EXHIBIT 19(E)
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT (this "Agreement") is executed as of
March 25, 2005 is between. LaSalle UAI Holdings, LLC, a Delaware Limited
Liability Company, having a mailing address of 00 Xxxx Xxxx, #0000, Xxxxxxx, XX
00000 ("Debtor") and Venture Equities Management, Inc., having a mailing address
of Attn: Xxxx Xx, 00 Xxxxxxx Xxxx, Xxxxx, XX 00000 ( "Secured Party").
RECITALS:
WHEREAS, Debtor and Secured Party are parties to that certain Stock
Purchase Agreement dated of even date herewith, pursuant to which Secured Party
sold to Debtor certain chares of stock in Universal Automotive Industries, Inc.,
as from time to time amended (collectively, the "Stock Purchase Agreement")
WHEREAS, in order to finance Debtor's acquisition pursuant to the Stock
Purchase Agreement, Secured Party has made a loan to Debtor in the amount of
$884,701.66, pursuant to that certain Non-Recourse Promissory Note (together
with any amendments, modifications and/or restatements thereof, the "Note")
dated the date hereof, in like amount, executed by Debtor and payable to Secured
Party, and bearing interest at the rate of Eight (8%) percent per annum;
NOW, THEREFORE, for and in consideration of any loan, advance or other
financial accommodation heretofore or hereafter made to the Borrower or the
Debtor under or in connection with the Note or otherwise, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. When used herein, the following terms have the following
meanings (such meanings to be applicable to both the singular and plural forms
of such terms):
Class A Shares means 201,438 shares of the issued and outstanding
Series A preferred stock of Issuer, $0.01 par value per share, registered
in the name of Debtor, being all of the issued and outstanding shares of
Series A preferred stock of Issuer, represented by certificate number
PA-2.
Collateral is defined in Section 2.
Default means the occurrence of any of the following events: (a)
failure of Debtor to make any payment on the Note when due; (b) any
warranty of the Debtor herein or in the Stock Purchase Agreement is untrue
or misleading; or (c) Debtor has defaulted in the observance or
performance of any covenant or obligation contained in the Stock Purchase
Agreement, the Note or this Agreement.
Issuer means Universal Automotive Industries, Inc. a Delaware
corporation.
Liabilities means all obligations (monetary or otherwise) of the
Debtor, howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing, or due or to
become due, which arise out of or in
connection with the Note, the Stock Purchase Agreement, this Agreement, or
any document or instrument executed in connection with any of the
foregoing.
Note has the meaning given to it in the Recitals.
Stock Purchase Agreement has the meaning given to it in the
Recitals.
Underlying Common Stock means the shares of common stock, par value
$0.01 per share, issuable on exercise of the conversion rights of the
Class A Shares, including any common stock or other securities issued with
respect to the Underlying Common Stock by reason of any corporate
reorganization, merger, consolidation, stock split, stock dividend,
conversion, preemptive right or otherwise.
2. Pledge. As security for the payment of all Liabilities, the Debtor
hereby pledges to the Secured Party, and grants to the Secured Party a
continuing security interest in, all of the following:
A. The Class A Shares and the Underlying Common Stock together with any
additional securities now or hereafter acquired as a result of any
corporate reorganization, merger, consolidation, stock split, stock
dividend, conversion, preemptive right or otherwise, and all cash,
securities, dividends, rights and other property at any time and from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such Class A Shares, Underlying Common Stock or
other securities.
B. All additional shares of stock of the Issuer at any time and from time
to time acquired by the Debtor in any manner, all of the certificates
representing such additional shares, and all cash, securities, dividends,
rights and other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange or
conversion for any or all of such shares;
C. All other property hereafter delivered to the Debtor in substitution
for or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such property, and all cash,
securities, interest, dividends, rights and other property at any time and
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all thereof; and
D. All products and proceeds of all of the foregoing.
All of the foregoing are herein collectively called the "Collateral".
The Debtor agrees to deliver to the Secured Party, promptly upon receipt
and in due form for transfer (i.e., endorsed in blank or accompanied by stock or
bond powers executed in blank), any Collateral which may at any time or from
time to time come into the possession or control of the Debtor; and prior to the
delivery thereof to the Secured Party, such Collateral shall be held by the
Debtor separate and apart from its other property and in express trust for the
Secured Party.
2
3. Warranties; Further Assurances. The Debtor warrants to the Secured
Party that: (a) the Debtor is (or at the time of any future delivery, pledge,
assignment or transfer thereof will be) the legal and equitable owner of the
Collateral free and clear of all liens, security interests and encumbrances of
every description whatsoever other than the security interest created hereunder;
(b) the pledge and delivery of the Collateral pursuant to this Agreement will
create a valid perfected security interest in the Collateral in favor of the
Secured Party; (c) The Class A Shares are duly authorized, validly issued, fully
paid and non-assessable; (d) the Class A Shares represent one hundred (100%)
percent of the total Class A shares of capital stock issued and outstanding of
the Issuer; and (e) the Debtor is a limited liability company formed under the
laws of the State of Delaware.
So long as any of the Liabilities shall be outstanding or any commitment
shall exist on the part of the Secured Party with respect to the creation of any
Liabilities, the Debtor (i) shall not, without the express prior written consent
of the Secured Party, sell, assign, exchange, pledge or otherwise transfer,
encumber, or grant any option, warrant or other right to purchase the stock of
the Issuer which is pledged hereunder, or otherwise diminish or impair any of
its rights in, to or under any of the Collateral; (ii) shall execute and/or
permit Secured Party to execute and/or file such Uniform Commercial Code
financing statements and other documents (and pay the costs of filing and
recording or re-filing and re-recording the same in all public offices
reasonably deemed necessary or appropriate by the Secured Party) and do such
other acts and things, all as the Secured Party may from time to time reasonably
request, to establish and maintain a valid, perfected security interest in the
Collateral (free of all other liens, claims and rights of third parties
whatsoever) to secure the performance and payment of the Liabilities; (iii) will
execute and deliver to the Secured Party such stock powers and similar documents
relating to the Collateral, satisfactory in form and substance to the Secured
Party, as the Secured Party may reasonably request; and (iv) will furnish the
Secured Party such information concerning the Collateral as the Secured Party
may from time to time reasonably request, and will permit the Secured Party or
any designee of the Secured Party, from time to time at reasonable times and on
reasonable notice (or at any time without notice during the existence of a
Default), to inspect, audit and make copies of and extracts from all records and
all other papers in the possession of the Debtor which pertain to the
Collateral, and will, upon request of the Secured Party at any time when a
Default has occurred and is continuing, deliver to the Secured Party all of such
records and papers.
4. Holding in Name of Secured Party, etc. The Secured Party may from time
to time after the occurrence and during the continuance of a Default, without
notice to the Debtor, take all or any of the following actions: (a) transfer all
or any part of the Collateral into the name of the Secured Party or any nominee
or sub-agent for the Secured Party, with or without disclosing that such
Collateral is subject to the lien and security interest hereunder, (b) appoint
one or more sub-lenders or nominees for the purpose of retaining physical
possession of the Collateral, (c) notify the parties obligated on any of the
Collateral to make payment to the Secured Party of any amounts due or to become
due thereunder, (d) endorse any checks, drafts or other writings in the name of
the Debtor to allow collection of the Collateral, (e) enforce collection of any
of the Collateral by suit or otherwise, and surrender, release or exchange all
or any part thereof, or compromise or renew for any period (whether or not
longer than the original period) any obligations of any nature of any party with
respect thereto, and (f) take control of any proceeds of the Collateral.
3
5. Voting Rights, Dividends, etc.
(a) Notwithstanding certain provisions of Section 4 hereof, so long as the
Secured Party has not given the notice referred to in paragraph (b) below:
A. The Debtor shall be entitled to exercise any and all voting or
consensual rights and powers and stock purchase, or subscription rights
(but any such exercise by the Debtor of stock purchase or subscription
rights may be made only from funds of the Debtor not comprising part of
the Collateral) relating or pertaining to the Collateral or any part
thereof for any purpose; provided that the Debtor agrees that it will not
exercise any such right or power in any manner which would have a material
adverse effect on the value of the Collateral or any part thereof;
provided, further, that the rights granted hereunder shall not include the
right to convert the Class A Shares to Underlying Common Stock, without
the prior written consent of Secured Party.
B. All dividends and distributions in respect of the Collateral or any
part thereof, whether in cash or in stock, resulting from a subdivision,
combination or reclassification of Collateral or any part thereof or
received in exchange for Collateral or any part thereof or as a result of
any merger, consolidation, acquisition or other exchange of assets to
which any Issuer may be a party or otherwise or as a result of any
exercise of any stock purchase, conversion or subscription right, shall be
and become part of the Collateral hereunder and, if received by the
Debtor, shall be forthwith delivered to the Secured Party in due form for
transfer (i.e., endorsed in blank or accompanied by stock or bond powers
executed in blank) to be held for the purposes of this Agreement.
C. The Secured Party shall execute and deliver, or cause to be executed
and delivered, to the Debtor all such proxies, powers of attorney,
dividend orders and other instruments as the Debtor may request for the
purpose of enabling the Debtor to exercise the rights and powers which it
is entitled to exercise pursuant to clause (A) above.
(b) Upon notice from the Secured Party during the existence of a Default,
and so long as the same shall be continuing, all rights and powers which the
Debtor is entitled to exercise pursuant to Section 5(a)(A) hereof, shall
forthwith cease, and all such rights and powers shall thereupon become vested in
the Secured Party which shall have, during the continuance of such Default, the
sole and exclusive authority to exercise such rights and powers and to receive
such dividends. Any and all money and other property paid over to or received by
the Secured Party pursuant to this paragraph (b) shall be retained by the
Secured Party as additional Collateral hereunder and applied in accordance with
the provisions hereof.
6. Remedies. Whenever a Default shall exist, the Secured Party may
exercise from time to time any rights and remedies available to it under the
Uniform Commercial Code as in effect in Illinois or otherwise available to it.
Without limiting the foregoing, whenever a Default shall exist the Secured Party
(a) may, to the fullest extent permitted by applicable law, without notice,
advertisement, hearing or process of law of any kind, (i) sell any or all of the
Collateral, free of all rights and claims of the Debtor therein and thereto, at
any public or private sale or brokers' board and (ii) bid for and purchase any
or all of the Collateral at any such public sale and (b) shall have the right,
for and in the name, place and stead of the Debtor, to execute
4
endorsements, assignments, stock powers and other instruments of conveyance or
transfer with respect to all or any of the Collateral. The Debtor hereby
expressly waives, to the fullest extent permitted by applicable law, any and all
notices, advertisements, hearings or process of law in connection with the
exercise by the Secured Party of any of its rights and remedies during the
continuance of a Default. Any notification of intended disposition of any of the
Collateral shall be deemed reasonably and properly given if given at least ten
(10) days before such disposition. Any proceeds of any of the Collateral may be
applied by the Secured Party to the payment of expenses in connection with the
Collateral, including, without limitation, reasonable attorneys' fees and legal
expenses, and any balance of such proceeds may be applied by the Secured Party
toward the payment of such of the Liabilities, and in such order of application,
as the Secured Party may from time to time elect (and, after payment in full of
all Liabilities, any excess shall be delivered to the Debtor or as a court of
competent jurisdiction shall direct).
The Secured Party is hereby authorized to comply with any limitation or
restriction in connection with any sale of Collateral as it may be advised by
counsel is necessary in order to (a) avoid any violation of applicable law
(including, without limitation, compliance with such procedures as may restrict
the number of prospective bidders or purchasers and/or further restrict such
prospective bidders or purchasers to persons or entities who will represent and
agree that they are purchasing for their own account for investment and not with
a view to the distribution or resale of such Collateral) or (b) obtain any
required approval of the sale or of the purchase by any governmental regulatory
authority or official, and the Debtor agrees that such compliance shall not
result in such sale being considered or deemed not to have been made in a
commercially reasonable manner and that the Secured Party shall not be liable or
accountable to the Debtor for any discount allowed by reason of the fact that
such Collateral is sold in compliance with any such limitation or restriction.
7. General. The Secured Party shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral if it takes such action
for that purpose as the Debtor shall request in writing, but failure of the
Secured Party to comply with any such request shall not of itself be deemed a
failure to exercise reasonable care, and no failure of the Secured Party to
preserve or protect any rights with respect to the Collateral against prior
parties, or to do any act with respect to preservation of the Collateral not so
requested by the Debtor, shall be deemed a failure to exercise reasonable care
in the custody or preservation of any Collateral.
No delay on the part of the Secured Party in exercising any right, power
or remedy shall operate as a waiver thereof, and no single or partial exercise
of any such right, power or remedy shall preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy. No amendment,
modification or waiver of, or consent with respect to, any provision of this
Agreement shall be effective unless the same shall be in writing and signed and
delivered by the Secured Party, and then such amendment, modification, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
All obligations of the Debtor and all rights, powers and remedies of the
Secured Party expressed herein are in addition to all other rights, powers and
remedies possessed by them, including, without limitation, those provided by
applicable law or in any other written instrument or agreement relating to any
of the Liabilities or any security therefor.
5
This Agreement shall be construed in accordance with and governed by the
laws of the State of Illinois applicable to contracts made and to be fully
performed in such State. Wherever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
This Agreement shall be binding upon the Debtor and the Secured Party and
their respective successors and assigns, and shall inure to the benefit of the
Debtor and the Secured Party and the successors and assigns of the Secured
Party.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed an original but all such counterparts shall together constitute
but one and the same Agreement.
THE DEBTOR AND THE SECURED PARTY AGREE THAT ANY LITIGATION BASED HEREON,
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, SHALL BE BROUGHT
AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY
BE BROUGHT, AT THE SECURED PARTY'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE DEBTOR HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE
OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE DEBTOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.
THE DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE DEBTOR AND THE SECURED PARTY HEREBY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS AGREEMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
6
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as
of the day and year first written above.
DEBTOR
LASALLE UAI HOLDINGS, LLC
BY: LASALLE INVESTMENTS, INC., ITS MANAGER
BY: /s/ Xxxxxx Xxxxx
---------------------------
ITS: President
SECURED PARTY
VENTURE EQUITIES MANAGEMENT, INC.
By: /s/ Xxxxx Xx
-------------------------------
Title: Vice President
7
