Pledge Agreement dated January 31, 2000
Agreement, dated January 31, 2000, by and between Xxxxxx X. Xxxxx ("Xxxxx")
residing at 0000 Xxxxx Xxxxx Xxxx, Xxxxxxx XX 00000, and Safety Components
International, Inc. ("SCI"), a Delaware Corporation.
WHEREAS, Xxxxx is the principal shareholder of Valentec International
Limited ("VIL"), a United Kingdom corporation;
WHEREAS, VIL has an account payable (the "A/P") to SCI equal to one million
one hundred fifty one thousand three hundred fourteen dollars and eleven cents
($1,151,314.11);
WHEREAS, Xxxxx desires to provide certain collateral to secure such account
payable and to otherwise provide certain assurances to SCI relating to the
payment of such account payable;
NOW, THEREFORE, the parties agree as follows:
1. As collateral security for the A/P, Xxxxx hereby pledges and assigns to
SCI, and grants to SCI a continuing first priority security interest in, and
first priority lien on, all of Xxxxx'x right, title and interest in and to the
following (the "Pledged Collateral"):
(a) the 976,576 shares of Common Stock of SCI owned by Xxxxx (the "Pledged
Shares"), any securities into which the Pledged Shares are or may become
exchangeable or convertible by merger, reorganization or otherwise, all other
rights, contractual or otherwise, in respect thereof 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;
(b) all additional shares of stock, at any time and from time to time
acquired by the Pledgor, of SCI in connection with any stock dividend, stock
split, reclassification, recapitalization or other similar change relating to
the Pledged Shares, the certificates representing such additional shares, all
other rights, contractual or otherwise, in respect thereof 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
additional shares; and
(c) All proceeds of any and all of the foregoing.
2. Security for A/P. The security interest and lien created hereby in the
Pledged Collateral constitutes continuing collateral security for the full
payment by VIL of the A/P.
3. Delivery of the Pledged Collateral. All certificates currently
representing any Pledged Shares shall be delivered to SCI on or prior to the
execution and delivery of this Agreement. If Xxxxx shall receive, by virtue of
being an owner of the Pledged Collateral any stock certificate, promissory note
or other instrument, or dividend or other distribution, Xxxxx shall receive such
certificate, note, instrument, dividend or distribution in trust for the benefit
of SCI and shall deliver it
forthwith to SCI in the exact form received, with any necessary indorsement or
stock powers duly executed in blank to be held by SCI as further security for
the A/P.
4. Representation of Xxxxx. Xxxxx owns the Pledged Collateral free and
clear of all liens, claims and encumbrances. This agreement creates a valid
security interest in favor of SCI.
5. Agreement Not To Sell. Xxxxx agrees not to sell or otherwise encumber
the Pledged Collateral during the term of this Agreement.
6. Cause VIL to Pay A/P out of proceeds of Saudi Receivable. Upon receipt
by VIL of payments under the existing contract between Saudi Arabia and VIL,
estimated to be approximately five hundred sixty four thousand dollars
($564,000), Xxxxx agrees to cause VIL to promptly deliver such payment or
payments to SCI to be applied against any amounts then owing to SCI under the
A/P.
7. Partial Release of Pledged Collateral. Upon receipt by SCI of any
partial payment of the A/P, whether from VIL or Xxxxx, or any cash dividend on
the Pledged Collateral (which dividend shall be applied as a payment against the
A/P), SCI shall promptly release a portion of the Pledged Collateral having a
value equal to such payment or payments. Such value shall be determined on the
basis of the closing sale price of the Pledged Collateral on NASDAQ or the OTC
Bulletin Board or comparable service on the day of such payment to SCI and if no
reliable quotation is then available, such value shall be determined by the
Board of Directors of SCI in good faith. Notwithstanding the foregoing, no
release of collateral shall be made if the remaining collateral has a value, as
determined in accordance with this paragraph, of less than the remaining amount
of the A/P.
8. Full Release of Pledged Collateral. If the A/P is paid in full on or
prior to January 17, 2001, all Pledged Collateral shall be promptly returned by
SCI to Xxxxx.
9. Retention of Collateral by SCI if Full Payment is Not Made. In the event
full payment of the A/P is not made by VIL and/or Xxxxx on or prior to January
17, 2001, SCI shall apply any Pledged Collateral then held by it under this
agreement against the then remaining amount of the A/P. The Pledged Collateral
shall be valued for such purposes as determined in accordance with paragraph 7.
Such valuation shall be made on January 17, 2001. SCI shall have the right after
January 17, 2001, to retain the remaining Pledged Collateral as treasury shares
or to sell the Pledged Collateral in satisfaction of all or a portion of the
A/P. If SCI sells the shares, it shall consummate such sale not later than May
17, 2001 and the value shall be redetermined based upon the net proceeds (i.e.
gross proceeds less expenses of sale, including brokerage or underwriting
commissions) received by SCI. Any excess Pledged Collateral shall be promptly
returned by SCI to Xxxxx.
10. Nonrecourse to Xxxxx. Nothing in this Agreement shall be construed as a
personal guaranty by Xxxxx of the payment of the A/P to SCI. In the event the
value of the
Pledged Collateral is insufficient to satisfy the then remaining amount of the
A/P, Xxxxx shall not be personally liable for the deficiency. SCI shall have the
right to pursue remedies against VIL for such deficiency.
11. Duty of SCI. Other than the exercise of reasonable care to assure the
safe custody of the Pledged Collateral while held hereunder and except as
required by law, SCI shall have no duty or liability to preserve rights
pertaining thereto and shall be relieved of all responsibility for the Pledged
Collateral upon surrendering it or tendering surrender to Xxxxx.
12. Voting of Pledged Collateral. Xxxxx shall have the right to exercise
all voting, consensual and other similar rights associated with the Pledged
Collateral prior to January 17, 2001. After such date, Xxxxx shall exercise such
rights only in respect of the excess Pledged Collateral. The Board of Directors
shall determine the amount of such excess in good faith within ten business days
of such date.
13. Miscellaneous.
(a) No failure of SCI to exercise, and no delay in exercising any right
hereunder, shall operate as a waiver hereof, nor shall any single or partial
exercise preclude any other or future exercise thereof or the exercise of any
other right.
(b) Section headings are for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
(c) This Agreement shall be governed by the laws of the State of New York
without regard to any conflict of law provisions thereof.
(d) This Agreement shall be binding upon and shall inure to the benefit of
and be enforceable by the parties hereto and their respective successors
(including by merger), assigns, heirs and legal representatives.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the date first above written.
__________________________________
Xxxxxx X. Xxxxx
Safety Components International, Inc.
By: ______________________________
