing and Lenders shall, notwithstanding such a transfer of record, allow
ACL the benefit of provisions herein regarding distributions and voting rights.
7. Voting Rights. As long as there is no default under this Agreement,
ACL shall be entitled to exercise all voting rights arising from ownership of
the Pledged Stock.
8. Right to Distributions. As long as there is no default under this
Agreement, ACL shall have the exclusive right to receive all distributions of
cash made with respect to the Pledged Stock.
9. Return of Pledged Stock. The Pledged Stock shall be returned to ACL
when (i) the Secured Indebtedness has been paid in full and (ii) Lenders (or
either of them) have no further obligation to extend credit to be included in
the Secured Indebtedness. The return of the Pledged Stock shall be without
recourse against Lenders and shall be effected without any representation or
warranty on Lenders' part, notwithstanding any provision of the Uniform
Commercial Code or other law that might otherwise imply or require
representations or warranties as to title or other matters.
10. Recitals. ACL warrants and agrees that the recitals set forth at
the beginning of this Agreement are true.
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11. No Burdensome Agreements. ACL warrants that ACL is not a party to
any contract or agreement and is not subject to any contingent liability that
does or may impair ACL's ability to perform under the terms of this Agreement.
ACL further warrants that the execution and performance of this Agreement will
not cause a default, acceleration or other event under any other contract or
agreement to which ACL or any property of ACL is subject, and will not result in
the imposition of any charge, penalty, lien or other encumbrance against any of
ACL's property except in favor of Lenders.
12. Legal and Binding Agreement. ACL warrants that the execution and
performance of this Agreement will not violate any judicial or administrative
order or governmental law or regulation, and that this Agreement is valid,
binding and enforceable in every respect according to its terms.
13. No Consent Required. ACL warrants that ACL's execution, delivery
and performance of this Agreement do not require the consent of or the giving of
notice to any third party including, but not limited to, any other lender,
governmental body or regulatory authority.
14. No Default. ACL warrants that, as of the execution of this
Agreement, no default exists hereunder and no condition exists which, with the
giving of notice, the passing of time, or both, would constitute such a default.
15. Default Defined. The occurrence of an Event of Default under the
Loan Documents shall constitute a default under this Agreement.
16. Remedies Upon Default. Upon the occurrence and during the
continuation of a default hereunder, Lenders may exercise any of the following
remedies:
(a) Power to Vote Pledged Stock. If Lenders so elect in
writing, Lenders shall have the exclusive right to exercise voting powers and
give consents, waivers, ratifications and notices relating to the Pledged Stock.
ACL hereby irrevocably appoints Sirrom as ACL's proxy and attorney-in-fact to so
act with respect to the Pledged Stock. Lenders may exercise their power to vote
the Pledged Stock pursuant to the power granted in this subparagraph or pursuant
to the Irrevocable Proxy executed in favor of Lenders in connection with the
execution of this Agreement. Issuer and Issuer's secretary and transfer agent
(if any) are hereby irrevocably authorized and directed to honor the Irrevocable
Proxy in favor of Lenders without any inquiry whatsoever on their part, and ACL
hereby agrees that Issuer, Issuer's secretary and transfer agent (if any) and
all employees and agents of both of them shall not be liable to ACL for honoring
the Irrevocable Proxy upon Lenders' demand. Lenders' exercise of any rights
under the Irrevocable Proxy pending disposition of the Pledged Stock at a
private or public sale shall not be considered a disposition of any or all of
the Pledged Stock and shall not be considered an acceptance of the Pledged Stock
in satisfaction of any or all of the Secured Indebtedness.
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(b) Record Ownership. Lenders may cause any or all of the
Pledged Stock to be transferred of record into Lenders' name. ACL hereby
appoints Sirrom as ACL's attorney-in-fact for the purpose of so transferring
record ownership of the Pledged Stock. The mere transfer of record ownership
shall be for preservation of Lenders' rights only and shall not be considered a
sale or disposition of the Pledged Stock or an acquisition thereof in full or
partial satisfaction of the Secured Indebtedness, unless Lenders specifically so
provide in writing.
(c) Receipt of Distributions. Lenders shall have the exclusive
right to receive all distributions made with respect to the Pledged Stock.
Lenders shall apply cash distributions to payment of the Secured Indebtedness
and hold all other types of property distributed for sale pursuant to the
Uniform Commercial Code as adopted in Tennessee as proceeds of the Pledged
Stock. Lenders' right to receive such distributions shall be further evidenced
by the Irrevocable Proxy executed in connection with this Agreement.
(d) Sale of Pledged Stock. Lenders may sell the Pledged Stock
or any part thereof at public or private sale or at any appropriate broker's
board or securities exchange, for cash, on credit, or for future delivery.
(i) If notice of the disposition is required by law to be
given, such notice shall be sufficient and commercially
reasonable if given at least five (5) days prior to the
proposed disposition.
(ii) Lenders may purchase any or all of the Pledged Stock sold
at any public sale or, to the extent permitted by law, at any
private sale.
(iii) ACL acknowledges that the Pledged Stock has not been
registered pursuant to applicable securities laws and that
compliance with applicable laws upon any disposition by
Lenders may bring a lower price than would otherwise be
obtained for the Pledged Stock. Without limiting the authority
of Lenders to take all other measures deemed necessary by
Lenders to comply with any applicable securities laws, ACL
agrees that, or prior to any sale of the Pledged Stock,
Lenders may, in their sole discretion, restrict prospective
purchasers to persons who will represent that they will
purchase for their own account for investment and not with
view to the distribution or sale of any of the Pledged Stock
and who will agree that the Pledged Stock so purchased may
bear an appropriate restrictive legend.
(iv) At or prior to any sale, Lenders may, in their sole
discretion, require that prospective purchasers establish, to
Lenders' satisfaction, that they are investors of sufficient
financial means and/or business acumen to qualify as
"accredited investors" or that they meet any other appropriate
standard of investor suitability under federal and/or state
securities laws.
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(v) At any sale, Lenders shall have the right to transfer to
the purchaser thereof the Pledged Stock sold. Sirrom is hereby
appointed ACL's attorney-in-fact for the purpose of supplying
any endorsements necessary to effect such transfer. Each
purchaser at any such sale (including, without limitation,
Lenders) shall hold the property sold free from any claim or
right of any kind, including any equity or rights of
redemption of ACL. ACL hereby specifically waives all rights
of redemption, stay or appraisal which ACL has or may have
under any rule of law or statute now existing or hereafter
adopted.
(vi) At any sale, the Pledged Stock may be sold in one lot as
an entirety or in separate portions, as Lenders may determine.
(vii) If any of the Issuer's securities are then registered
for public sale, then, prior to any sale hereunder, Lenders
may, but shall not be obligated to, seek to have all or part
of the Pledged Stock registered for public distribution
pursuant to any applicable state or federal law or seek
assurances from any state or federal authority that the
intended disposition of Pledged Stock will qualify under an
exception to laws that otherwise require registration for the
sale of stock.
(viii) In addition to other costs of sale, all expenses
incurred by Lenders in addressing securities law matters
relating to the sale of the Pledged Stock, including, but not
limited to, reasonable attorney's fees, shall become part of
the Secured Indebtedness.
(ix) Lenders shall not be obligated to make any sale pursuant
to any notice given and 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 resumed at any
time and place to which the same may be so adjourned.
(x) In the case of any sale of all or any part of the Pledged
Stock on credit or for future delivery, payments made by the
purchaser shall reduce the outstanding balance of the Secured
Indebtedness as payments are received, and the outstanding
principal balance of the Secured Indebtedness shall continue
to accrue interest over the time that such payments are made,
until the principal and accrued interest constituting the
Secured Indebtedness have been paid in full. Lenders shall not
incur any liability in case of the failure of such purchaser
to completely pay for the Pledged Stock so sold and, in the
case of any such failure, the Pledged Stock may again be sold
pursuant to the provisions hereof.
17. Application of Proceeds. All amounts received by Lenders by
exercise of its remedies hereunder shall be applied as provided in the Loan
Documents.
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18. Incorporation of Exhibits. All Exhibits referred to in this
Agreement are incorporated herein by this reference.
19. Indulgence Not Waiver. Lenders' indulgence in the existence of a
default hereunder or any other departure from the terms of this Agreement shall
not prejudice Lenders' rights to declare a default or otherwise demand strict
compliance with this Agreement.
20. Cumulative Remedies. The remedies provided Lenders in this
Agreement are not exclusive of any other remedies that may be available to
Lenders under any other document or at law or equity.
21. Amendment and Waiver in Writing. No provision of this Agreement can
be amended or waived, except by a statement in writing signed by the party
against which enforcement of the amendment or waiver is sought.
22. Assignment. This Agreement shall be binding upon and inure to the
benefit of the heirs, successors and assigns of ACL and the successors and
assigns of Lenders, except that ACL shall not assign any rights or delegate any
obligations arising hereunder without the prior written consent of Lenders. Any
attempted assignment or delegation by ACL without the required prior consent
shall be void.
23. Entire Agreement. This Agreement and the other written agreements
between ACL and Lenders represent the entire agreement between the parties
concerning the subject matter hereof, and all oral discussions and prior
agreements are merged herein.
24. Severability. Should any provision of this Agreement be invalid or
unenforceable for any reason, the remaining provisions hereof shall remain in
full effect.
25. Time of Essence. Time is of the essence of this Agreement, and all
dates and time periods specified herein shall be strictly observed, except that
Lenders may permit specific deviations therefrom by its written consent.
26. Applicable Law. The validity, construction and enforcement of this
Agreement and all other documents executed with respect to the Secured
Indebtedness shall be determined according to the laws of Tennessee applicable
to contracts executed and performed entirely within that state.
27. Jurisdiction, Venue, Waiver of Jury Trial. Disputes arising under
this Agreement shall be governed as to matters of jurisdiction, venue and waiver
of right to jury trial by the provisions of the Loan Documents.
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28. Gender and Number. Words used herein indicating gender or number
shall be read as context may require.
29. Captions Not Controlling. Captions and headings have been included
in this Agreement for the convenience of the parties, and shall not be construed
as affecting the content of the respective paragraphs.
Dated as of the date first written above:
THE UNDERSIGNED ACKNOWLEDGE A THOROUGH
UNDERSTANDING OF THE TERMS OF THIS AGREEMENT
AND AGREE TO BE BOUND THEREBY:
AMERICAN CONSOLIDATED LABORATORIES, INC.
By: /s/ Joseph A. Arena
Title: CEO
SIRROM INVESTMENTS, INC.
By: /s/ Donald F. Barrickman
Title: Vice President
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EXHIBIT A
DESCRIPTION OF PLEDGED STOCK
ISSUER NUMBER OF CERTIFICATE NUMBER % OF ISSUER'S STOCK
SHARES
NOVAVISION, INC. 1,000 1 100
CAROLINA CONTACT LENS, INC. 1,100 4 100
SALVATORI OPHTHALMIC 1,000 1 100
MANUFACTURING CORPORATION
WOLCON LABS, INC. 5,100 4 100
4,900 5
S-O NEBRASKA, INC 1,000 1 100
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