PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "AGREEMENT") dated as of June __, 1997,
is made between _____________ (the "OBLIGOR") and International Logistics
Limited, a Delaware corporation (the "COMPANY").
WHEREAS, to induce the Company to lend the Obligor the funds
evidenced by the Promissory Note (as defined below) and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Obligor has agreed to pledge and grant a security interest in
the Collateral as security for the Secured Obligations.
NOW, THEREFORE, in consideration of the foregoing, the Obligor agrees
with the Company as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION.
1.01 CERTAIN DEFINED TERMS. The following terms shall have the
following meanings under this Agreement:
"COLLATERAL" shall have the meaning assigned to that term in
Section 2.01.
"DISTRIBUTIONS" shall have the meaning assigned to such term in
Section 2.04.
"EVENT OF DEFAULT" shall mean (i) the failure of the Obligor to pay
in full the Obligations as and when they become due and payable or (ii) the
Obligor's ceasing to be employed by the Company or any of its subsidiaries for
any reason.
"LIENS" shall mean, with respect to any property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
property or any agreement to give, or notice of, any of the foregoing.
"PLEDGED STOCK" shall have the meaning assigned to that term in
Section 2.01(a).
"PROMISSORY NOTE" shall mean the Promissory Note dated _____________
of the Obligor in favor of the Company, as amended from time to time.
"SECURED OBLIGATIONS" shall mean any and all obligations of the
Obligor to the Company evidenced by the Promissory Note or arising under this
Agreement.
"STOCK COLLATERAL" shall have the meaning assigned to that term in
Section 2.01(a).
-1-
"STOCKHOLDERS AGREEMENT" shall mean the Stockholders Agreement
between the Company and each of the Holders listed on Exhibit A thereto, as the
same may be amended from time to time.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as
in effect in the State of Illinois from time to time or, by reason of mandatory
application, any other applicable jurisdiction.
SECTION 2. COLLATERAL.
2.01 GRANT. As collateral security for the prompt payment in
full when due (whether at stated maturity, by acceleration or otherwise) and
performance of the Secured Obligations, the Obligor hereby pledges and grants
to the Company, for the benefit of the Company, a security interest in all of
the Obligor's right, title and interest in and to the following property,
whether now owned or hereafter acquired by the Obligor and whether now
existing or hereafter coming into existence (collectively, the "COLLATERAL"):
(a) (i) all of the shares of capital stock of the Obligor
represented by the respective certificates identified in Annex 1 together
with, in each case, the certificates representing the same (collectively, the
"PLEDGED STOCK");
(ii) all shares, securities, moneys or property
representing a dividend on, or a distribution or return of capital in respect
of any of the Pledged Stock, resulting from a split-up, revision,
reclassification or other like change of any of the Pledged Stock or
otherwise received in exchange for any of the Pledged Stock and all equity
rights issued to the holders of, or otherwise in respect of, any of the
Pledged Stock; and
(iii) in the event of any consolidation or merger in
which the Company is not the surviving corporation, all shares of each class
of the capital stock of the successor corporation (unless such successor
corporation is the Company itself) formed by or resulting from such
consolidation or merger (collectively, and together with the property
described in clauses (i) and (ii) above, the "STOCK COLLATERAL");
(b) all proceeds and products in whatever form of all or any
part of the foregoing Collateral.
2.02 PERFECTION. Concurrently with the execution and delivery of
this Agreement, the Obligor shall (i) deliver to the Company all certificates
identified in Annex 1, accompanied by undated stock powers duly executed in
blank and (ii) take all such other actions as shall be necessary or as the
Company may
-2-
reasonably request to perfect and establish the priority of the Liens granted
by this Agreement.
2.03 PRESERVATION AND PROTECTION OF SECURITY INTERESTS. The
Obligor shall give, execute, deliver, file or record any and all financing
statements, notices, contracts, agreements or other instruments, obtain any
and all governmental approvals and take any and all steps that may be
necessary or as the Company may reasonably request to create, perfect,
establish the priority of, or to preserve the validity, perfection or
priority of, the Liens granted by this Agreement or to enable the Company to
exercise and enforce its rights, remedies, powers and privileges under this
Agreement with respect to such Liens. The Company shall be entitled to
reflect the Lien of this Agreement in its stock records and to refuse to
recognize any transfer of the Stock Collateral not in accordance with this
Agreement.
2.04 DISTRIBUTIONS. The proceeds from all cash dividends or
other cash distributions on the Collateral and any proceeds from the sale of
all or any part of the Obligor's interest therein (the "DISTRIBUTIONS") shall
be paid directly to the Company. Any Distributions shall first be applied to
the unpaid accrued interest then due on the Promissory Note and then to
reduce the outstanding principal balance of the Promissory Note.
2.05 ATTORNEY-IN-FACT. Subject to the rights of the Obligor
under Section 2.06, the Company is hereby appointed the attorney-in-fact of
the Obligor for the purpose of carrying out the provisions of this Agreement
and taking any action and executing any instruments which the Company may
deem necessary or advisable to accomplish the purposes of this Agreement, to
preserve the validity, perfection and priority of the Liens granted by this
Agreement and, following any Event of Default, to exercise its rights,
remedies, powers and privileges under this Agreement. This appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without
limiting the generality of the foregoing, the Company shall be entitled under
this Agreement upon the occurrence and continuation of any Event of Default
(i) to ask, demand, collect, sue for, recover, receive and give receipt and
discharge for amounts due and to become due under and in respect of all or
any part of the Collateral; (ii) to receive, endorse and collect any drafts,
instruments, documents and chattel paper in connection with clause (i) above;
(iii) to file any claims or take any action or proceeding that the Company
may deem necessary or advisable for the collection of all or any part of the
Collateral; and (iv) to execute, in connection with any sale or disposition
of the collateral under Section 5, any endorsements, assignments, bills of
sale or other instruments of conveyance or transfer with respect to all or
any part of the Collateral.
-3-
2.06 SPECIAL PROVISIONS RELATING TO STOCK COLLATERAL. So long
as no Event of Default shall have occurred and be continuing, the Obligor
shall have the right to exercise all voting, consensual and other powers of
ownership pertaining to the Stock Collateral for all purposes not
inconsistent with the terms of this Agreement or the Stockholders Agreement;
and the Company shall, at the Obligor's expense, execute and deliver to the
Obligor or cause to be executed and delivered to the Obligor all such
proxies, powers of attorney, dividend and other orders and other instruments,
without recourse, as the Obligor may reasonably request for the purpose of
enabling the Obligor to exercise the rights and powers which it is entitled
to exercise pursuant to this Section 2.06.
2.07 RIGHTS AND OBLIGATIONS.
(a) No reference in this Agreement to proceeds or to the sale or
other disposition of Collateral shall authorize the Obligor to sell or
otherwise dispose of any Collateral except to the extent otherwise expressly
permitted by the terms of the Stockholders Agreement.
(b) The Company shall not be required to take steps necessary to
preserve any rights against prior parties as to any part of the Collateral.
2.08 TERMINATION. On the date when all Secured Obligations shall
have been paid in full, this Agreement shall terminate, and the Company shall
forthwith cause to be assigned, transferred and delivered, against receipt
but without any recourse, warranty or representation whatsoever, any
remaining Collateral and money received in respect of the Collateral, to or
on the order of the Obligor or as required by applicable law or court order.
2.09 RIGHT TO SET OFF. The Obligor acknowledges that under the
Company's Employee Stock Purchase Plan II (the "PLAN") the Company has the
option to repurchase (the "CALL OPTION") the Stock Collateral and the Obligor
has the option to sell (the "PUT OPTION") to the Company the Stock Collateral
if the Obligor's employment with the Company or its subsidiaries is
terminated for any reason and further agrees and acknowledges that the
Company may set off any amounts payable to the Obligor upon exercise of the
Call Option or the Put Option against any and all unpaid principal and
accrued interest payable by the Obligor under the Promissory Note.
3. REPRESENTATIONS AND WARRANTIES. As of the date hereof and
as of the date of the delivery of the Collateral, the Obligor represents and
warrants to the Company as follows:
-4-
3.01 TITLE. The Obligor is the sole beneficial owner of the
Collateral, and such Collateral is free and clear of all Liens except the
Lien of this Agreement. The Liens granted by this Agreement in favor of the
Company for the benefit of the Company have attached and constitute a
perfected security interest in all of such Collateral prior to all other
Liens.
3.02 PLEDGED STOCK. The Pledged Stock evidenced by the certificates
identified in Annex 1 is duly authorized, validly existing, fully paid and
nonassessable.
SECTION 4. COVENANTS.
4.01 SALES AND OTHER LIENS. Without the prior written consent of
the Company, the Obligor shall not dispose of any Collateral, create, incur,
assume or suffer to exist any Lien upon any Collateral or file or suffer to
be on file or authorize to be filed, in any jurisdiction, any financing
statement or like instrument with respect to all or any part of the
Collateral.
4.02 FURTHER ASSURANCES. The Obligor agrees that, from time to
time upon the written request of the Company, the Obligor will execute and
deliver such further documents and do such other acts and things as the
Company may reasonably request in order fully to effect the purposes of this
Agreement.
SECTION 5. REMEDIES.
5.01 EVENTS OF DEFAULT, ETC. If any Event of Default shall have
occurred and be continuing:
(a) The Company in its discretion may, in its name or in the
name of the Obligor or otherwise, demand, sue for, collect or receive any
money or property at any time payable or receivable on account of or in
exchange for all or any part of the Collateral, but shall be under no
obligation to do so;
(b) the Company in its discretion may, upon ten business days'
prior written notice (or such lesser notice as is provided by applicable law)
to the Obligor of the time and place, with respect to all or any part of the
Collateral which shall then be or shall thereafter come into the possession,
custody or control of the Company or any of its assigns, sell, lease or
otherwise dispose of all or any part of such Collateral, at such place or
places as the Company deems best, for cash, for credit or for future delivery
(without thereby assuming any credit risk) and at public or private sale,
without demand of performance or notice of intention to effect any such
disposition or of time or place of any such sale (except such notice as is
required above or by applicable statute and cannot be waived), and the
Company or any of its assigns may be the purchaser, lessee or recipient
-5-
of any or all of the Collateral so disposed of at any public sale (or, to the
extent permitted by law, at any private sale) and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any
right or equity of redemption (statutory or otherwise), of the Obligor, any
such demand, notice and right or equity being hereby expressly waived and
released. The Company 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
made at any time or place to which the sale may be so adjourned; and
(c) the Company shall have, and in its discretion may
exercise, all of the rights, remedies, powers and privileges with respect to
the Collateral of a secured party under the Uniform Commercial Code (whether
or not the Uniform Commercial Code is in effect in the jurisdiction where
such rights, remedies, powers and privileges are asserted) and such
additional rights, remedies, powers and privileges to which a secured party
is entitled under the laws in effect in any jurisdiction where any rights,
remedies, powers and privileges in respect of this Agreement or the
Collateral may be asserted, including the right, to the maximum extent
permitted by law, to exercise all voting, consensual and other powers of
ownership pertaining to the Collateral as if the Company were the sole and
absolute owner of the Collateral (and the Obligor agrees to take all such
action as may be appropriate to give effect to such right).
The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 5.01 shall be applied in accordance
with Section 5.03.
5.02 PRIVATE SALE.
(a) Neither the Company nor any of its assigns shall incur
any liability as a result of the sale, lease or other disposition of all or
any part of the Collateral at any private sale pursuant to Section 5.01
conducted in a commercially reasonable manner. The Obligor hereby waives any
claims against the Company or its assigns arising by reason of the fact that
the price at which the Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale or
was less than the aggregate amount of the Secured Obligations, even if the
Company accepts the first offer received and does not offer the Collateral to
more than one offeree.
(b) The Obligor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended, and
applicable state securities laws, the Company or its assigns
-6-
may be compelled, with respect to any sale of all or any part of the
Collateral, to limit purchasers to those who will agree, among other things,
to acquire the Collateral for their own account, for investment and not with
a view to distribution or resale. The Obligor acknowledges that any such
private sales may be at prices and on terms less favorable to the Company or
its assigns than those obtainable through a public sale without such
restrictions, and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that the Company or its assigns shall have no obligation to engage
in public sales and no obligation to delay the sale of any Collateral for the
period of time necessary to permit the Company to register it for public sale.
5.03 APPLICATION OF PROCEEDS. Except as otherwise expressly
provided in this Agreement and except as provided below in this Section 5.03,
the proceeds of, or other realization upon, all or any part of the Collateral
by virtue of the exercise of remedies under Section 5.01, and any other cash
at the time held by the Company under this Section 5, shall be applied by the
Company:
FIRST, to the payment of the costs and expenses of such exercise of
remedies, including reasonable out-of-pocket costs and expenses of the
Company, the fees and expenses of its agents and counsel and all other
expenses incurred and advances made by the Company in that connection;
NEXT, to the payment in full of the remaining Secured Obligations;
and
FINALLY, to the payment to the Obligor, or its respective
successors or assigns, or as a court of competent jurisdiction may direct, of
any surplus then remaining.
As used in this Section 5, "PROCEEDS" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions
in kind of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Obligor or any issuer
of, or account debtor or other obligor on, any of the Collateral.
-7-
SECTION 6. MISCELLANEOUS.
6.01 WAIVER. No failure on the part of the Company or its
assigns to exercise and no delay in exercising, and no course of dealing with
respect to, any right, remedy, power or privilege under this Agreement shall
operate as a waiver of such right, remedy, power or privilege, nor shall any
single or partial exercise of any right, remedy, power or privilege under
this Agreement preclude any other or further exercise of any such right,
remedy, power or privilege or the exercise of any other right, remedy, power
or privilege. The rights, remedies, powers and privileges provided in this
Agreement are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
6.02 NOTICES. All notices and communications to be given under
this Agreement shall be given or made in writing to the intended recipient at
the address specified below or, as to any party, at such other address as
shall be designated by such party in a notice to each other party. Except as
otherwise provided in this Agreement, all such communications shall be deemed
to have been duly given when transmitted by telex or telecopier, delivered to
the telegraph or cable office or personally delivered or, in the case of a
mailed notice, upon receipt, in each case, given or addressed as provided in
this Section 6.02:
To the Obligor: ___________________________
___________________________
___________________________
To the Company: International Logistics Limited
330 S. Mannheim Road
Hillside, IL 60162
Attention: Chief Financial Officer
with a copy to: Milbank, Tweed, Hadley & McCloy
601 S. Figueroa St., Suite 3100
Los Angeles, CA 90017
Attention: Eric H. Schunk, Esq.
6.03 EXPENSES, ETC. The Obligor agrees to pay or to reimburse
the Company or its assigns for all costs and expenses (including reasonable
attorney's fees and expenses) that may be incurred by the Company or its
assigns in any effort to enforce any of the provisions of Section 5 or any of
the obligations of the Obligor in respect of the Collateral or in connection
with (a) the preservation of the Lien of, or the rights of the Company under
this Agreement or (b) any actual or attempted sale, lease, disposition,
exchange, collection, compromise, settlement or other realization in respect
of, or care of, the Collateral,
-8-
including all such costs and expenses (and reasonable attorney's fees and
expenses) incurred in any bankruptcy, reorganization, workout or other
similar proceeding.
6.04 AMENDMENTS, ETC. Any provision of this Agreement may be
modified, supplemented or waived only by an instrument in writing duly
executed by the Obligor and the Company. Any such modification, supplement
or waiver shall be for such period and subject to such conditions as shall be
specified in the instrument effecting the same and shall be binding upon the
Company, each holder of any of the Secured Obligations and the Obligor, and
any such waiver shall be effective only in the specific instance and for the
purposes for which given.
6.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the Obligor, the Company and each holder of
any of the Secured Obligations and their respective successors and permitted
assigns. The Obligor shall not assign or transfer its rights under this
Agreement without the prior written consent of the Company.
6.06 SURVIVAL. All representations and warranties made in this
Agreement or in any certificate or other document delivered pursuant to or in
connection with this Agreement shall survive the execution and delivery of
this Agreement or such certificate or other document (as the case may be) or
any deemed repetition of any such representation or warranty.
6.07 AGREEMENTS SUPERSEDED. This Agreement supersedes all prior
agreements and understandings, written or oral, among the parties with
respect to the subject matter of this Agreement.
6.08 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
6.09 CAPTIONS. The captions and section headings appearing in
this Agreement are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.
6.10 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties to this Agreement may execute this
Agreement by signing any such counterpart.
-9-
6.11 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF ILLINOIS. THE OBLIGOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS AND OF
ANY ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS FOR THE PURPOSES OF ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. THE OBLIGOR IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
6.13 WAIVER OF JURY TRIAL. THE OBLIGOR AND THE COMPANY HEREBY
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
-10-
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
By:_________________________
_____________, an individual
INTERNATIONAL LOGISTICS
LIMITED, a Delaware corporation
By:_________________________
Name: __________________
Title: __________________
-11-
ANNEX 1
PLEDGED STOCK
Certificate Registered
Nos. Owner Number of Shares
- ----------- ---------- ----------------
---
ANNEX 1 TO PLEDGE AGREEMENT