EXHIBIT 10.11
EXECUTION COPY
AMENDED AND RESTATED STOCK PLEDGE AGREEMENT, dated as of
February 25, 1999, among WAHLCO ENVIRONMENTAL SYSTEMS, INC.,
a Delaware corporation ("Wahlco"), THERMATRIX INC., a
Delaware Corporation ("Thermatrix, and together with Wahlco,
"Borrowers"), and BACHMANN COMPANIES, INC., a Delaware
corporation, WAHLCO ENGINEERED PRODUCTS LTD., a United
Kingdom Corporation, WAHLCO ENGINEERED PRODUCTS GROUP
LIMITED, a United Kingdom corporation, and TEDDINGTON
BELLOWS (HOLDINGS), LTD., a United Kingdom corporation each
a direct or indirect subsidiary of Borrowers (individually
as a "Pledgor" and collectively together with the Borrowers,
as "Pledgors"), WEXFORD MANAGEMENT LLC, a Connecticut
limited liability company, as Agent (the "Agent").
-----------------------------------------------------
WHEREAS, each Pledgor is the record and beneficial owner of the shares
of common and preferred stock described in Schedule I hereto (the "Pledged
Shares" of such Pledgor) issued by the corporations named therein; and
WHEREAS, on January 13, 1999, pursuant to an Agreement and Plan of
Merger, dated November 9, 1998 (the "Merger Agreement"), among the Borrowers and
TMX Acquisition Sub I, Inc., a wholly owned subsidiary of Thermatrix ("Merger
Sub"), Merger Sub merged with and into Wahlco (the "Merger") and Wahlco became a
wholly owned subsidiary of Thermatrix at the effective time of the Merger;
WHEREAS, concurrently with the execution and delivery hereof, the
Borrowers are entering into a Second Amended and Restated Credit Agreement,
dated as of the date hereof, with the Lenders named therein (the "Lenders") and
the Agent (as the same may hereafter be modified, extended, replaced or
otherwise amended, the "Credit Agreement"), pursuant to which the Borrowers
shall be jointly and severally liable for the payment and performance of all of
the obligations and liabilities to the Lenders and the Agent set forth therein
and in the other Loan Documents (as such term is defined in the Credit
Agreement) (all of such obligations and liabilities, the "Liabilities");
WHEREAS, it is a condition to the effectiveness of the Credit
Agreement that the Pledgors enter into this Agreement; and
WHEREAS, each of the Pledgors will receive substantial direct and
indirect benefits from the Lenders and the Agent entering into the Credit
Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and to induce Lender to enter into the Credit Agreement,
the Stock Pledge Agreement, dated July 28, 1995 as amended by the first
amendment thereto, is hereby amended and restated in its entirety, and, it is
agreed as follows:
1. Definitions. Unless otherwise defined herein, terms defined
in the Credit Agreement are used herein as therein defined, and the following
shall have (unless otherwise
provided elsewhere in this Stock Pledge Agreement) the following respective
meanings (such meanings being equally applicable to both the singular and plural
form of the terms defined):
"Agreement" shall mean this Stock Pledge Agreement, including all
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to the Agreement as the same may be in effect
at the time such reference becomes operative.
"Bankruptcy Code" shall mean Title 11, United States Code, as amended
from time to time, and any successor statute thereto.
"Pledged Collateral" shall have the meaning assigned to such term in
Section 2 hereof.
"Secured Obligations" shall have the meaning assigned to such term in
Section 3 hereof.
2. Pledge. Each Pledgor hereby pledges to the Agent and the Lenders,
------
and grants to the Agent and the Lenders, a first priority security interest in,
all of the following (collectively, the "Pledged Collateral"):
(a) the Pledged Shares of such Pledgor and the certificates
representing the Pledged Shares, and all dividends, distributions, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares of such Pledgor;
(b) all additional shares of stock of any issuer of the Pledged
Shares of such Pledgor from time to time acquired by such Pledgor in any manner
(which shares shall be deemed to be part of the Pledged Shares), and the
certificates representing such additional shares, and all dividends,
distributions, cash, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such shares; and
(c) all shares of any Person who, after the date of this Agreement,
becomes, as a result of any occurrence, a directly owned Subsidiary of such
Pledgor (which shares shall be deemed to be part of the Pledged Shares) and the
certificates representing such shares, and all dividends, distributions, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares.
3. Security for Obligations. This Agreement secures, and the
------------------------
Pledged Collateral is security for, the prompt payment in full when due, whether
at stated maturity, by acceleration or otherwise, and performance of the
Obligations, whether for principal, premium, interest, fees, costs and expenses,
and all obligations of Pledgors now or hereafter existing under this Agreement
and under the Guaranty (collectively, the "Secured Obligations").
2
4. Delivery of Pledged Collateral. All certificates representing or
------------------------------
evidencing the Pledged Shares other than the shares of Nuevo Metro-Flex
Italiana, S.r.L. shall be delivered to the Agent and held by the Agent on behalf
of the Lenders on the date hereof and shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Agent. In addition, the Agent shall have the right at any
time to exchange certificates or instruments representing or evidencing Pledged
Shares for certificates or instruments of smaller or larger denominations.
5. Representations and Warranties. Except as set forth in the
------------------------------
Disclosure Letter, each Pledgor represents and warrants to the Agent and the
Lenders that:
(a) Such Pledgor is, and at the time of delivery of the Pledged
Shares to the Agent pursuant to Section 4 hereof will be, the sole holder of
record and the sole beneficial owner of the Pledged Collateral pledged by such
Pledgor free and clear of any Lien thereon or affecting the title thereto,
except for the Lien created by this Agreement.
(b) All of the Pledged Shares of such Pledgor have been duly
authorized, validly issued and are fully paid and non-assessable.
(c) Such Pledgor has the right and requisite corporate authority to
pledge, assign, transfer, deliver, deposit and set over the Pledged Collateral
pledged by such Pledgor to the Agent as provided herein.
(d) None of the Pledged Shares of such Pledgor has been issued or
transferred in violation of the securities registration, securities disclosure
or similar laws of any jurisdiction to which such issuance or transfer may be
subject.
(e) The authorized Stock of each of the issuers listed on Schedule I
hereto consists of the number of shares of stock, with the number of shares
issued and outstanding, that are described in Schedule I hereto. As of the date
hereof, there are no existing options, warrants, calls or commitments of any
character whatsoever relating to any Stock of any of such issuers.
(f) No consent, approval, authorization or other order of any Person
and no consent, authorization, approval, or other action by, and no notice to or
filing with, any Governmental Authority is required either (i) for the pledge by
such Pledgor of the Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by such Pledgor or (ii) for
the exercise by the Agent of the voting or other rights provided for in this
Agreement or the remedies in respect of the Pledged Collateral pursuant to this
Agreement, except as may be required in connection with such disposition by laws
affecting the offering and sale of securities generally.
(g) The pledge, assignment and delivery of the Pledged Collateral
pursuant to this Agreement will create a valid first priority Lien on and a
first priority perfected security interest in the Pledged Collateral pledged by
such Pledgor, and the proceeds thereof, securing the payment of the Secured
Obligations, subject to no other Lien or security interest.
3
(h) 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 as enforceability may
be limited by bankruptcy, insolvency, or other similar laws affecting the rights
of creditors generally or by the application of general equity principles.
(i) The Pledged Shares constitute one hundred percent (100%) of the
issued and outstanding shares of Stock of the issuers thereof.
The representations and warranties set forth in this Section 5 shall
survive the execution and delivery of this Agreement.
6. Covenants. Each Pledgor covenants and agrees that until the
---------
Termination Date:
(a) Without the prior written consent of the Agent, such Pledgor will
not sell, assign, transfer, pledge, or otherwise encumber any of its rights in
or to the Pledged Collateral pledged by such Pledgor or any unpaid dividends or
other distributions or payments with respect thereto or grant a Lien in any
therein except as otherwise permitted by the Loan Agreement.
(b) Such Pledgor will, at its expense, promptly execute, acknowledge
and deliver all such instruments and take all such action as the Agent from time
to time may request in order to ensure to the Agent and the Lenders the benefits
of the Liens in and to the Pledged Collateral intended to be created by this
Agreement, including the filing of any necessary Uniform Commercial Code
financing statements, which may be filed by the Agent with or without the
signature of such Pledgor, and will cooperate with the Agent, at such Pledgor's
expense, in obtaining all necessary approvals and making all necessary filings
under federal or state law in connection with such Liens or any sale or transfer
of the Pledged Collateral.
(c) Such Pledgor has and will defend the title to the Pledged
Collateral and the Liens of the Agent and the Lenders thereon against the claim
of any Person and will maintain and preserve such Liens until the Secured
Obligations are paid in full.
(d) Such Pledgor will, upon obtaining any additional shares of stock
of any issuer of the Pledged Shares or any new directly owned Subsidiary, which
shares are not already Pledged Collateral, promptly (and in any event within
three Business Days) deliver to the Agent a Pledge Amendment, duly executed by
such Pledgor, in substantially the form of Schedule II hereto (a "Pledge
Amendment"), in respect of the additional Pledged Shares which are to be pledged
pursuant to this Agreement. Such Pledgor hereby authorizes the Agent to attach
each Pledge Amendment to this Agreement delivered to the Agent shall for all
purposes hereunder be considered Pledged Collateral.
(e) Pledgors covenant and agree to use their commercially reasonable
efforts to deliver the shares of Nuevo Metro-Flex Italiana, S.r.L. to the Agent,
accompanied by duly executed instruments of transfer or assignment in blank.
4
7. Pledgor's Rights. As long as no Default or Event of Default shall
----------------
have occurred and be continuing and until written notice shall be given to each
Pledgor in accordance with Section 8 (a) hereof,
(a) such Pledgor shall have the right, from time to time, to vote and
give consents with respect to the Pledged Collateral or any part thereof for all
purposes not inconsistent with the provisions of this Agreement, the Credit
Agreement, and any other agreement; provided, however, that no vote shall be
-------- -------
cast, and no consent shall be given or action taken, which would have the effect
of impairing the position or interest of the Agent or any Lender in respect of
the Pledged Collateral or which would have the effect of impairing the position
or interest of the Agent or any Lender in respect of the Pledged Collateral or
which would authorize or effect (except as and to the extent expressly permitted
by the Credit Agreement) (i) the dissolution or liquidation, in whole or in
part, of any of its Subsidiaries, (ii) the consolidation or merger of any of its
Subsidiaries with any other Person, (iii) the sale, disposition or encumbrance
of all or substantially all of the assets of any of its Subsidiaries, (iv) any
change in the authorized number of shares, the stated capital or the authorized
share capital of any of its Subsidiaries or the issuance of any additional
shares of its Stock, or (v) the alteration of the voting rights with respect to
the Stock of any of its Subsidiaries;
(b) (i) such Pledgor shall be entitled, from time to time, to
collect and receive for its own use all cash dividends paid in respect of
the Pledged Shares to the extent not in violation of the Credit Agreement
other than any and all (A) dividends paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral, (B) dividends and other distributions paid or payable in cash
in respect of any Pledged Collateral in connection with a partial or total
liquidation or dissolution, and (C) cash paid, payable or otherwise
distributed in redemption of, or in exchange for, any Pledged Collateral;
provided, however, that until actually paid all rights to such
-------- -------
distributions shall remain subject to the Lien created by this Agreement;
and
(ii) all dividends (other than such cash dividends as are
permitted to be paid to such Pledgor in accordance with clause (i) above)
and all other distributions in respect of any of the pledged Shares of
such Pledgor, whenever paid or made, shall be delivered to the Agent to
hold as Pledged Collateral and shall, if received by such Pledgor, be
received in trust for the benefit of the Agent or any Lender, be
segregated from the other property or funds of such Pledgor, and be
forthwith delivered to the Agent as Pledged Collateral in the same form as
so received (with any necessary endorsement).
8. Defaults and Remedies. (a) Upon the occurrence of an Event of
---------------------
Default and during the continuation of such Event of Default, then or at any
time after such declaration (provided that such declaration is not rescinded by
the Agent) and following written notice to each Pledgor, Agent (personally or
through an agent) is hereby authorized and empowered to transfer and register in
its name or in the name of its nominee the whole or any part of the Pledged
Collateral, to exchange certificates or instruments representing or evidencing
Pledged Securities for certificates or instruments of smaller or larger
denominations, to exercise the voting rights with respect thereto, to collect
and receive all cash dividends and other
5
distributions made thereon, to sell in one or more sales after seven days'
notice of the time and place of any public sale or of the time after which a
private sale is to take place (which notice each Pledgor agrees is commercially
reasonable), but without any previous notice or advertisement, the whole or any
part of the Pledged Collateral as though the Agent was the outright owner
thereof, each Pledgor hereby irrevocably constituting and appointing the Agent
as the proxy and attorney-in-fact of such Pledgor, with full power or
substitution to do so, and which shall remain in effect until the Secured
Obligations are paid in full; provided, however, that the Agent shall not have
any duty to exercise any such right or to preserve the same and shall not be
liable for any failure to do so or for any delay in doing so. Any sale shall be
made at a public or private sale at the Agent's place of business, or at any
public building in the City of New York or elsewhere to be named in the notice
of sale, either for cash or upon credit or for future delivery at such price, as
the Agent may deem fair, and the Agent may be the purchaser of the whole or any
part of the Pledged Collateral so sold and hold the same thereafter in its own
right free from any claim of such Pledgor or any right of redemption. Each sale
shall be made to the highest bidder, but the Agent reserves the right to reject
any and all bids at such sale which, in its discretion, it shall deem
inadequate. Demands of performance, except as otherwise herein specifically
provided for, notice of sale, advertisements and the presence of property at
sale are hereby waived and any sale hereunder may be conducted by an auctioner
or any officer or agent of the Agent.
(b) If, at the original time or times appointed for the sale of the
whole or any part of the Pledged Collateral, the highest bid, if there be but
one sale, shall be inadequate to discharge in full all the Secured Obligations,
or if the pledged Collateral be offered for sale in lots, if at any of such
sales, the highest bid for the lot offered for sale would indicate to the Agent,
in its discretion, the unlikelihood of the proceeds of the sales of the whole of
the Pledged Collateral being sufficient to discharge all the Secured
Obligations, the Agent may, on one or more occasions and in its discretion,
postpone any of said sales by public announcement at the time of sale or the
time of previous postponement of sale, and no other notice of such postponement
or postponements of sale need be given, any other notice being hereby waived;
provided, however, that any sale or sales made after such postponement shall be
- -------- -------
after seven days' notice to Pledgors.
(c) in the event of any sales hereunder the Agent shall, after
deducting all costs or expenses of every kind (including reasonable attorneys'
fees and disbursements) for care, safekeeping, collection, sale, delivery or
otherwise, apply the residue of the proceeds of the sales to the payment or
reduction, either in whole or in part, of the Secured Obligations in accordance
with the agreements and the instruments governing and evidencing such
Obligations, returning the surplus, if any, to Pledgors.
(d) if, at any time when the Agent in its sole discretion determines,
following the occurrence and during the continuance of an Event of Default, that
in connection with any actual or contemplated exercise of its rights (when
permitted under this Section 8) to sell the whole or any part of the Pledged
Collateral registration of all or part of the Pledged Collateral pursuant to the
Securities Act of 1933, as amended (or any similar statute then in effect) (the
"Act"), each Pledgor shall, in an expeditious manner, cause its Subsidiaries to:
6
(i) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect to
the Pledged Collateral and use its best efforts to cause such
registration statement to become and remain effective.
(ii) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Act with
respect to the sale or other disposition of the Pledged Collateral
covered by such registration statement whenever the Agent shall desire
to sell or otherwise dispose of the Pledged Collateral.
(iii) Furnish to the Agent such numbers copies of a prospectus
and a preliminary prospectus, in conformity with the requirements of
the Act, and such other documents as the Agent may request in order to
facilitate the public sale or other disposition of the Pledged
Collateral by the Agent.
(iv) Use its best efforts to register or qualify the Pledged
Collateral covered by such registration statement under such other
securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as the Agent shall request, and do such other
reasonable acts and things as may be required of it to enable the
Agent to consummate the public sale or other disposition in such
jurisdictions of the Pledged Collateral by the Agent.
(v) Furnish, at the request of the Agent, on the date that
shares of the Pledged Collateral are delivered to the underwriters for
sale pursuant to such registration or, if the security is not being
sold through underwriters, on the date that the registration statement
with respect to such shares of the Pledged Collateral becomes
effective, (A) an opinion, dated such date, of the independent counsel
representing such registrant for the purposes of such registration,
addressed to the underwriters, if any, and in the event the Pledged
Collateral is not being sold through underwriters, then to the Agent,
in customary form and covering matters of the type customarily covered
in such legal opinions; and (B) a comfort letter, dated such date,
from the independent certified public accountant of such registrant,
addressed to the underwriters, if any, and in the event the Pledged
collateral is not being sold through underwriters, then to the Agents,
in a customary from and covering matters of the type customarily
covered by such comfort letters and as the underwriters or the Agent
shall reasonably request. The opinion of counsel referred to above
shall additionally cover such other legal matters with respect to the
registration in respect of which such opinion is being given as the
Agent any reasonably request.
(vi) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not later
than 18 months after the effective date of the registration statement,
an earnings statement covering the period of at least 12 months
7
beginning with the first full month after the effective date of such
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Act.
(e) All expenses incurred in complying with Section 8(d)
hereof, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National Association of
Securities Dealers, Inc.), printing expenses, fees and expenses of counsel for
the Agent, expenses of the independent certified public accountants (including
any special audits incident to or required by any such registration) and
expenses of complying with the securities or blue sky laws or any jurisdictions,
shall be paid by Pledgors.
(f) if, at any time when the Agent shall determine to exercise
its right to sell the whole or any part of the Pledged Collateral hereunder,
such Pledged Collateral or the part of thereof to be sold shall not, for any
reason whatsoever, be effectively registered under the Act, the Agent may, in
its discretion (subject only to applicable requirements of law), sell such
Pledged Collateral or part thereof by private sale in such manner and under such
circumstances as the Agent may deem necessary or advisable, but subject to the
other requirements of this Section 8, and shall not be required to effect such
registration or to cause the same to be effected. Without limiting the
generality of the foregoing, in any such event the Agent in its discretion (x)
may, in accordance with applicable securities laws, proceed to make such private
sale notwithstanding that a registration statement for the purpose of
registering such Pledged Collateral or part thereof could be or shall have filed
under said Act (or similar statute), (y) may approach and negotiate with a
single possible purchaser to effect such sale, and (z) 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 Collateral thereof. In addition to a private sale as provided
above in this Section 8, if any of the Pledged Collateral shall not be freely
distributable to the public without registration under the Act (or similar
statute) at the time of any proposed sale pursuant to this Section 8, then the
Agent shall not be required to effect such registration or cause the same to be
effected but, in its discretion (subject only to applicable requirements of
law), may require that any sale hereunder (including a sale at auction) be
conducted subject to restrictions (i) as to the financial sophistication and
ability of any Person permitted to bid or purchase at any such sale, (ii) as to
the content of legends to be placed upon any certificates representing the
Pledged Collateral sold in such sale, including restrictions on future transfer
thereof, (iii) as to the representations required to be made by each Person
bidding or purchasing at such sale relating to that Person's access to financial
information about Pledgors and such Person's access to financial information
about Pledgors and such Person's intentions as to the holding of the Pledged
Collateral so sold for investment, for its own account, and not with a view to
the distribution thereof, and account, and not with a view to the distribution
thereof, and (iv) as to such other matters as the Agent may, in its discretion,
deem necessary or appropriate in order that such sale (notwithstanding any
failure so to register) may be effected in compliance with the Bankruptcy Code
and other laws affecting the enforcement of creditors' rights and the Act and
all applicable state securities laws.
8
(g) Each Pledgor acknowledges that notwithstanding the legal
availability of a private sale or a sale subject to the restrictions described
above in paragraph (f), the Agent may, in its discretion, elect to register any
or all the Pledged Collateral under the Act (or any applicable state securities
law) in accordance with its rights hereunder. Each Pledgor, however, recognizes
that the Agent may be unable to effect a public sale of any or all the Pledged
Collateral and may be compelled to resort to one or more private sales thereof.
Each Pledgor also acknowledges that any such private sale may result in prices
and other terms less favorable to the seller than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner. Lender
shall be under no obligation to delay a sale of any of the Pledged Collateral
for the period of time necessary to permit the registrant to register such
securities for public sale under the Act, or under applicable state securities
laws, even if any Pledgor would agree to do so.
(h) Each Pledgor agrees that following the occurrence and during the
continuance of an Event of Default it will not at any time plead, claim or take
the benefit of any appraisal, valuation, stay, extension, moratorium or
redemption law now or hereafter in force in order to prevent or delay the
enforcement of this Agreement, or the absolute sale of the whole or any part of
the Pledged Collateral of the possession thereof by any purchaser at any sale
hereunder, and such Pledgor waives the benefit of all such laws to the extent it
lawfully may do so. Each Pledgor agrees that it will not interfere with any
right, power and remedy of the Agent provided for in this Agreement or now or
hereafter existing at law or in equity or by statute or otherwise, or the
exercise or beginning of the exercise by the Agent or any one or more of such
rights, powers or remedies. No failure or delay on the part of the Agent to
exercise any such right, power or remedy and no notice or demand which may be
given to or made upon any Pledgor by the Agent with respect to any such remedies
shall upon any Pledgor by the Agent with respect to any such remedies shall
operate as a waiver thereof, or limit or impair the Agent's right to take any
action or to exercise any power or remedy hereunder, without notice or to
exercise any power or remedy hereunder, without notice or demand, or prejudice
its rights as against any Pledgor in any respect.
(i) Each Pledgor further agrees that a breach of any of the
covenants contained in this Section 8 will cause irreparable injury to the
Agent, that the Agent has no adequate remedy at law in respect of such breach
and, as a consequence, agrees that each and every covenant contained in this
Section 8 shall be specifically enforceable against such Pledgor, and such
Pledgor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that the Secured
Obligations are not then due and payable in accordance with the agreements and
instruments governing and evidencing such obligations. Each Pledgor further
acknowledges the impossibility of ascertaining the amount of damages which would
be suffered by the Agent by reason of a breach of any of such covenants and,
consequently, agrees that, if the Agent shall sue for damages for breach, it
shall pay, as liquidated damages and not as a penalty, an amount equal to the
lessor of (i) the value of the Pledged Collateral pledged by such Pledgor on the
date the Agent shall demand compliance with this Section 8, and (ii) the amount
required to pay in full the Secured Obligations.
9
(9) Application of Proceeds. Any cash held by the Agent as Pledged
-----------------------
Collateral and all cash proceeds received by the Agent in respect of any sale
of, liquidation of, or other realization upon all or any part or the Pledged
Collateral shall be applied by the Agent as follows:
first, to the Agent in an amount sufficient to pay in full the expense
-----
of the Agent in connection with such sale, disposition or other
realization, including all expenses, liabilities and advances incurred or
made by the Agent in connection therewith, including, without limitation,
attorney's fees;
second, to the Agent, on behalf of the Lenders, in an amount equal to
------
any other Secured Obligations other than principal and interest;
third, to the Agent, on behalf of the Lenders, in an amount equal to
-----
the then unpaid and accrued interest and prepayment premiums, if any, on
the Secured Obligations;
fourth, to the Agent, on behalf of the Lenders in an amount equal to
------
the principal amount of the Secured obligations; and
finally, after payment in full of all Secured Obligations, to pay to
-------
Pledgors, or their successors or assigns, or to whomever may be lawfully
entitled to receive the same, or as a court of competent jurisdiction may
direct, any surplus then remaining from such proceeds.
10. Waiver. No delay on the Agent's part in exercising any power of
------
sale, Lien, option or other right hereunder, and no notice or demand which may
be given to or made upon Pledgors by the Agent in respect to any power of sale,
Lien, option or other right hereunder, shall constitute a waiver thereof, or
limit or impair the Agent's right to take any action or to exercise any power of
sale, Lien, option, or any other right hereunder, without notice or demand, or
prejudice the Agent's rights as against Pledgors in any respect.
11. Assignment. The Agent may assign, endorse or transfer any
----------
instrument evidencing all or any part of the Secured Obligations as provided in,
and in accordance with, the Loan Agreement, and the holder of such instrument
shall be entitled to the benefits of this Agreement.
12. Termination. Immediately following the payment of all Secured
-----------
Obligations, the Agent shall deliver to each Pledgor the Pledged Collateral
pledged by such Pledgor at the time subject to this Agreement and all
instruments of assignment executed in connection therewith, free and clear of
the Liens hereof and, except as otherwise provided herein, all of Pledgors'
obligations hereunder shall at such time terminate.
13. Lien Absolute. All rights of the Agent hereunder, and all
-------------
obligations of Pledgors hereunder, shall be absolute and unconditional
irrespective of:
10
(a) any lack of validity or enforceability of the Loan Agreement, the
Notes, any other Loan Document or any other agreement or instrument governing or
evidencing any Secured Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or part of the Secured Obligations, or any other amendment or
waiver of or consent to any departure from the Loan Agreement, the Notes, any
other Loan Document or any other agreement or instrument governing or evidencing
any Secured Obligations;
(c) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Obligations; or
(d) any other circumstance which might otherwise constitute a defense
available to, or discharge of, any Pledgor.
14. Release. Each Pledgor consents and agrees that the Agent may at
-------
any time, or from time to time, in its discretion (a) renew, extend or change
the time of payment, and/or the manner, place or terms of payment of all or any
part of the Secured Obligations and (b) exchange, release and/or surrender all
or any of the Pledged Collateral, or any part thereof, by whomsoever deposited,
which is now or may hereafter be held by the Agent in connection with all or any
of the Secured Obligations; all in such manner and upon such terms as the Agent
may deem proper, and without notice to or further assent from such Pledgor, it
being hereby agreed that such Pledgor shall be and remain bound upon this
Agreement, irrespective of the existence value or condition of any of the
Pledged Collateral, and notwithstanding any such change, exchange, settlement,
compromise, surrender, release, renewal or extension, and notwithstanding also
that the Secured Obligations may, at any time, exceed the aggregate principal
amount thereof set forth in the Loan Agreement, or any other agreement governing
any Secured Obligations. Each Pledgor hereby waives notice of acceptance of this
Agreement, and also presentment, demand, protest and notice of dishonor of any
and all of the Secured Obligations, and promptness in commencing suit against
any party hereto or liable hereon, and in giving any notice to or of making any
claim or demand hereunder upon such Pledgor. No act or omission of any kind on
the Agent's part shall in any event affect or impair this Agreement.
15. Indemnification. Each Pledgor jointly and severally agrees to
---------------
indemnify and hold the Agent harmless from and against any taxes, liabilities,
claims and damages, including reasonable attorney's fees and disbursements, and
other expenses incurred or arising by reason of the taking or the failure to
take action by the Agent, in good faith, in respect of any (transaction effected
under this Agreement or in connection with the Lien provided for herein,
including, without limitation, any taxes payable in connection with the delivery
or registration of any of the Pleaded Collateral as provided herein. Whether or
not the transactions contemplated by this Agreement shall be consummated, each
Pledgor jointly and severally agrees to pay to the Agent all out-of-pocket costs
and expenses incurred in
11
connection with this Agreement and all reasonable fees, expenses and
disbursements, including registration costs under the Act (or similar statute)
and the reasonable fees of the Agent's Agents or representatives, incurred in
connection with the execution and delivery of this Agreement and the performance
by the Agent of the provisions of this Agreement and of any transactions
effected in connection with this Agreement. The obligations of Pledgors under
this Section 15 shall survive the termination of this Agreement.
16. Reinstatement. This Agreement shall remain in full force and
-------------
effect and continue to be effective should any petition be filed by or against
any Pledgor for liquidation or reorganization, should any Pledgor become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any
Pledgor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a "voidable preference", "fraudulent conveyance", or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
17. Miscellaneous. (a) the Agent may execute any of its duties
-------------
hereunder by or through agents or employees and shall be entitled to advice of
counsel concerning all matters pertaining to its duties hereunder.
(b) Each Pledgor jointly and severally agrees to promptly reimburse
the Agent for actual out of pocket expenses, including, without limitation,
reasonable counsel fees, incurred by the Agent in connection with the
administration and enforcement of this Agreement.
(c) Neither the Agent nor any of its officers, directors, employees,
agents or counsel shall be liable for any action lawfully taken or omitted to be
taken by it or them hereunder or in connection herewith, except for its or their
own gross negligence or willful misconduct.
(d) This Agreement shall be binding upon Pledgors and their
successors and assigns, and shall inure to the benefit of, and be enforceable
by, the Agent and its successors and assigns, and shall be governed by, and
construed and enforced in accordance with, the internal laws in effect in the
State of New York without giving effect to principles of conflict of laws, and
none of the terms or provisions of this Agreement may be waived, altered,
modified or amended except in writing duly signed for and on behalf of the Agent
and Pledgors.
18. Severability. If for any reason any provision or provisions
------------
hereof are determined to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of or effect those portions of
this Agreement which are valid.
19. Notices. Except as otherwise provided herein, whenever it
-------
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to
give or serve upon any other a communication with respect to this
12
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and either shall be delivered in person
with receipt acknowledged or sent by registered or certified mail, return
receipt requested, postage prepaid, or by telecopy and confirmed by telecopy
answerback addressed as follows:
(a) If to the Agent, at:
Wexford Management LLC
411 West Putnam Avenue
Greenwich, Connecticut 06830
Telephone: (203) 862-7000
Attention: Arthur H. Amron
Facsimile: (203) 862-7312
and
Attention: Jay L. Maymudes
Facsimile: (203) 862-7350
With a copy to:
Howard, Smith & Levin
1330 Avenue of the Americas
New York, New York 10019
Attention: Michael B. Hopkins, Esq.
Telephone: (212) 841-1000
Facsimile: (212) 841-1010
(b) If to any Pledgor, at its principal business
address specified on Schedule II hereto
With a copy to:
Wilson Sonsini Goodrich & Rosati,
650 Page Mill Road
Palo Alto, CA 94304
Attention: Michael J. Danaher, Esq.
Andrew Hirsch, Esq.
Telephone: (650) 493-9300
Facsimile: (650) 493-6811
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback or
three (3) Business Days after the same shall have been deposited in the United
States mail. Failure or
13
delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to the persons designated above to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
20. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
21. CONSENT TO JURISDICTION; WAIVERS. EACH PLEDGOR AND THE
--------------------------------
AGENT AND THE LENDERS CONSENTS FOR THEMSELVES AND IN RESPECT OF THEIR
PROPERTIES, GENERALLY, UNCONDITIONALLY AND IRREVOCABLY, TO THE NONEXCLUSIVE
JURISDICTION OF THE FEDERAL AND STATE COURTS IN THE STATE OF NEW YORK WITH
RESPECT TO ANY PROCEEDING RELATING TO ANY MATTER, CLAIM OR DISPUTE ARISING UNDER
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PLEDGOR FURTHER
CONSENTS, GENERALLY, UNCONDITIONALLY AND IRREVOCABLY, TO THE NONEXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE IN RESPECT OF ANY
PROCEEDING RELATING TO ANY MATTER, CLAIM OR DISPUTE ARISING WITH RESPECT TO SUCH
COLLATERAL. EACH PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS,
GENERALLY, UNCONDITIONALLY AND IRREVOCABLY, AT ITS ADDRESS FOR NOTICES PURSUANT
HERETO, IN CONNECTION WITH ANY OF THE AFORESAID PROCEEDINGS IN ACCORDANCE WITH
THE RULES APPLICABLE TO SUCH PROCEEDINGS. EACH PLEDGOR HEREBY IRREVOCABLY WAIVES
ANY OBJECTION WHICH IT MAY HAVE NOW OR IN THE FUTURE TO THE LAYING OF VENUE IN
RESPECT OF ANY OF THE AFORESAID PROCEEDINGS BROUGHT IN THE COURTS REFERRED TO
ABOVE AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE PROCESS IN ANY
MANNER PERMITTED BY LAW OR TO COMMENCE PROCEEDINGS OR OTHERWISE PROCEED AGAINST
EACH PLEDGOR IN ANY JURISDICTION.
EACH PLEDGOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR THE
GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE AGENT OR EITHER PLEDGOR IN CONNECTION HEREWITH.
EACH PLEDGOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH LOAN DOCUMENT
TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
AGENT ENTERING INTO THIS AGREEMENT.
14
22. Section Titles. The Section titles contained in this Agreement
--------------
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
23. Counterparts. This Agreement may be executed in any number of
------------
counterparts, which shall, collectively and separately, constitute one
agreement.
15
IN WITNESS WHEREOF, the parties hereto have caused this Stock Pledge
Agreement to be duly executed as of the date first written above.
THERMATRIX, INC.
By: /s/ Daniel S. Tedone
-------------------------------
Name: Daniel S. Tedone
Title: Executive Vice President
and Chief Financial Officer
WAHLCO ENVIRONMENTAL SYSTEMS, INC.
By: /s/ Daniel S. Tedone
-------------------------------
Name: Daniel S. Tedone
Title: Executive Vice President
and Chief Financial Officer
BACHMAN COMPANIES, INC.
By: /s/ Daniel S. Tedone
-------------------------------
Name: Daniel S. Tedone
Title: Executive Vice President and
Chief Financial Officer
WAHLCO ENGINEERED PRODUCTS GROUP LTD.
By: /s/ Daniel S. Tedone
-------------------------------
Name: Daniel S. Tedone
Title: Director
By: /s/ Edward E. Greene
-------------------------------
Name: Edward E. Greene
Title: Director
WAHLCO ENGINEERED PRODUCTS LTD.
By: /s/ Daniel S. Tedone
-------------------------------
Name: Daniel S. Tedone
Title: Director
By: /s/ Edward E. Greene
-------------------------------
Name: Edward E. Greene
Title: Director
16
TEDDINGTON BELLOWS (HOLDINGS), LTD.
By: /s/ Daniel S. Tedone
--------------------------------
Name: Daniel S. Tedone
Title: Director
By: /s/ Edward E. Greene
--------------------------------
Name: Edward E. Greene
Title: Director
Accepted and Acknowledged by:
WEXFORD MANAGEMENT LLC
By: /s/ Arthur Amron
--------------------------------
Name: Arthur Amron
Title: Senior Vice President
and General Counsel
17
SCHEDULE I
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
NUMBER OF SHARES
CLAIMS OF CERTIFICATE SHARES ISSUED AND
PLEDGOR NAME AND ADDRESS OF ISSUER STOCK NUMBER(S) PLEDGED OUTSTANDING
- ----------------------------------------------------------------------------------------------------------------------------------
Thermatrix, Inc. Wahlco Environmental Common CS-1 100 100
Systems, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Thermatrix, Inc. Thermatrix Ltd. Ordinary(pound)1 1 2 2
- ----------------------------------------------------------------------------------------------------------------------------------
Wahlco Environmental Systems, Inc. Bachmann Companies, Inc. Common CS-1001 74,000 74,000
29 Lexington Avenue Preferred 0 0
Lewiston, Maine 04240
- ----------------------------------------------------------------------------------------------------------------------------------
Wahlco Environmental Systems, Inc. Wahlco, Inc. Common CS-1001 100 100
3600 West Segerstrom Avenue
Santa Ana, California 92704
- ----------------------------------------------------------------------------------------------------------------------------------
Wahlco Environmental Systems, Inc. Wahlco Engineered Products Ordinary E ? 18,051,421
Group Ltd.
Broombank Park
Chesterfield Trading Estate
Sheepbridge
WES Technology Inc. Chesterfield S41 9RT England Ordinary(pound)1 ? 1 18,051,422
- ----------------------------------------------------------------------------------------------------------------------------------
Bachmann Companies, Inc. Wahlco Engineered Products Inc. Common CS-1001 100,000 100,000
29 Lexington Street
Lewiston, Maine 04248 Preferred
- ----------------------------------------------------------------------------------------------------------------------------------
Wahlco Engineered Products Group Wahlco Engineered Products, Ltd. Class A 6,051,589 6,051,589
Limited Broombank Park Class B 2,649,979 2,500,000
Chesterfield Trading Estate
Sheepbridge
WES Technology Inc. Chesterfield S41 9RT England Class B 1
- ----------------------------------------------------------------------------------------------------------------------------------
Wahlco Engineered Products Group Pentney Engineering Ltd. Ordinary E 3,511,822
Limited Broombank Park
Chesterfield Trading Estate
Sheepbridge
WES Technology Inc. Chesterfield S41 9RT England Ordinary E 1 3,511,823
- ----------------------------------------------------------------------------------------------------------------------------------
Wahlco Environmental Systems Inc. Teddington Bellows (Holdings) Ordinary(pound)1 1
Ltd.
Telio Works
Wahlco Engineered Products Group Pontardulais, Swansea SA4 1RP Ordinary(pound)1 593,211 593,212
Ltd. West Glamorgan, Wales UK
- ----------------------------------------------------------------------------------------------------------------------------------
Wahlco Engineered Products Limited Nuovo Metro-Flex Itailana
Sr1. No Information
Via Bastiglia 42, Rebbio
Como 22100, Italy
- ----------------------------------------------------------------------------------------------------------------------------------
Wahlco Engineered Products Group WES Property Ltd. Ordinary(pound)1 2 2
Ltd. Broombank Park
Chesterfield Trading Estate
Sheepbridge
Chesterfield S41 9RT England
- ----------------------------------------------------------------------------------------------------------------------------------
Teddington Bellows (Holdings) Ltd. Teddington Bellows (Holdings) Ordinary(pound)1 493,311 493,312
Ltd. Ordinary E 1
Broombank Park
Chesterfield Trading Estate
Sheepbridge
Chesterfield S41 9RT England
- ----------------------------------------------------------------------------------------------------------------------------------
Wahlco Engineered Products Group Treste Plant Hire Ltd. Ordinary(pound)1 99,999 100,000
Ltd. Broombank Park
- ----------------------------------------------------------------------------------------------------------------------------------
18
- ----------------------------------------------------------------------------------------------------------------------------------
Chesterfield Trading Estate
Sheepbridge
WES Technology, Inc. Chesterfield S41 9RT England Ordinary(pound)1 1
- ----------------------------------------------------------------------------------------------------------------------------------
Wahlco Enginnered Products Group Wahlco International Limited Ordinary(pound)1 9,984
Ltd. Broombank Park
Chesterfield Trading Estate
Sheepbridge
Wahlco Environmental Systems Inc. Chesterfield S41 9RT England Ordinary(pound)1 1 10,000
- ----------------------------------------------------------------------------------------------------------------------------------
Wahlco Engineered Products Group Teddington Bellows (Holdings) Ordinary(pound)1 593,211 593,212
Ltd. Ltd.
Wahlco Environmental Systems Inc. Ordinary(pound)1 1
- ----------------------------------------------------------------------------------------------------------------------------------
19
SCHEDULE II
to the Stock Pledge Agreement
PLEDGE AMENDMENT
This Pledge Amendment, dated _______ __, 19__ is delivered pursuant to
Section 6(d) of the Stock Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to that certain Stock
Pledge Agreement, dated as of January ___, 1999 by the undersigned and others,
as Pledgors, to the Agent and the Lenders named therein, and that the Pledged
Securities listed on this Pledge Amendment shall be and become a part of the
Pledged Collateral referred to in said Stock Pledge Agreement and shall secure
all Secured Obligations referred to in said Stock Pledge Agreement.
[Name of Pledgor]
By:_______________
Name:
Title:
Name and Address Class of Certificate Number of Number of shares
of Pledgor Issuer Stock Number(s) Shares issues and outstandings
- ----------- ------ ----- --------- ------ -----------------------
20