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EXHIBIT 10(jj)
PLEDGE AGREEMENT
THIS AGREEMENT, dated as of October 21, 1997, among VALLEY
FORGE DENTAL ASSOCIATES, INC. a Delaware corporation (the "Borrower"), EACH OF
THE UNDERSIGNED SHAREHOLDERS OF THE BORROWER SET FORTH ON THE SIGNATURE PAGE
HEREOF AND THE SUBSIDIARIES OF THE BORROWER IDENTIFIED IN SCHEDULE I ATTACHED
HERETO AND MADE A PART HEREOF (together with the Borrower, each a "Pledgor" and
collectively, the "Pledgors"), and PNC BANK, NATIONAL ASSOCIATION ("Bank"), is
delivered pursuant to the terms of that certain Discretionary Line of Credit
Letter Agreement dated as of even date herewith, among the Borrower, the
Guarantors set forth therein and the Bank (as amended, restated, modified or
supplemented from time to time, the "Credit Agreement")
WITNESSETH THAT:
WHEREAS, each Pledgor is the legal and beneficial owner and
the holder of its respective Pledged Collateral (as defined in Section 1(b)
hereof) as set forth on Exhibit A hereto; and
WHEREAS, pursuant to the Credit Agreement, the Bank may make
certain loans to the Borrower; and
WHEREAS, the obligations of the Bank to review the Borrower's
loan requests are subject to the condition, among others, that each Pledgor
secure its obligations to the Bank under the Credit Agreement in the manner set
forth therein and herein;
NOW, THEREFORE, intending to be legally bound hereby, the
parties hereto covenant and agree as follows:
1. Definitions. Terms which are defined in the Credit Agreement and not
otherwise defined herein are used herein as defined therein. In addition to the
words and terms defined elsewhere in this Pledge Agreement (as amended,
restated, modified or supplemented from time to time, the "Pledge Agreement"),
the following words and terms shall have the following meanings, respectively,
unless the context hereof otherwise clearly requires:
(a) "Code" shall mean the Uniform Commercial Code as in effect
in the Commonwealth of Pennsylvania or other applicable jurisdiction on the date
hereof and as the same may subsequently be amended from time to time.
(b) "Debt" shall mean, collectively, all now existing and
hereafter arising Indebtedness of the Borrower and the other Pledgors to the
Bank under the Credit Agreement, the Guaranty Agreements and the other Loan
Documents, including without limitation, all Indebtedness, whether principal,
interest, fees, expenses or otherwise, of the Borrower and the
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other Pledgors to the Bank now existing or hereafter incurred under the Credit
Agreement, the Guaranty Agreements or the Note, or any of the other Loan
Documents, as any of the same or any one or more of them may from time to time
be amended, restated, modified or supplemented, together with any and all
extensions, renewals, refinancings or refundings thereof in whole or in part.
(c) "Pledged Collateral" shall mean and include with respect
to each Pledgor (i) the securities listed on Exhibit A attached hereto and made
a part hereof, and all rights and privileges pertaining thereto, including,
without limitation, all securities and additional securities receivable in
respect of or in exchange for such securities, all rights to subscribe for
securities incident to or arising from ownership of such securities, all cash,
interest, stock and other dividends or distributions paid or payable on such
securities, and all books and records pertaining to the foregoing, including,
without limitation, all stock record and transfer books, (ii) any and all other
securities hereafter pledged to the Bank to secure the Debt and the Pledgor's
obligations hereunder, and all rights and privileges pertaining thereto,
including, without limitation, all securities and additional securities
receivable in respect of or in exchange for such securities, all rights to
subscribe for securities incident to or arising from ownership of such
securities, all cash, interest, stock and other dividends or distributions paid
or payable on such securities, and all books and records pertaining to the
foregoing, including, without limitation, all stock record and stock transfer
books, and (iii) whatever is received when any of the foregoing is sold,
exchanged or otherwise disposed of, including any proceeds as such term is
defined in the Code.
2. Pledge. As security for the due and punctual payment and performance
of the Debt in full, each Pledgor hereby agrees that the Bank shall have, and
each Pledgor hereby grants to and creates in favor of the Bank, a first priority
security interest under the Code in and to all of the Pledged Collateral.
3. Delivery of Certificates, etc. Upon the execution and delivery of
this Pledge Agreement, each Pledgor has delivered to and deposited with the Bank
in pledge, stock certificates and any other instruments evidencing the Pledged
Collateral, together with undated stock powers signed in blank by such Pledgor
as the Bank shall have required.
4. Representations and Warranties. Each Pledgor represents and warrants
to the Bank as follows:
(a) The Pledgor has good and marketable title to the Pledged
Collateral;
(b) Any shares of capital stock of a Subsidiary forming part
of the Pledged Collateral have been duly authorized and validly issued to the
Pledgor, are fully paid and nonassessable and constitute all of the issued and
outstanding stock of such Subsidiary, and there are no outstanding options or
rights to purchase or acquire any additional shares of capital stock of such
Subsidiary;
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(c) Other than the security interest granted to and created in
favor of the Bank hereunder, all of the Pledged Collateral is free and clear of
any pledge, lien, security interest, encumbrance, option or rights of others,
except to the extent transfer of the Pledged Collateral may be restricted by the
federal Securities Act of 1933, as amended, and state securities laws; and
(d) The Pledgors have delivered to the Bank a true and correct
copy of the articles or certificate of incorporation, bylaws and other
organizational documents of each Subsidiary of the Borrower the shares of
capital stock of which constitute part of the Pledged Collateral.
5. Further Assurances. Each Pledgor will faithfully preserve and
protect the Bank's security interest in the Pledged Collateral as a first
priority perfected security interest under the Code, and will do all such other
acts and things, and will upon request therefor by the Bank execute and deliver
all such other documents and instruments, including, without limitation, further
pledges, assignments, documents and powers of attorney with respect to its
Pledged Collateral consistent with the terms of this Pledge Agreement and the
Credit Agreement, as the Bank may reasonably determine to be necessary or
advisable from time to time in order to preserve, perfect and protect said
security interest.
6. Certain Covenants of the Pledgor. Each Pledgor covenants and agrees
that (a) it will defend the Bank's right, title and security interest in and to
the Pledged Collateral and the proceeds thereof against the claims and demands
of all persons whomsoever other than any Person claiming a right in the Pledged
Collateral pursuant to an agreement between such Person and the Bank; (b) except
as permitted by the Credit Agreement, it will not assign, transfer, pledge, or
otherwise encumber any of its right, title or interest under, in or to the
Pledged Collateral other than pursuant hereto; (c) except as permitted by the
Credit Agreement, it will not take or omit to take any action, or permit any
Subsidiary, any shares of capital stock of which constitute a part of the
Pledged Collateral, to take or omit to take any action, the taking or the
omission of which might result in an alteration or impairment of the Pledged
Collateral or of this Pledge Agreement; (d) it will not permit any Subsidiary,
any shares of capital stock of which constitute a part of the Pledged
Collateral, to repeal, amend or modify its articles or certificate of
incorporation, bylaws or other organizational documents, other than as permitted
under the terms of the Credit Agreement; (e) it will cause each Subsidiary, any
shares of capital stock of which constitute a part of the Pledged Collateral, to
maintain accurate stock record and stock transfer books, and upon request of the
Bank, provide the Bank with access to and copies of such stock record and stock
transfer books; (f) it will not, without the prior written consent of the Bank,
waive or release any obligation of any party to the Pledged Collateral; and (g)
it will execute and deliver to the Bank and record such supplements to this
Pledge Agreement and additional assignments as the Bank reasonably may request
to evidence and confirm the pledge herein contained.
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7. Protection of the Bank's Interest in the Pledged Collateral Against
Others. Each Pledgor assumes full responsibility for taking any and all
necessary steps, as reasonably determined by the Bank, to preserve the Bank's
rights with respect to its Pledged Collateral against all others, including the
respective issuers of capital stock forming part of the Pledged Collateral. The
Bank shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the Bank takes such
action for that purpose as the Pledgor shall request in writing (or in the
absence of such request, if the Bank deals with it in the same manner that it
deals with similar property for its own account) , provided that such requested
action will not, in the judgment of the Bank, impair the security interest in
the Pledged Collateral created hereby or the Bank's rights in, or the value of,
the Pledged Collateral, and provided further that such written request is
received by the Bank in sufficient time to permit the Bank to take the requested
action.
8. Continuation of Perfection of Security Interest. Each Pledgor shall
at such Pledgor's own cost and expense cause the security interest in its
Pledged Collateral granted to and created in favor of the Bank under this Pledge
Agreement to be perfected and continue to be perfected as long as the Debt or
any part thereof is outstanding and unpaid or not performed in full, and for
such purpose such Pledgor shall from time to time deliver possession to the Bank
of and execute, deliver and file or record (or cause to be filed or recorded)
such instruments, documents and notices (including, without limitation,
amendments or supplements to this Pledge Agreement, financing statements and
continuation statements) as the Bank may deem necessary or advisable from time
to time in order to confirm, perfect and preserve such security interest. The
Bank is hereby irrevocably appointed attorney-in-fact of each Pledgor to do all
acts and things which the Bank, in the exercise of its responsibilities under
the Credit Agreement, may deem necessary or advisable to perfect and continue
perfected the Bank's security interest in the Pledged Collateral in the event
any Pledgor fails to do any act or thing upon the Bank's request.
9. Voting Rights; Dividends; etc.
(a) So long as no demand for payment of the Debt has been made
and payment in full has not been received:
(i) Each Pledgor shall be entitled to exercise 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 Pledge Agreement or the
Credit Agreement; provided, however, that such Pledgor shall
not exercise or refrain from exercising any such right if such
action or inaction would reasonably be likely to have a
material adverse effect on the value of the Pledged Collateral
or any part thereof;
(ii) Any and all instruments and other property
(other than cash dividends) received, receivable or otherwise
distributed in respect of, or in exchange for, any of the
Pledged Collateral shall be forthwith delivered to the Bank to
hold as part of the Pledged Collateral and shall, if received
by any
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Pledgor, be received in trust for the benefit of the Bank, be
segregated from the other property or funds of such Pledgor,
and be forthwith delivered to the Bank as Pledged Collateral
in the same form as so received (with any necessary
endorsement).
(b) After demand for payment of the Debt has been made and so
long as payment in full has not been received:
(i) All rights of any Pledgor to exercise the voting
and other consensual rights which it would otherwise be
entitled to exercise pursuant to Section 9(a)(i) and to
receive the dividends and other distributions which it would
otherwise be authorized to receive and retain pursuant to
Section 9(a)(ii) shall cease, and all such rights shall, upon
notice by the Bank to such Pledgor, become vested in the Bank,
who shall thereupon have the sole right to exercise such
voting and other consensual rights and the sole right to
receive and hold as Pledged Collateral such dividends and
other distributions and apply them to payment of the Debt; and
(ii) All dividends and other distributions which are
received by any Pledgor contrary to the provisions of
paragraph (i) of this Section 9(b) shall be received in trust
for the benefit of the Bank, shall be segregated from other
funds of such Pledgor and shall be forthwith paid over to the
Bank as Pledged Collateral in the same form as so received
(with any necessary endorsement); and
(iii) Each of the Pledgors acknowledges and agrees
that the nature of the business of the Borrower and its
Subsidiaries may require that the Bank exercise its voting
rights in an expeditious fashion and without prior notice to
the Pledgors so that the Bank may attempt to preserve the
value of continuing the respective businesses of the Borrower
and its Subsidiaries as a going concern.
10. Remedies. If demand for payment of the Debt has been made and
payment in full has not been received, then the Bank shall have such rights and
remedies with respect to the Pledged Collateral or any part thereof and the
proceeds thereof as are provided by the Code and such other rights and remedies
with respect thereto which it may have at law or in equity or under this Pledge
Agreement, including without limitation, to the extent not inconsistent with the
provisions of the Code or any other applicable Law, the right to (a) transfer
all or any part of the Pledged Collateral into the Bank's name or into the name
of its nominee and thereafter receive all cash, stock and other dividends or
distributions paid or payable in respect thereof, and otherwise act with respect
thereto for the benefit of the Bank as the absolute owner thereof, and (b) sell,
assign, give an option or options to purchase or otherwise dispose of all or any
part of the Pledged Collateral at any public or private sale at such place or
places and at such time or times and upon such terms, whether for cash or on
credit, and in such manner as the Bank may determine, and apply the proceeds so
received in accordance with the terms of the Security Agreement.
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11. Notice of Sale of the Pledged Collateral by the Bank. If any
notification of intended sale of any of the Pledged Collateral is required by
law, such notification shall be deemed reasonable if provided at least ten (10)
days before such sale, addressed to the Pledgor as provided in the Credit
Agreement.
12. Nature of Sale. Each Pledgor recognizes that the Bank may be
compelled to resort to one or more private sales of the Pledged Collateral to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire such securities for their own account for investment and not with a
view to the distribution or resale thereof. Each Pledgor acknowledges and agrees
that any such private sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall not, for such reason
alone, be deemed to have been made in a commercially unreasonable manner. The
Bank shall not be under any obligation to delay a sale of any of the Pledged
Collateral for the period of time necessary to permit the issuer of such
securities to register such securities for public sale under the federal
Securities Act of 1933, as amended, or under applicable state securities laws,
even if the issuer would agree to do so.
13. Termination. Upon indefeasible payment in full of the Debt and the
termination of the Credit Agreement, this Pledge Agreement shall terminate and
be of no further force and effect, and the Bank shall thereupon promptly return
to each Pledgor such of the Pledged Collateral and such other documents
delivered by such Pledgor hereunder as may then be in the Bank's possession and
execute such documents, instruments, agreements or any combination thereof as
the Pledgors shall reasonably request to evidence such termination.. Until such
time, however, this Pledge Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective successors and assigns.
14. No Waiver. No failure or delay on the part of the Bank in
exercising any right, remedy, power or privilege hereunder shall operate as a
waiver thereof or of any other right, remedy, power or privilege of the Bank
hereunder; nor shall any single or partial exercise of any such right, remedy,
power or privilege preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights and remedies
of the Bank under this Pledge Agreement are cumulative and not exclusive of any
rights or remedies which it may otherwise have, including without limitation any
rights or remedies it may have under the Credit Agreement or any of the Guaranty
Agreements (as defined in the Credit Agreement).
15. Notices. All notices, statements, requests and demands given to or
made upon any party hereto in accordance with the provisions of this Pledge
Agreement shall be given or made as provided in the Credit Agreement.
16. Successors and Assigns. This Pledge Agreement shall be binding upon
and inure to the benefit of the Bank and its successors and assigns, and each
Pledgor and its successors and assigns, except that the Pledgors may not assign
or transfer the respective Pledgor's obligations hereunder or any interest
herein.
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17. Governing Law. This Pledge Agreement shall be deemed to be a
contract under the laws of the Commonwealth of Pennsylvania and for all purposes
shall be governed by and construed in accordance with the laws of said
Commonwealth excepting its rules relating to conflicts of Law.
18. Survival. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
19. Waiver of Rights. Each of the Pledgors waives any rights to require
the Bank to proceed against the Borrower or any other person, to proceed or
exhaust any collateral, or to pursue any other remedy prior to exercising the
Bank's rights under this Pledge Agreement. Each of the Pledgors further waives
any defense which might otherwise arise by reason of any disability, discharge
in bankruptcy, or other defense of the Borrower or of any other person liable in
respect of the Debt. Until the Debt is indefeasibly paid in full, each of the
Pledgors shall have no right of subrogation or contribution against any party
liable on the Debt. Each of the Pledgors waives any right to enforce any remedy
that the Bank has or may hereafter have against the Borrower or any other person
and waives any benefit of any collateral now or hereafter held by the Bank in
respect of the Debt. Each of the Pledgors authorizes the Bank, without notice to
any of the other Pledgors, and without affecting the security interest granted
hereby or the liabilities of any of the Pledgors hereunder, to renew, extend,
accelerate, compromise, settle or otherwise change the time for payment of or
otherwise change the terms of the Debt or any part thereof, including to
increase or decrease the rate of interest thereon; to exchange, release or
subordinate any collateral which may be held by the Bank as security for the
Debt; to release or substitute any person for the Borrower or any endorser or
guarantor of the Debt or any part thereof or any other parties thereto; and to
apply any payments on account of the Debt any proceeds of any collateral held by
the Bank for the Debt, against any item or items of the Debt or instrument or
instruments evidencing the Debt, as the Bank shall, in its sole discretion elect
whether or not the same may then be due.
[SIGNATURE PAGES FOLLOW]
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[SIGNATURE PAGE 1 OF 3 TO PLEDGE AGREEMENT]
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed and delivered this Pledge Agreement as
of the day and year first above set forth.
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxxxx
_________________________________________
Title: Relationship Manager
Address for Notices:
000 Xxxxx Xxxxxx
One PNC Plaza, 6th Floor
Pittsburgh, Pennsylvania 15222-2707
Attention: Xx. Xxxxxx X. Xxxxxxxx
Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000
VALLEY FORGE DENTAL ASSOCIATES, INC.
and the Subsidiaries listed on Schedule 1
hereto
By: /s/ W. Xxxx Xxxxxxx
_________________________________________
W. Xxxx Xxxxxxx,
Vice President and Chief Financial Officer
Address for Notices:
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Mr. W. Xxxx Xxxxxxx
Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000
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[SIGNATURE PAGE 2 OF 3 TO PLEDGE AGREEMENT]
ABBINGDON VENTURE PARTNERS
LIMITED PARTNERSHIP - II
By: Abbingdon-II Partners, as general partner
By: /s/ Xxxxxxx X. Xxxx
_________________________________________
Xxxxxxx X. Xxxx,
general partner
Address for Notices:
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000
ABBINGDON VENTURE PARTNERS
LIMITED PARTNERSHIP - III
By: Abbingdon-II Partners, as general partner
By: /s/ Xxxxxxx X. Xxxx
_________________________________________
Xxxxxxx X. Xxxx,
general partner
Address for Notices:
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000
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[SIGNATURE PAGE 3 OF 3 TO PLEDGE AGREEMENT]
ABBINGDON VENTURE PARTNERS LIMITED
PARTNERSHIP
By: BDC - III Partners, as general partner
By: /s/ Xxxxxxx X. Xxxx
_________________________________________
Xxxxxxx X. Xxxx,
general partner
Address for Notices:
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000
BUSINESS DEVELOPMENT CAPITAL
LIMITED PARTNERSHIP - III
By: BDC - III Partners, as general partner
By: /s/ Xxxxxxx X. Xxxx
_________________________________________
Xxxxxxx X. Xxxx,
general partner
Address for Notices:
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000
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EXHIBIT A
TO
PLEDGE AGREEMENT
PLEDGED COLLATERAL
ENTITY PLEDGING STOCK TYPE AND AMOUNT OF OWNERSHIP
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1. Business Development Capital Limited 400 shares of preferred stock,
Partnership - III par value $.01 per share (the
"VFDA Preferred Stock"), of
Valley Forge Dental Associates,
Inc., a Delaware corporation
("VFDA"), represented by stock
certificate number 1
175,000 shares of common stock,
par value $.01 per share (the
"VFDA Common Stock"), of VFDA
represented by stock certificate
number 1
2. Abbingdon Venture Partners Limited 1,080 shares of the VFDA
Partnership Preferred Stock represented by
stock certificate number 2
472,500 shares of the VFDA
Common Stock represented by
stock certificate number 2
3. Abbingdon Venture Partners Limited 3,960 shares of the VFDA
Partnership - II Preferred Stock represented by
stock certificate number 3
1,732,500 shares of the VFDA
Common Stock represented by
stock certificate number 3
4. Abbingdon Venture Partners Limited 2,560 shares of the VFDA
Partnership - III Preferred Stock represented by
stock certificate number 4
1,120,000 shares of the VFDA
Common Stock represented by
stock certificate number 4
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EXHIBIT A
TO
PLEDGE AGREEMENT
PLEDGED COLLATERAL
(CONTINUED)
ENTITY PLEDGING STOCK TYPE AND AMOUNT OF OWNERSHIP
--------------------- ----------------------------
5. Valley Forge Dental Associates, Inc. 1,000 shares of common stock,
par value $.01 per share, of
Riverhearst, Inc., a Delaware
corporation, represented by
stock certificate number 1
937.50 shares of common stock,
par value $.01 per share, of VFD
of Georgia, Inc., a Delaware
corporation, represented by
stock certificate number 3
1,000 shares of common stock,
par value $.01 per share, of VFD
of Pennsylvania, Inc., a
Delaware corporation,
represented by stock certificate
number 2
212,780 shares of common stock,
par value $.01 per share, of
Prodent, Inc., a Pennsylvania
corporation, represented by
stock certificate number 72
6. VFD of Pennsylvania, Inc. 100 shares of common stock, no
par value, of VFD of Pittsburgh,
Inc., a Pennsylvania
corporation, represented by
stock certificate number 9
120 shares of common stock, no
par value, of Horizon Group
International, Inc., an Ohio
corporation ("HGI"), represented
by stock certificate number 36
81 shares of preferred stock,
par value $10,000 per share, of
HGI, represented by stock
certificate number A-5
7. Horizon Group International, Inc. 1 share of common stock, no par
value, of Precise Dental Lab.,
Inc., an Ohio corporation,
represented by stock certificate
number 1
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SCHEDULE I
TO
PLEDGE AGREEMENT
SUBSIDIARIES PLEDGING STOCK
VFD of Pennsylvania, Inc.
Horizon Group International, Inc.
