THIS SECURITY AND PLEDGE AGREEMENT, dated as of August 31,
1999 (the "Agreement"), is by and among Health-Chem Corporation
(the "Company"), a New York corporation, Herculite Products, Inc.
and Hercon Environmental Corporation (the "Sellers" and together
with the Company, the "Pledgor") and Bankers Trust Company, a New
York banking corporation (the "Pledgee"). All capitalized terms
used herein and not defined are used as defined in the Asset
Purchase Agreement dated as of July 20, 1999 (the "Purchase
Agreement") by and between the Sellers and Aberdeen Road Company
(the "Buyer").
W I T N E S S E T H
WHEREAS, the Company issued its 10.375% Convertible
Subordinated Debentures (the "Debentures") due April 15, 1999
pursuant to an indenture (the "Indenture") dated as of April 15,
1981 between the Company and the Pledgee, a trustee; and
WHEREAS, the Company defaulted on the Debentures by failing to
make the principal payment due on the Debentures on April 15, 1999;
and
WHEREAS, the Sellers are second and third-tier subsidiaries of
the Company and are selling substantially all of their assets (the
"Purchased Assets") to the Buyer pursuant to the Purchase
Agreement; and
WHEREAS, the Sellers, the Buyer and the Escrow Agent have
entered into an escrow agreement dated as of August 18, 1999 (the
"Escrow Agreement") pursuant to which the Buyer shall deposit with
Xxxxxx & Xxxxx LLP, a Pennsylvania limited liability partnership,
as escrow agent (the "Escrow Agent") $550,000 (the "Collateral")
out of the Cash Purchase Price payable to the Sellers at closing;
and
WHEREAS, the Pledgor desires to secure the obligations of the
Company under the Indenture by granting to the Pledgee, for the
benefit of the holders of the Debentures, a perfected security
interest and lien upon all of their interest in the Collateral.
NOW, THEREFORE, in consideration of the promises, and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as
follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by the
Pledgor for the benefit of the Pledgee on behalf of the holders of
the Debentures to secure:
(i) all amounts due and payable pursuant to the
Indenture;
(ii) any and all obligations of the Pledgor from time to
time under this Agreement; and
(iii) in the event of any proceeding for the collection
or enforcement of any indebtedness, obligations, or liabilities of
the Pledgor referred to in clause (i) or (ii) above, or of any
exercise by the Pledgee of its rights hereunder, reasonable
attorneys' fees and court costs.
all such obligations, liabilities, sums and expenses set forth in
clauses (i) through (iii) of this Section 1 being herein
collectively called the "Obligations".
2. DEFINITIONS. The following capitalized terms used herein
shall have the definitions specified below:
"Document" means this Agreement, the Indenture and other
agreement or document entered into in connection herewith or
therewith from time to time, and any amendment, modification or
supplement to such various agreements and documents.
"UCC" means the Uniform Commercial Code as in effect in the
State of New York from time to time.
3. PLEDGE AND SECURITY INTEREST.
3.1 Grant of Security Interest in the Collateral. To secure
the Obligations now or hereafter owed or to be performed by the
Pledgor, the Pledgor hereby grants, pledges and assigns to the
Pledgee on behalf of the holders of the Debentures, and does hereby
create a continuing security interest in favor of the Pledgee in
all of the Pledgor's right, title, and interest to the Collateral
managed by the Escrow Agent pursuant to the Escrow Agreement.
3.2 Priority. The Pledgor intends the security interest in
the Collateral in favor of the Pledgee on behalf of the holders of
the Debentures to be prior to all other liens in respect of the
Collateral, except that the rights of the Buyer shall be senior to
those of the Pledgee. The Pledgor shall take all actions necessary
or requested by the Pledgee to obtain and maintain, in favor of the
Pledgee for the benefit of the holders of the Debentures, a
perfected security interest in and lien upon the Collateral prior
to all other liens except as aforesaid. It is understood, however,
that the Collateral is subject to reduction and use in accordance
with the terms of the Escrow Agreement and the Purchase Agreement.
4. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy
of the Pledgee provided for in this Agreement, the Indenture or any
other Document or now or hereafter existing at law or in equity or
by statute shall be cumulative and concurrent and shall be in
addition to every other such right, power or remedy. The exercise
or beginning of the exercise by the Pledgee of any one or more of
the rights, powers or remedies provided for in this Agreement, the
Indenture or any other Document or now or hereafter existing at law
or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee of all such other
rights, powers or remedies, and no failure or delay on the part of
the Pledgee to exercise any such right, power or remedy shall
operate as a waiver thereof. No notice to or demand on the Pledgor
in any case shall entitle the Pledgor to any other or further
notice or demand in similar other circumstances or constitute a
waiver of any of the rights of the Pledgee to any other or further
action in any circumstances without demand or notice.
5. FURTHER ASSURANCES. The Pledgor agrees that it will join
with the Pledgee in executing and, at the Pledgor's own expense,
file and refile under the UCC such financing statements,
continuation statements and other documents in such offices as the
Pledgee may reasonably deem necessary or appropriate and wherever
required or permitted by law in order to perfect and preserve the
Pledgee's security interest in the Collateral hereunder and agrees
to do such further acts and things and to execute and deliver to
the Pledgee such additional conveyances, assignments, agreements
and instruments as the Pledgee may reasonably require to carry into
effect the purposes of this Agreement or to further assure and
confirm unto the Pledgee its rights, powers and remedies hereunder
or thereunder.
6. TRANSFER BY THE PLEDGOR. The Pledgor will not sell,
transfer, assign, or otherwise dispose of, grant any option with
respect to, or mortgage, pledge, grant a security interest in or
otherwise encumber any of the Collateral or any interest therein
(except under this Agreement), except for such transaction as shall
be subject to the rights of the Pledgee hereunder.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR.
(a) The Pledgeor represents, warrants and covenants that:
(i) it is duly incorporated, validly existing and
in good standing under the laws of its place of incorporation;
(ii) the Sellers are the legal, beneficial and
record owner of, and have good and marketable title to, all
Collateral and they have sufficient interest in the Collateral in
which a security interest is purported to be created hereunder for
such security interest to attach (subject, in each case, to no
pledge, lien, mortgage, hypothecation, security interest, charge,
option, or other encumbrance whatsoever, except (i) interest of
the Buyer therein, and (ii) the liens and security interests
created by this Agreement);
(iii) the Sellers have full power, authority and
legal right to pledge all of the Collateral pledge by them pursuant
to this Agreement;
(iv) this Agreement has been duly authorized,
executed and delivered by the Pledgor and constitutes a legal,
valid and binding obligation of the Pledgor enforceable against the
Pledgor in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law);
(v) except to the extent already obtained or made,
no consent of any other party (including, without limitation, any
stockholder or creditor of the Pledgor) and no consent, license,
permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any
governmental authority is required to be obtained by the Pledgor in
connection with (a) the execution, delivery or performance of
this Agreement, (b) the validity or enforceability of this
Agreement, (c) the perfection or enforceability of the Pledgee's
security interest in the Collateral or (d) except for compliance
with or as may be required by applicable securities laws, the
exercise by the Pledgee of any of its rights or remedies provided
herein;
(vi) the execution, delivery and performance of this
Agreement will not violate any provision of any applicable law or
regulation or of any order, judgment, writ, award or decree of any
court, arbitrator or governmental authority, domestic or foreign,
applicable to the Pledgor, or of the certificate of incorporation
or by-laws of the Pledgor or of any securities issued by the
Pledgor, or of any mortgage, deed of trust, indenture, lease, loan
agreement, credit agreement or other contract, agreement or
instrument or undertaking to which the Pledgor is a party or which
purports to be binding upon the Pledgor or upon any of its assets
and will not result in the creation or imposition of (or the
obligation to create or impose) any lien or encumbrance on any of
the assets of the Pledgor, except under this Agreement;
(vii) this Agreement creates a valid and perfected
priority security interest in the Collateral, subject to no prior
lien or encumbrance or to any agreement purporting to grant to any
third party a lien or encumbrance on the property or assets of the
Pledgor, except for the rights of the Buyer in the Collateral,
which rights are senior to those of Pledgee, and subject to the due
filing of a financing statement the Pledgee is entitled to all the
rights, priorities and benefits afforded by the UCC to perfected
security interests in respect of such Collateral; and
(viii) the Pledgor has not executed and is not aware
of any currently effective financing statement, charging
instruments or other instrument similar in effect that is on file
in any recording office covering all or any part of the Pledgor's
interest in the Collateral, except such as may have been filed
pursuant to this Agreement or the Escrow Agreement, and, so long as
any of the Obligations remain unpaid, the Pledgor will not execute
or authorize to be filed in any public office any financing
statement (or similar statement or instrument of registration
under the law of any jurisdiction) or statements relating to the
Collateral, except any financing statements filed or to be filed in
respect of and covering (i) the interest of the Buyer in the
Collateral, and (ii) the security interests granted hereby by the
Pledgor.
(b) The Pledgor covenants and agrees that it will defend
Pledgee's right, title and security interest in and to the
Collateral and the proceeds thereof against the claims and demands
of all persons whomsoever subject, however, to the terms of the
Escrow Agreement.
(c) The Pledgor further covenants and agrees that it shall
not (without the prior written consent of the Pledgee) sell,
transfer or otherwise dispose of the Collateral or any interest
therein or attempt to agree to so dispose, other than subject to
Pledgee's rights under this Agreement.
8. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of
the Pledgor under this Agreement shall be absolute and
unconditional and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged,
terminated or otherwise affected by, and circumstance or occurrence
whatsoever (other than termination of this Agreement pursuant to
Section 9 hereof), including without limitation:
(i) any renewal, extension, amendment or
modification of, or addition or supplement to or deletion from any
Document (other than this Agreement to the limited extent of such
renewal, extension, amendment, modification, addition or supplement
made in accordance with the terms of this Agreement), or any other
instrument or agreement referred to herein or therein, or any
assignment or transfer of any thereof;
(ii) any waiver, consent, extension, indulgence or
other action or inaction under or in respect of this Agreement or
any other Document (other than a waiver, consent or extension with
respect to this Agreement to the limited extent thereof made in
accordance with the terms of this Agreement);
(iii) any furnishing of any additional security to
the Pledgee, or its assignee or any acceptance thereof or any
release of any security by the Pledgee, or its assignee;
(iv) any limitation on any party's liability or
obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such
instrument or agreement or any term thereof; or
(v) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Pledgor, or any action taken with
respect to this Agreement or any other Document or agreement by any
trustee or receiver; or by any court, in any such proceeding,
whether or not the Pledgor shall have notice or knowledge of any of
the foregoing.
9. TERMINATION; RELEASE. On the Termination Date (as
defined below), this Agreement shall terminate and the Pledgee, at
the request and expense of the Pledgor, will execute and deliver to
the Pledgor a proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement and release of the
security interest hereunder. As used in this Agreement,
"Termination Date" shall mean the date upon which all Obligations
then due and payable or which may become due and payable have been
paid in full.
10. NOTICES, ETC. All notices and other communications
hereunder shall be in the English language, shall be in writing and
shall be delivered or mailed by first class mail, postage prepaid,
or sent by facsimile, addressed as follows:
(i) if to the Pledgee:
Bankers Trust Company
0 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxx
Fax: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
(ii) if to the Pledgor:
Health-Chem Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx, Esq.
Kronish Lieb Xxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Fax: (000) 000-0000
Telephone: (000) 000-0000
11. THE PLEDGEE. The obligations of the Pledgee with respect
to the Collateral, interests therein and the disposition thereof,
and otherwise under this Agreement, are only those expressly set
forth in the UCC and this Agreement.
12. WAIVER; AMENDMENT. None of the terms and conditions of
this Agreement may be changed, waived, discharged or terminated in
any manner whatsoever unless such change, waiver, discharge or
termination is in writing duly signed by the Pledgor and the
Pledgee.
13. MISCELLANEOUS. This Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full
force and effect, subject to release and/or termination as set
forth in Section 9, (ii) be binding upon the Pledgor, its
successors and assigns; provided, however, that the Pledgor shall
not assign any of its rights or obligations hereunder without the
prior written consent of the Pledgee, and (iii) inure, together
with the rights and remedies of the Pledgee hereunder, to the
benefit of the Pledgee, its successors, transferees and assigns.
The headings of the several sections and subsections in this
Agreement are for purposes of reference only and shall not limit or
define the meaning hereof. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all
of which together shall constitute one instrument. In the event
that any provision of this Agreement shall prove to be invalid or
unenforceable, such provision shall be deemed to be severable from
the other provisions of this Agreement which shall remain binding
on all parties hereto. In any proceedings relating to this
Agreement, a statement as to any amount due to the Pledgee under
this Agreement which is certified as being correct by an officer or
agent of the Pledgee shall, save in the case of manifest error, be
conclusive evidence that such amount is in fact due and payable.
14. WAIVER OF JURY TRIAL. THE PLEDGOR AND THE PLEDGEE HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
15. NO IMPLIED DUTIES.
(a) The Pledgee shall not be obligated to perform or
discharge any obligation of the Pledgor as a result of the pledge
hereby effected.
(b) The acceptance by the Pledgee of this Agreement, with all
rights, powers, privileges and authority so created, shall not at
any time or in any event obligate the Pledgee to appear in or
defend any action or proceeding relating to the Collateral to which
it is not a party, or to take any action hereunder or thereunder,
or to expend any money or incur any expenses or perform or
discharge any obligation, duty or liability under the Collateral.
16. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF
CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK). The Pledgor hereby
submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New
York State court sitting in New York City for purposes of all legal
proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Pledgor irrevocably waives,
to the fullest extent permitted by 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 bought in an
inconvenient forum.
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused
this Agreement to be executed by their duly elected officers duly
authorized as of the date first above written.
HEALTH-CHEM CORPORATION,
as Pledgor
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
HERCULITE PRODUCTS, INC.
as Pledgor
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the
Board
HERCON ENVIRONMENTAL CORPORATION
as Pledgor
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the
Board
BANKERS TRUST COMPANY,
as Pledgee
By: /s/Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
Title: Vice President
10-K EXHIBIT 10.21
