PLEDGE AGREEMENT
PLEDGE AGREEMENT dated September 29, 2000, made by PROBEX CORP., a Delaware
corporation, (the "Pledgor"), to PENNZOIL-QUAKER STATE COMPANY (the "Lender").
PRELIMINARY STATEMENTS
(1) Pledgor has borrowed money from Lender (the "Loan") pursuant to that
certain Term Note dated as of September 29, 2000 by and between Pledgor and
Lender (as may be amended from time to time, the "Note"). All capitalized terms
not otherwise defined in this Agreement shall have the meaning as defined in the
Note or in the Security Agreement of even date herewith between Lender and
Probex Fluids Recovery, Inc. ("PFR") (as may be amended from time to time, the
"Security Agreement").
(2) Pledgor is the owner of the shares (the "Pledged Shares") of PFR
described in Schedule I hereto.
(3) It is a condition precedent to the Note that Pledgor, as owner of 100%
percent of the shares of PFR, shall have made the pledge contemplated by this
Agreement. Pledgor and PFR each will receive substantial direct and indirect
benefit from the Loan and the making of this pledge.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lender to make the Loan under the Note, Pledgor hereby agrees as follows:
SECTION 1. Security Interest.
(a) Grant. Pledgor hereby pledges to Lender, and grants to Lender a
security interest in, the following (the "Pledged Collateral"):
(i) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares;
(ii) all additional shares in the issuer of the Pledged Shares
from time to time acquired by Pledgor in any manner, and the
certificates representing such additional interest, and all dividends,
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such shares; and
(iii) all proceeds of any and all of the foregoing Pledged
Collateral, including, without limitation, proceeds that constitute
property of the types described above (the inclusion of proceeds does
not authorize Pledgor to sell or dispose of the Pledged Collateral in
any manner not specifically authorized hereby).
(b) Code Terms. Pledgor acknowledges and agrees that all terms used
herein to describe the Pledged Collateral which are defined in the Code
shall have the meanings stated in the Code. Pledgor further acknowledges
and agrees that in applying the law of any jurisdiction that has now or
hereafter enacted all or substantially all of Revised Article 9, the Code
terms used herein to describe the Pledged Collateral shall also have the
meanings given those terms under Revised Article 9, it being the agreement
and intention of Pledgor in each instance that such collateral be included
in the Collateral description, whether prior to or after the effectiveness
of Revised Article 9 in such jurisdiction.
(c) Defined Terms. As used herein:
(i) "Code" shall mean the Uniform Commercial Code as in effect
from time to time in the State of Texas, ---- including without
limitation, the Uniform Commercial Code as amended by Revised Article
9, provided that if by reason of mandatory provisions of law, the
creation and/or perfection or the effect of perfection or
non-perfection of the security interests in any Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other
than Texas, the term "Code" shall also mean the Uniform Commercial
Code as in effect from time to time in such other jurisdiction
(including without limitation, the Uniform Commercial Code as amended
by Revised Article 9) for purposes of the provisions hereof relating
to such creation, perfection or effect of perfection or
non-perfection.
(ii) "Revised Article 9" means the uniform revision of Article 9
of the Uniform Commercial Code, with new provisions added to other
Articles of the Uniform Commercial Code contemplated by such revision,
all as approved in 1999 by The American Law Institute and by the
National Conference of Commissioners on Uniform State Laws.
SECTION 2. Security for Secured Obligations. This Agreement secures the
prompt and complete payment of the Secured Obligations (as such term is defined
in the Security Agreement). Without limiting the generality of the foregoing,
this Agreement secures the payment of all amounts which constitute part of the
Secured Obligations and would be owed by the Pledgor or PFR to Lender under the
Note and the other Credit Documents but for the fact that they are unenforceable
or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving Pledgor or PFR.
SECTION 3. Delivery of Pledged Collateral. All certificates or instruments
representing or evidencing the Pledged Collateral shall be delivered to and held
by Lender pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Lender.
2
SECTION 4. Representations and Warranties. Pledgor represents and warrants
as follows:
(a) Pledgor is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite
power and authority to carry on its business as now conducted and, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified
to do business in, and is in good standing in, every jurisdiction where
such qualification is required.
(b) The execution, delivery and performance of the Loan Documents to
be entered into by Pledgor are within Pledgor's corporate powers and have
been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by
Pledgor and constitutes, and each other Loan Document to which Pledgor is
to be a party, when executed and delivered by Pledgor, will constitute, a
legal, valid and binding obligation of Pledgor, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
(c) The execution, delivery and performance of the Loan Documents to
be entered into by Pledgor (i) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of
Pledgor or any order of any Governmental Authority, (ii) will not violate
or result in a default under any indenture, agreement or other instrument
binding upon Pledgor or its assets, or give rise to a right thereunder to
require any payment to be made by Pledgor, and (iii) will not result in the
creation or imposition of any Lien on any asset of Pledgor, except Liens
created under the Loan Documents.
(d) The Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable.
(e) Pledgor is the legal and beneficial owner of the Pledged
Collateral free and clear of any Lien, security interest, option or other
charge or encumbrance, and Pledgor has not sold, granted any option,
warrant or other right with respect to, assigned, transferred or otherwise
disposed of any of its rights or interests, in or to the Pledged
Collateral.
(f) The pledge of the Pledged Shares pursuant to this Agreement
creates a valid and perfected first priority security interest in the
Pledged Collateral, securing the payment of the Secured Obligations.
(g) No consent of any other Person and no authorization, approval, or
other action by, and no notice to or filing with, any Governmental
Authority is required (i) for the pledge by Pledgor of the Pledged
Collateral pursuant to this Agreement or for the execution, delivery or
performance of this Agreement or any other Loan Documents by Pledgor, (ii)
for the perfection or maintenance of the security interest created hereby
3
(including the first priority nature of such security interest, except for
possession of any certificates by Lender and the placement of Lender's (or
its assignee's) name on any stock powers) or (iii) for the exercise by
Lender 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 any disposition of any
portion of the Pledged Collateral by laws affecting the offering and sale
of securities generally).
(h) The Pledged Shares constitute 100% of the issued and outstanding
shares of stock of PFR.
(i) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
SECTION 5. Additional Covenants.
(a) Existence; Conduct of Business. Pledgor will, and will cause each
of its Subsidiaries to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and
the rights, licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its business.
(b) Payment of Obligations. Pledgor will, and will cause each of its
Subsidiaries to, pay its Indebtedness and other obligations, including tax
liabilities, before the same shall become delinquent or in default, except
where (i) he validity or amount thereof is being contested in good faith by
appropriate proceedings, (ii) Pledgor or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP,
(iii) such contest effectively suspends collection of the contested
obligation and the enforcement of any Lien securing such obligation and
(iv) the failure to make payment pending such contest could not reasonably
be expected to result in a Material Adverse Effect.
(c) Maintenance of Properties. Pledgor will, and will cause each of
its Subsidiaries to, keep and maintain all property material to the conduct
of its business in good working order and condition, ordinary wear and tear
excepted.
(d) Insurance. Pledgor will, and will cause each of its Subsidiaries
to, maintain, with financially sound and reputable insurance companies
insurance in such amounts (with no greater risk retention) and against such
risks as are customarily maintained by companies of established repute
engaged in the same or similar businesses operating in the same or similar
locations. Pledgor will furnish to the Lender, upon request, information in
reasonable detail as to the insurance so maintained.
(e) Casualty and Condemnation. Pledgor (i) will, and will cause each
of its Subsidiaries to, furnish to the Lender prompt written notice of any
casualty or other insured damage to any material portion of any of its
property or assets or the commencement of any action or proceeding for the
taking of any of its property or assets or any part thereof or interest
therein under power of eminent domain or by condemnation or similar
proceeding and (ii) will ensure that the net proceeds of any such event
(whether in the form of insurance proceeds, condemnation awards or
otherwise) are promptly collected and applied to the Note.
4
(f) Books and Records; Inspection and Audit Right. (i) Pledgor will,
and will cause each of its Subsidiaries to, keep proper books of record and
account in which full, true and correct entries are made of all dealings
and transactions in relation to its business and activities. Pledgor will,
and will cause each of its Subsidiaries to, permit any representatives
designated by the Lender, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as
often as reasonably requested.
(ii) Pledgor will, and will cause each of its Subsidiaries to,
permit any representatives designated by the Lender (including any
consultants, accountants, lawyers and appraisers retained by the
Lender) to conduct evaluations and appraisals of the Pledgor's and its
Subsidiaries' assets, all at such reasonable times and as often as
reasonably requested. Pledgor shall pay the reasonable fees and
expenses of any representatives retained by the Lender to conduct any
such evaluation or appraisal.
(g) Compliance with Laws. Pledgor will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
(h) Indebtedness; Certain Equity Securities. (i) Pledgor will not, and
will not permit any Subsidiary to, create, incur, assume or permit to exist
any Indebtedness (other than (x) the Secured Obligations and (y) other
Indebtedness of Pledgor outstanding on the date hereof related to capital
leases in existence on the date hereof of Pledgor's phone systems, computer
systems and furniture); provided, however, the Pledgor may incur additional
unsecured Indebtedness if 100% of the proceeds of such Indebtedness are
immediately applied to repayment of the Note.
(ii) Pledgor will not, and will not permit any Subsidiary to,
issue after the date hereof any preferred stock or other preferred
equity interests.
(i) Liens. Pledgor will not create, incur, assume or permit to exist
any Lien on any property or asset now owned or hereafter acquired by it, or
assign or sell any income or revenues (including accounts receivable) or
rights in respect of any thereof, except for (i) Liens created by the Loan
Documents and (ii) Permitted Encumbrances.
(j) Fundamental Changes. (i) Pledgor will not, and will not permit any
Subsidiary to, merge into or consolidate with any other Person, or permit
any other Person to merge into or consolidate with it, or liquidate or
dissolve;
(ii) Pledgor will not, and will not permit any Subsidiary to,
engage to any material extent in any business other than businesses of
5
the type conducted by Pledgor and its Subsidiaries on the date of
execution of this Agreement and businesses reasonably related thereto.
(k) Investments, Loans, Advances, Guarantees and Acquisitions. Pledgor
will not, and will not permit any Subsidiary to, purchase, hold or acquire
any equity interests in or evidences of indebtedness or other securities
(including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, guarantee
any obligations of, or make or permit to exist any investment or any other
interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit, except (i) as contemplated by the Purchase
Agreement, (ii) Permitted Investments, (iii) investments existing on the
date hereof and (iv) investments in their respective Subsidiaries. Pledgor
shall not form or acquire any additional subsidiary.
(l) Asset Sales. Pledgor will not, and will not permit any Subsidiary
to, sell, transfer, lease or otherwise dispose of any asset, including any
equity interest owned by it, except sales of inventory and used or surplus
equipment in the ordinary course of business.
(m) Sale and Leaseback Transactions. Pledgor will not, and will not
permit any Subsidiary to, enter into any arrangement, directly or
indirectly, whereby it shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereinafter
acquired, and thereafter rent or lease such property or other property that
it intends to use for substantially the same purpose or purposes as the
property sold or transferred.
(n) Restricted Payments; Certain Payments of Indebtedness. (i) Pledgor
will not, and will not permit any Subsidiary to, declare or make, or agree
to pay or make, directly or indirectly, any Restricted Payment, or incur
any obligation (contingent or otherwise) to do so,
(ii) Pledgor will not, and will not permit any Subsidiary to,
make or agree to pay or make, directly or indirectly, any optional
payment or other optional distribution (whether in cash securities or
other property) of or in respect of principal of or interest on any
Indebtedness (other than the Secured Obligations), or any optional
payment or other optional distribution (whether in cash, securities or
other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any Indebtedness (other than the
Secured Obligations).
(o) Transactions with Affiliates. Pledgor will not, and will not
permit any Subsidiary to, sell, lease or otherwise transfer any property or
assets to, or purchase, lease or otherwise acquire any property or assets
from, or otherwise engage in any other transactions with, any of its
Affiliates, except transactions in the ordinary course of business that are
at prices and on terms and conditions not less favorable to Pledgor or such
Subsidiary than could be obtained on an arm's-length basis from unrelated
third parties.
6
(p) Further Assurances. Pledgor agrees that at any time and from time
to time, at the expense of Pledgor, Pledgor will promptly execute and
deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that Lender may reasonably request,
in order to perfect and protect any security interest granted or purported
to be granted hereby or to enable Lender to exercise and enforce its rights
and remedies hereunder with respect to any Pledged Collateral.
SECTION 6. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred:
(i) Pledgor shall be entitled to exercise or refrain from
exercising any and all voting and other consensual rights pertaining
to the Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Note.
(ii) Pledgor shall be entitled to receive and retain any and all
dividends paid in respect of the Pledged Collateral, provided,
however, that 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, and
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 or in connection with
a reduction of capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect
of principal of, or in redemption of, or in exchange for, any
Pledged Collateral,
shall be, and shall be forthwith delivered to Lender to hold as, Pledged
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Lender, be segregated from the other property or funds of Pledgor,
and be forthwith delivered to Lender as Pledged Collateral in the same form as
so received (with any necessary endorsement or assignment).
(iii) Lender shall execute and deliver (or cause to be executed
and delivered) to Pledgor all such proxies and other instruments as
Pledgor may reasonably request for the purpose of enabling Pledgor to
exercise the voting and other rights which it is entitled to exercise
pursuant to paragraph (i) above and to receive the dividends which it
is authorized to receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence of an Event of Default:
(i) All rights of Pledgor (x) to exercise or refrain from
exercising the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 6(a)(i) shall,
upon notice to Pledgor by the Agent, cease and (y) to receive the
7
dividends payments which it would otherwise be authorized to receive
and retain pursuant to Section 6(a)(ii) shall automatically cease, and
all such rights shall thereupon become vested in Lender who shall
thereupon have the sole right to exercise or refrain from exercising
such voting and other consensual rights and to receive and hold as
Pledged Collateral such dividends.
(ii) All dividends which are received by Pledgor contrary to the
provisions of paragraph (i) of this Section 6(b) shall be received in
trust for the benefit of Lender, shall be segregated from other funds
of Pledgor and shall be forthwith paid over to Lender as Pledged
Collateral in the same form as so received (with any necessary
endorsement).
SECTION 7. Transfers and Other Liens; Additional Shares.
(a) Pledgor agrees that it will not (i) sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect
to, any of the Pledged Collateral, or (ii) create or permit to exist any
lien, security interest, option or other charge or encumbrance upon or with
respect to any of the Pledged Collateral.
(b) Pledgor agrees that it will (i) cause PFR not to issue any stock
or other securities in addition to or in substitution for the Pledged
Shares, except to Pledgor and (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional shares
of stock or other securities of PFR.
SECTION 8. Lender Appointed Attorney-in-Fact. Pledgor hereby appoints
Lender Pledgor's attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to time in Lender's
discretion to take any action and to execute any instrument which Lender may
deem necessary or advisable to accomplish the purposes of this Agreement
(subject to the rights of Pledgor under Section 6), including, without
limitation, to receive, indorse and collect all instruments made payable to
Pledgor representing any dividend or other distribution in respect of the
Pledged Collateral or any part thereof and to give full discharge for the same.
SECTION 9. Lender May Perform. If Pledgor fails to perform any agreement
contained herein, Lender may itself perform, or cause performance of, such
agreement, and the expenses of Lender incurred in connection therewith shall be
payable by Pledgor under Section 13.
SECTION 10. Lender's Duties. The powers conferred on Lender hereunder are
solely to protect its interest in the Pledged Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe custody of any
Pledged Collateral in its possession and the accounting for moneys actually
received by it hereunder, Lender shall have no duty as to any Pledged
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not Lender has or is deemed to have knowledge of
such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Pledged Collateral.
8
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of any Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Lender
accords its own property.
SECTION 11. Remedies upon Default. If any Event of Default shall have
occurred:
(a) Lender may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under Code, whether or not the Code applies to the affected Collateral, and
may also, upon notice as specified below, sell the Pledged Collateral or
any part thereof in one or more parcels at public or private sale, at any
exchange, broker's board or at any of Lender's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as Lender
may deem commercially reasonable. Pledgor agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to Pledgor of
the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. Lender shall
not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. Lender may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) Any cash held by Lender as Pledged Collateral and all cash
proceeds received by Lender in respect of any sale of, collection from, or
other realization upon all or any part of the Pledged Collateral may, in
the discretion of Lender, be held by Lender as collateral for, and/or then
or at any time thereafter be applied (after payment of any amounts payable
to Lender pursuant to Section 13) in whole or in part by ---------- Lender
against, all or any part of the Secured Obligations in such order as Lender
shall elect. Any surplus of such cash or cash proceeds held by Lender and
remaining after payment in full of all the Secured Obligations shall be
paid over to Pledgor or to whomsoever may be lawfully entitled to receive
such surplus.
SECTION 12. Registration Rights. If Lender shall determine to exercise its
right to sell all or any of the Pledged Collateral pursuant to Section 11,
Pledgor agrees that, upon request of Lender, Pledgor will, at its own expense,
do or cause to be done all such other acts and things as may be necessary to
make such sale of the Pledged Collateral or any part thereof valid and binding
and in compliance with applicable law.
SECTION 13. Expenses. Pledgor will upon demand pay to Lender the amount of
any and all reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which Lender may incur in connection
with (i) the preparation, execution and delivery of this Agreement and the other
Loan Documents, (ii) revision of the Purchase Agreement and the other documents
related thereto required due to the execution and delivery of the Loan
Documents, (iii) the administration of this Agreement and the other Loan
Documents, (iv) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Pledged Collateral, (v) the exercise or
enforcement of any of the rights of Lender hereunder and the other Loan
Documents or (vi) the failure by Pledgor or PFR to perform or observe any of the
provisions hereof or under any other Loan Document.
9
SECTION 14. Security Interest Absolute.
(a) All rights of Lender hereunder, the security interest granted
herein and all Secured Obligations of Pledgor hereunder shall be
irrevocable, absolute and unconditional irrespective of, and Pledgor hereby
irrevocably waives any defenses it may now or hereafter have in any way
relating to any or all of the following:
(i) any compromise, settlement, release, change, modification
(whether material or otherwise), refusal or deferment to demand or
enforce, or termination of any or all of the Secured Obligations;
(ii) any failure to give notice to Pledgor of the occurrence of
an Event of Default;
(iii) any lack of validity or enforceability of any of the Credit
Documents or any other agreement or instrument relating thereto;
(iv) any change in the time, manner or place of payment and/or
performance of any of the Secured Obligations, or any other
modification, amendment, rescission or waiver by Lender of the
payment, performance or observance by PFR or Pledgor of any of the
Secured Obligations;
(v) any failure of Lender to disclose to Pledgor information
relating to the financial condition, operations, properties or
prospects of PFR now or in the future;
(vi) any failure, omission, delay or lack on the part of Lender
to take, enforce, assert or exercise any action, right, power or
remedy conferred on it in any of the Credit Documents;
(vii) any release or discharge (in bankruptcy or similar
proceeding or otherwise), in whole or in part, or any bankruptcy,
liquidation, dissolution, change, restructuring or termination of the
corporate existence of, PFR or any other person or entity which is
primarily or secondarily liable with respect to the Secured
Obligations;
(viii) the failure to obtain or maintain perfection of or to
protect any security interest in, or the taking, exchange, release,
surrender, disposal, impairment or loss of, or any manner of
application or sale of, all or any collateral for the Secured
Obligations; or
(ix) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, PFR or Pledgor.
(b) The obligations of Pledgor under this Agreement shall be immediate
and shall not be contingent upon Lender (i) proceeding against or
exhausting any other rights and remedies which it may have against PFR or
any other person primarily or secondarily liable for any of the Secured
10
Obligations, and/or (ii) enforcing, realizing upon or resorting to any
security held by Lender, and Pledgor hereby waives any rights, by statute
or otherwise, to require Lender to institute any such proceeding, exhaust
any such rights and remedies and/or enforce, realize upon or resort to any
such security. Lender shall be under no obligation to marshal any assets in
favor of Pledgor, or against or in payment of any or all of the Secured
Obligations, and shall not be required to mitigate damages or take any
other action to reduce, collect or enforce the Secured Obligations or any
collateral therefor.
SECTION 15. Amendments, Etc. No amendment or waiver of any provision of
this Agreement, and no consent to any departure by Pledgor herefrom, shall in
any event be effective unless the same shall be in writing and signed by Lender,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 16. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telex, facsimile or cable
communication) and mailed, telecopied, telexed, cabled or delivered addressed as
follows:
(a) If to Pledgor, to it at:
Probex Corp.
One Galleria Tower
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Chief Financial Officer
Telephone No. (000) 000-0000
Telecopy No. (000) 000-0000
(b) If to Lender, to it at:
Pennzoil-Quaker State Company
000 Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxxxxx
Telephone No. (000) 000-0000
Telecopy No. (000)000-0000
All such notices and communications shall, when mailed, telecopied, telexed,
transmitted or cabled be effective three days after deposited in the mail or the
day confirmed by telex answerback, transmitted by telecopier or delivered to the
cable company, respectively, except that notices and communications to Lender
shall not be effective until actually received by Lender.
SECTION 17. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Pledged Collateral and shall (i) remain in
full force and effect until the indefeasible payment in full in cash of the
Secured Obligations and all other amounts payable under this Agreement, (ii) be
binding upon Pledgor, its successors and assigns (provided that Pledgor may not
assign or transfer its rights or obligations hereunder without Lender's prior
11
written consent), and (iii) inure to the benefit of, and be enforceable by,
Lender and its successors, transferees and assigns. This Agreement shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Secured Obligations is rescinded or
must otherwise be restored or returned by Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Pledgor or PFR, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Pledgor or PFR or any substantial
part of its property, or otherwise, all as though such payments had not been
made. All payments hereunder will be paid without set-off or counterclaim and in
immediately available funds and in United States Dollars.
SECTION 18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF, EXCEPT TO THE EXTENT
PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST GRANTED HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.
SECTION 19. Waivers.
(a) PLEDGOR WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
(I) NOTICE OF ACCEPTANCE OF THIS AGREEMENT; (II) ANY RIGHT TO REVOKE OR
OTHERWISE TERMINATE THIS AGREEMENT; (III) NOTICE OF DEMAND FOR PAYMENT,
PRESENTMENT, PROTEST, NOTICE OF DISHONOR OR NONPAYMENT; (IV) NOTICE OF
DEFAULT BY PLEDGOR OR PFR; (V) NOTICE OF ALL OTHER DEMANDS AND NOTICES TO
WHICH PLEDGOR MIGHT OTHERWISE BE ENTITLED, AND (VI) ANY NECESSITY, WHETHER
SUBSTANTIVE OR PROCEDURAL, THAT JUDGMENT PREVIOUSLY BE RENDERED AGAINST PFR
OR ANY OTHER PERSON OR ENTITY, OR THE PLEDGOR OR PFR OR ANY OTHER PERSON OR
ENTITY BE JOINED IN SUCH CAUSE, OR THAT A SEPARATE ACTION BE BROUGHT
AGAINST PLEDGOR OR PFR OR ANY OTHER PERSON OR ENTITY.
(b) PLEDGOR AND LENDER HEREBY EXPRESSLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS THAT ANY OF THEM MAY HAVE
TO TRIAL BY JURY (I) IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE OR ANY
OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THEREWITH, OR (II) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING
12
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE, AND PLEDGOR HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SUBSECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF PLEDGOR TO
THE WAIVER OF PLEDGOR'S RIGHT TO TRIAL BY JURY.
(c) TO THE EXTENT NOT OTHERWISE EXPRESSLY PROVIDED HEREIN, PLEDGOR
EXPRESSLY WAIVES ALL DEFENSES BASED ON SURETYSHIP OR IMPAIRMENT OF
COLLATERAL.
(d) PLEDGOR ACKNOWLEDGES THAT IT MAKES THE WAIVERS AND AGREEMENTS SET
FORTH IN SUBSECTIONS (a), (b) AND (c) ABOVE KNOWINGLY AND VOLUNTARILY,
WITHOUT DURESS AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF THOSE
WAIVERS WITH ITS ATTORNEYS, AND THAT THESE WAIVERS CONSTITUTE A MATERIAL
INDUCEMENT FOR LENDER TO ENTER INTO THE NOTE AND MAKE THE LOAN. PLEDGOR
FURTHER ACKNOWLEDGES THAT SECURED PARTY HAS NOT AGREED WITH OR REPRESENTED
TO PLEDGOR OR ANY OTHER PERSON THAT THE PROVISIONS OF SUBSECTIONS (a), (b)
AND (c) ABOVE WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
SECTION 20. Submission to Jurisdiction; Waivers. Pledgor hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the district
courts of Xxxxxx County, Texas, and of the United States District Court of
the Southern District of Texas (Houston Division), and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to Pledgor at
its address referred to in Section 16 or at such other address of which the
Lender shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction; and
13
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section 20 any special, exemplary, punitive or consequential
damages.
SECTION 21. Indemnity.
---------
(a) Pledgor agrees to indemnify, reimburse and hold the Lender, and
its successors, assigns, employees, agents and servants (hereinafter in
this Section 21, referred to individually as an "Indemnitee," and
collectively as "Indemnitees") harmless from any and all liabilities,
obligations, losses, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs and expenses (including
reasonable attorneys' fees and expenses) (for the purposes of this Section
21, the foregoing are collectively called "expenses") of whatsoever kind
and nature imposed on, asserted against or incurred by any of the
Indemnitees in any way relating to or arising out of this Agreement or any
other Loan Document, or in any other way connected with the enforcement of
any of the terms of, or the preservation of any rights hereunder or under
any other Loan Document or in any way relating to or arising out of the
ownership, ordering, purchase, delivery, control, acceptance, lease,
financing, possession, operation, condition, sale, return or other
disposition, or use of the Pledged Collateral, the Security Agreement
Collateral or any other property or asset of Pledgor or PFR (including,
without limitation, latent or other defects, whether or not discoverable),
the violation of the laws of any governmental body or unit, or any tort
(including, without limitation, claims arising or imposed under the
doctrine of strict liability, or for or on account of injury to or the
death of any Person (including any Indemnitee), or property damage), or
contract claim; provided that no Indemnitee shall be indemnified pursuant
to this Section 21(a) for losses, damages or liabilities to the extent (i)
caused by the gross negligence or willful misconduct of any Indemnitee or
(ii) Lender has expressly agreed to indemnify Pledgor or PFR under the
Purchase Agreement. Pledgor agrees that upon written notice by any
Indemnitee of the assertion of such a liability, obligation, loss, damage,
penalty, claim, demand, action, suit or judgment, Pledgor shall assume full
responsibility for the defense thereof.
(b) Without limiting the application of Section 21(a), Pledgor agrees
to pay, or reimburse the Lender for any and all reasonable fees, costs and
expenses of whatever kind or nature incurred in connection with the
creation, preservation or protection of the Lender's Liens on, and security
interest in, the Pledged Collateral and the Security Agreement Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment
or discharge of any taxes or Liens upon or in respect of the Pledged
Collateral and the Security Agreement Collateral, premiums for insurance
with respect to the Pledged Collateral and the Security Agreement
Collateral and all other reasonable fees, costs and expenses in connection
with protecting, maintaining or preserving the Pledged Collateral and the
Security Agreement Collateral and the Lender's interest therein, whether
through judicial proceedings or otherwise, or in defending or prosecuting
any actions, suits or proceedings arising out of or relating to the Pledged
Collateral and the Security Agreement Collateral.
14
(c) Without limiting the application of Section 21(a) or (b), Pledgor
agrees to pay, indemnify and hold each Indemnitee harmless from and against
any loss, costs, damages and expenses which such Indemnitee may suffer,
expend or incur in consequence of or growing out of any misrepresentation
by Pledgor or PFR in this Agreement, any other Loan Document, or in any
writing contemplated by or made or delivered pursuant to or in connection
with this Agreement or any other Loan Document.
(d) If and to the extent that the obligations of Pledgor under this
Section 21 are unenforceable for any reason, Pledgor hereby agrees to make
the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
SECTION 22. Indemnity Obligations Secured by Security Agreement Collateral;
Survival. Any amounts paid by any Indemnitee, as to which such Indemnitee has
the right to reimbursement, shall constitute Secured Obligations. The indemnity
obligations of Pledgor contained in this Agreement shall continue in full force
and effect notwithstanding the full payment of all the Loan incurred under the
Note and the payment of all other Secured Obligations and notwithstanding the
discharge thereof.
SECTION 23. Acknowledgments. Pledgor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) the Lender has no fiduciary relationship with or duty to Pledgor
arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between the Lender, on one hand, and
the Pledgor, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor.
15
IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
PROBEX CORP.
By: _____________________________
Name: _____________________________
Title: _____________________________
ACCEPTED:
PENNZOIL-QUAKER STATE COMPANY
By:_____________________________
Name:___________________________
Title:__________________________
SCHEDULE I
Attached to and forming a part of that certain Pledge
Agreement dated September 29, 2000 by
Probex Corp.
as Pledgor, to Pennzoil-Quaker State Company
Class of Stock Certificate Percentage of
Class of ------------------ Outstanding
Stock Issuer Stock Nos. Par Value Number of Shares Shares
------------ ----- ---- --------- ---------------- ------
Probex Fluids C #1 $.01 100 100%
Recovery, Inc.
2
