EXHIBIT 10.10
PLEDGE AND SECURITY AGREEMENT
[AXIA INCORPORATED]
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is executed as of the
22nd day of July, 1998 by AXIA INCORPORATED, a Delaware corporation ("Pledgor"),
in favor of PARIBAS, a bank organized under the laws of France acting through
its Houston, Texas agency, as agent for the benefit of the Lenders (as defined
below) under the Credit Agreement (as defined below) ("Pledgee")
RECITALS:
A. Pledgor. AXIA FINANCE CORP. and Pledgee have entered into that
certain Credit Agreement dated of even date herewith along with the Lenders
named therein (collectively, the "Lender") (as amended, modified or supplemented
from time to time, the "Credit Agreement"), pursuant to which the Lender has
agreed to make available to Pledgor a credit facility subject to the terms and
conditions contained therein.
B. Pledgor is the legal, record and beneficial owner of substantially
all of the issued and outstanding common stock listed on Schedule I, issued by
the subsidiaries of Pledgor listed on Schedule I (collectively the "Issuer"),
evidenced by Issuer's common stock certificates registered in the name of
Pledgor, copies of which are attached hereto as Schedule I (the "Initial Pledged
Stock").
C. Pledgor, by virtue of its ownership of the Initial Pledged Stock,
deems it to be in its best interest, based on sound judgment, in that valuable
benefits will be derived by the pledgor by virtue of the loans, to execute and
deliver to Pledgee this Agreement.
D. In consideration of these premises and in order to induce the Lenders
to extend the credit pursuant to the Credit Agreement, and for other good and
valuable consideration. the receipt and sufficiency of which is hereby
acknowledged, the Pledgor and Pledgee hereby agree as follows:
AGREEMENTS:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Credit Agreement shall have such defined meanings when used herein.
2. Pledge. The Pledgor hereby pledges, assigns, hypothecates, transfers
and delivers to the Pledgee, and hereby grants to Pledgee, as agent for the
benefit of the Lenders, a first lien on, and security interest in, (a) the
Initial Pledged Stock, (b) all shares of stock, common or preferred, options,
interests, participations, and other equivalents, warrants, convertible
debentures and all agreements, instruments and documents convertible, in whole
or part, into any one or more of the foregoing (collectively, "Stock") of the
Issuer which Pledgor shall, from time to time, become entitled to receive or
shall receive as set forth in Section 3 hereof (together with
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any Stock options or rights received pursuant to Section 3 hereof, the
"Additional Pledged Stock"; the Additional Pledged Stock and the Initial Pledged
Stock being sometimes hereinafter referred to as the "Pledged Stock"), (c) all
other Collateral (as defined in Section 4 hereof) as may be pledged to Pledgee
at any time and from time to time hereunder and (d) all proceeds thereof,
together with appropriate undated stock powers duly executed in blank except as
to the name of the issuer, as collateral security for (i) the due and punctual
payment and performance by Pledgor of its obligations, covenants, agreements and
liabilities, absolute or contingent, liquidated or unliquidated, now existing or
hereinafter incurred under, arising out of or in connection with this Agreement,
(ii) the prompt and complete payment when due (whether at the stated due date,
by acceleration or otherwise) of the unpaid principal of and interest on the
Notes issued to evidence the Loans made by the Lenders to the Pledgor pursuant
to the Credit Agreement as well as collection costs therefor, and (iii) the due
and punctual payment and performance by Pledgor of all other Obligations (as
defined in the Credit Agreement) to the Lenders, absolute or contingent,
liquidated or unliquidated, now existing or hereinafter incurred (all the
foregoing being hereinafter called the "Obligations").
3. Stock Dividends, Distributions, etc. If, while this Agreement is in
effect, the Pledgor shall become entitled to receive or shall receive any Stock
certificate (including, without limitation, any certificate representing a Stock
dividend or a distribution in connection with any reclassification, increase or
reduction of capital, or issued in connection with any reorganization), option
or rights, whether as an addition to, in substitution of, or in exchange for any
shares of any Pledged Stock, or otherwise, the Pledgor agrees to accept the same
as Pledgee's agent and to hold the same in trust on behalf of and for the
benefit of the Pledgee segregated from the other assets of the Pledgor and to
deliver the same forthwith to the Pledgee, in the exact form received, with the
endorsement of the Pledgor, when necessary and/or appropriate, to undated stock
powers, duly executed in blank except as to the name of the issuer, to be held
by the Pledgee, subject to the terms hereof, as additional collateral security
for the Obligations, and such other documents as the Pledgee shall reasonably
request in order to perfect the Pledgee's security interest therein. Any sums
paid upon or in respect of the Pledged Stock upon the liquidation or dissolution
of Issuer shall be paid over to the Pledgee, to be held by it in trust as
additional collateral security for the Obligations; and in case any distribution
of capital shall be made on or in respect of the Pledged Stock or any property
shall be distributed upon or with respect to the Pledged Stock pursuant to the
recapitalization or reclassification of the capital of Issuer or pursuant to the
reorganization thereof, the property so distributed shall be delivered to the
Pledgee, to be held by it as additional collateral security for the Obligations.
All sums of money and property so paid or distributed in respect of the Pledged
Stock which are received by the Pledgor shall, until paid or delivered to the
Pledgee, be held by the Pledgor in trust, segregated from the other assets of
the Pledgor, as additional collateral security for the Obligations.
4. Collateral. The Pledged Stock and all other property at any time and
from time to time pledged to Pledgee hereunder (whether described in Schedule I
hereof or not) and all income therefrom and proceeds thereof, are herein
collectively sometimes called the "Collateral".
5. Record Ownership of Pledged Stock. Upon the occurrence and during the
continuance of an Event of Default, Pledgee may have the Pledged Stock
registered in its name,
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or in the name of its nominee or nominees, as pledgee; and, as to any Pledged
Stock so registered, Pledgee shall execute and deliver (or cause to be executed
and delivered) to Pledgor all such proxies, powers of attorney, dividend coupons
or orders, and other documents as Pledgor may reasonably request for the purpose
of enabling Pledgor to exercise the voting rights and powers which it is
entitled to exercise under this Agreement and to receive the dividends and other
payments in respect of the Pledged Stock which it is authorized to receive and
retain under this Agreement and the Credit Agreement.
6. Voting of Pledged Stock. As long as an Event of Default has not
occurred and is not continuing, Pledgor shall be entitled to exercise all voting
rights pertaining to the Pledged Stock; provided, however, that no vote shall be
cast or consent, waiver or ratification given or action taken which would impair
the Collateral or violate any provision of this Agreement, the Credit Agreement
or the other Loan Documents, including, without limitation, any act which would
increase the authorized issued or outstanding shares of capital Stock of Issuer.
After the occurrence and during the continuance of an Event of Default, upon
notice by Pledgee, the right to vote the Pledged Stock and all other corporate
rights pertaining to the Pledged Stock shall be vested exclusively in Pledgee,
including any and all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any shares of the Pledged Stock as
if Pledgee were the absolute owner thereof, including, without limitation, the
right to exchange at its discretion any and all of the Pledged Stock upon the
merger, consolidation, reorganization, recapitalization or other readjustment of
Issuer or upon the exercise by Issuer or the Pledgee of any right, privilege or
option pertaining to any shares of the Pledged Stock, and in connection
therewith, to deposit and deliver any and all of the Pledged Stock with any
committee, depository, transfer agent, registrar or other designated agency upon
such terms and conditions as it may determine, all without liability except to
account for property actually received by it, but the Pledgee shall have no duty
to exercise any of the aforesaid rights, privileges or options or be responsible
for any failure to do so or delay in so doing. To this end, Pledgor hereby
irrevocably constitutes and appoints Pledgee the proxy and attorney-in-fact of
Pledgor, with full power of substitution, to vote, and to act with respect to,
the Pledged Stock standing in the name of Pledgor or with respect to which
Pledgor is entitled to vote and act, subject to the understanding that such
proxy may not be exercised unless an Event of Default has occurred and is
continuing. The proxy herein granted is coupled with an interest, is
irrevocable, and shall continue until the Obligations have been paid and
performed in full.
7. Limitations on Pledgee's Obligations. The Pledgee shall not be liable
for failure to collect or realize upon the Obligations or any collateral
security or guarantee therefor, or any part thereof, or for any delay in so
doing nor shall the Pledgee be under any obligation to take any action
whatsoever with regard thereto.
8. The Pledgee's Appointment as Attorney-in-Fact. (a) In addition to,
and without limiting the scope of any other provision in this Agreement, the
Pledgor hereby irrevocably constitutes and appoints the Pledgee and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Pledgor and in the name of the Pledgor or in its own name, from
time to time in the Pledgee's discretion, for the purpose of carrying out the
actions and to execute any
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and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, hereby gives the Pledgee the power and right, on behalf of the
Pledgor, without notice to or assent by the Pledgor to do the following upon the
occurrence and during the continuance of an Event of Default; (i) to ask,
demand, collect, receive and give acquittances and receipts for any and all
monies due and to become due under the Collateral; (ii) in the name of the
Pledgor or its own name or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under the Collateral; (iii) to file any claim or to take
any other action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Pledgee for the purpose of collecting any and all such moneys
due under the Collateral, whenever payable; (iv) to pay or discharge taxes,
liens, security interests or other encumbrances levied or placed on or
threatened against the Collateral; (v) to direct any party liable for any
payment under the Collateral to make payment of any and all moneys due and to
become due thereunder directly to the Pledgee or as the Pledgee shall direct;
(vi) to receive payment of and receipt for any and all moneys, claims and other
amounts due and to become due at any time in respect of or arising out of any
Collateral; (vii) to commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in respect of the
Collateral; (viii) to defend any suit, action or proceeding brought against the
Pledgor with respect to any Collateral; (ix) to settle, compromise or adjust any
suit, action or proceeding described above and, in connection therewith, to give
such discharges or releases as the Pledgee may deem appropriate; (x) exercise
voting rights attributable to the Pledged Stock pursuant to Section 6; and (xi)
generally to sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the
Pledgee were the absolute owner thereof for all purposes, and to do, at the
Pledgee's option and the Pledgor's expense, at any time, or from time to time,
all acts and things which the Pledgee deems necessary to protect, preserve or
realize upon the Collateral and the Pledgee's security interest therein, in
order to effect the intent of this Agreement, all as fully and effectively as
the Pledgor might do.
The Pledgor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
(b) The powers conferred on the Pledgee hereunder are solely to
protect its interests, as Agent for the Lenders, in the Collateral and shall not
impose any duty upon it to exercise any such powers. Pledgee shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Pledgor for any act or failure
to act.
(c) The Pledgor also authorizes the Pledgee, at any time and from
time to time, to execute, in connection with any sale of the Collateral, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.
9. Performance by the Pledgee of the Pledgor's Obligations. If the
Pledgor fails to perform or comply with any of its agreements contained herein
and the Pledgee, as provided for
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by the terms of this Agreement, shall itself perform or comply, or otherwise
cause performance or compliance, with such agreement, then the expenses of the
Pledgee incurred in connection with such performance or compliance, together
with interest thereon to accrue at a rate of interest equal to the Highest
Lawful Rate (as defined in the Credit Agreement) from the date such expenses are
incurred, shall be payable by the Pledgor to the Pledgee on demand and shall
constitute Obligations secured hereby.
10. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Agreement:
(a) Any representation, warranty or statement made or deemed made by
the Pledgor herein or in connection herewith shall prove to have been incorrect
or untrue in any material respect on or as of the date made or deemed made,
(b) The Pledgor shall default in the observance or performance of any
term, covenant, or agreement contained herein; or
(c) Any "Events of Default", as such term is defined in the Credit
Agreement, shall occur and be continuing.
11. Remedies. (a) Upon the occurrence and during the continuance of any
Event of Default, and at any time thereafter, the Pledgee, without demand of
performance or other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private sale) to or upon
the Pledgor or any other person (all and each of which demands, advertisements
and/or notices are hereby expressly waived), may forthwith collect, receive,
appropriate and realize upon the Collateral for the benefit of the Lenders, or
any part thereof, and/or may forthwith sell, assign, give option or options to
purchase, contract to sell or otherwise dispose of and deliver said Collateral,
or any part thereof, in one or more parcels at public or private sale or sales,
at any exchange, broker's board or at the Pledgee's offices or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk, with the right to the Pledgee upon any such sale or sales,
public or private, to purchase the whole or any part of said Collateral so sold,
free of any right or equity of redemption in the Pledgor, which right or equity
is hereby expressly waived or released. The Pledgee shall apply the net proceeds
of any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred therein
or incidental to the care, safekeeping or otherwise of any and all of the
Collateral or in any way relating to the rights of the Pledgee hereunder,
including reasonable attorneys' fees and legal expenses, to the payment in whole
or in part of the Obligations in such order as the Pledgee may elect (in
accordance with the Credit Agreement), the Pledgor remaining liable for any
deficiency remaining unpaid after such application, and only after so applying
such net proceeds and after the payment by the Pledgee of any amount required by
any provision of law, including, without limitation, Section 9-504(a)(3) of
the Uniform Commercial Code of the State of Texas (the "Code"), need the Pledgee
account for the surplus, if any, to the Pledgor. The Pledgor agrees that, to the
extent permitted by law, the Pledgee need not give more than ten (10) days'
notice of the time and place of any public
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sale or of the time after which a private sale or other intended disposition is
to take place and that such notice is reasonable notification of such matters.
No notification need be given to the Pledgor if it has signed after default a
statement renouncing or modifying any right to notification of sale or other
intended disposition. IN ADDITION TO THE RIGHTS AND REMEDIES GRANTED TO IT IN
THIS AGREEMENT AND IN ANY OTHER INSTRUMENT OR AGREEMENT SECURING, EVIDENCING OR
RELATING TO ANY OF THE OBLIGATIONS, THE PLEDGEE SHALL HAVE ALL THE RIGHTS AND
REMEDIES OF A SECURED PARTY UNDER THE CODE. All waivers by the Pledgor of rights
(including rights to notice) and all rights and remedies afforded the Pledgor
herein, and all other provisions of this Agreement, are expressly made subject
to any applicable mandatory provisions of law limiting, or imposing conditions
(including conditions as to reasonableness) upon such waivers of the
effectiveness thereof or any such rights and remedies. Any sale or other
disposition of the Collateral shall be in compliance with all provisions of all
applicable statutes, laws, ordinances, regulations, orders, writs, injunctions
or decrees of any applicable Governmental Authority ("Law"). For purposes of
this Agreement, "Governmental Authority" means any nation or government, any
state, county, or city and any political subdivision of any of the foregoing and
any entity exercising exclusive, legislative, judicial, regulatory or
administrative functions of or pertaining to government (including applicable
securities laws, and regulations and applicable provisions of the Code).
(b) If Pledgee shall determine to exercise its right to sell any or
all of the Pledged Stock pursuant to this Section 11 hereof, and if in the
opinion of counsel for Pledgee it is advisable to have the Pledged Stock, or
that portion thereof to be sold, registered under the provisions of the
Securities Act of 1933, as amended (the "Securities Act"), the Pledgor will
cause the Issuer of such Pledged Stock to execute and deliver, and cause the
directors and officers thereof to execute and deliver, all at the Pledgor's
expense, all such instruments and documents, and to do or cause to be done all
such other acts and things as may be necessary to register the Pledged Stock, or
that portion thereof to be sold, under the provisions of the Securities Act and
to cause the registration statement relating thereto to become effective and to
remain effective for a period of 180 days from the date of the first public
offering of the Pledged Stock, or that portion thereof to be sold, and to make
all amendments thereto and/or to the related prospectus which are necessary, all
in conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. The
Pledgor agrees to cause each Issuer to comply with the provisions of the
securities or "Blue Sky" laws of any jurisdiction which Pledgee shall designate
and to cause Issuer to make available to its security holders, as soon as
practicable, an earnings statement which will satisfy the provisions of
Section 11(a) of the Securities Act.
(c) The Pledgor recognizes that the Pledgee may be unable to effect a
public sale of any or all the Pledged Stock by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, but may be
compelled to resort to one or more private sales thereof 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. The 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
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sale and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner. Pledgee
shall be under no obligation to delay a sale of any of the Pledged Stock for the
period of time necessary to permit the Issuer of such securities to register
such securities for public sale under the Securities Act, or under applicable
state securities laws, even if the Issuer would agree to do so.
(d) The Pledgor further agrees to do or cause to be done all such
other acts and things as may be necessary to make such sale or sales of any
portion of all of the Pledged Stock valid and binding and in compliance with any
and all applicable laws, regulations, orders, writs, injunctions, decrees or
awards of any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales, all at the
Pledgor's expense. The Pledgor further agrees that a breach of any of the
covenants contained in this Section 11 will cause irreparable injury to Pledgee,
that Pledgee has no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this paragraph
shall be specifically enforceable against the Pledgor and the Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no default of the
covenants, terms or conditions of the Credit Agreement has occurred. The Pledgor
further acknowledges the impossibility of ascertaining the amount of damages
which would be suffered by Pledgee by reason of a breach of any such covenants
and, consequently, agrees that, if Pledgee shall xxx for damages for breach,
Pledgor shall pay, as liquidated damages and not as a penalty, an amount equal
to the value of the Pledged Stock on the date Pledgee shall demand compliance
with this paragraph.
12. Waiver of Subrogation. Notwithstanding anything to the contrary in
this Agreement, unless and until the Obligations have been indefeasibly paid and
performed in full, the Pledgor hereby irrevocably waives all rights Pledgor may
have at law or in equity (including, without limitation, any law subrogating the
Pledgor to the rights of the Pledgee) to seek contribution, indemnification, or
any other form of reimbursement from the Pledgor, any other guarantor or
pledgor, or any other person now or hereafter primarily or secondarily liable
for any obligations of the Pledgor to the Pledgee, for any disbursement made by
the Pledgor under or in connection with this Agreement or otherwise. The Pledgor
further agrees that, to the extent that the waiver of any such subrogation,
contribution, reimbursement, indemnity or otherwise is found to be void or
voidable for any reason, any such rights which the Pledgor may have shall be
junior and subordinate in all respects to the rights of the Pledgee against the
Pledgor.
13. Actions by Pledgee. No action that the Pledgee or any Lender may take
or omit to take in connection with the Credit Agreement or any of the other Loan
Documents, any indebtedness owing by Pledgor to the Pledgee or the Lenders
(including, without limitation, renewals, extensions, modifications and
increases thereof), or any security for the payment of any indebtedness of
Pledgor to the Pledgee or the Lenders, or for the performance of any obligation
or undertaking of Pledgor, nor any course of dealing with Pledgor or any other
Person, shall release the Pledgor from his obligations hereunder, affect this
Agreement in any way, or afford the Pledgor any recourse against the Pledgee or
any of the Lenders. By way of example, but not in limitation of the foregoing,
the Pledgor hereby expressly agrees that the Pledgee or the any of the Lenders
may, from time to time, without notice to the Pledgor:
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(a) sell, assign, transfer or grant participations in the Loans
and/or any right held by the Pledgee or any Lender pursuant to or in connection
with the Credit Agreement and the Loan Documents;
(b) amend, change, or modify, in whole or in part, any documents or
instruments evidencing, securing or relating to any indebtedness or undertaking
of Pledgor to the Pledgee or the Lenders;
(c) accelerate, change, extend, or renew the time for payment of the
Notes or any other indebtedness arising under any documents or instruments
evidencing, securing or relating to any indebtedness or undertaking of Pledgor
to the Pledgee or the Lenders;
(d) compromise or settle any amount due or owing, or claimed to be
due or owing, under the Notes or under any documents or instruments evidencing,
securing or relating to any indebtedness or undertaking of Pledgor to the
Pledgee or the Lenders;
(e) surrender, release, or subordinate any or all security for any
indebtedness or undertaking of Pledgor to the Pledgee or the Lenders or accept
additional or substituted security therefor;
(f) release any guarantor or pledgor of any indebtedness or
undertaking of the Pledgor to the Pledgee or the Lenders, or substitute or add
additional guarantors or pledgors; and
(g) apply collateral securing the Notes to other indebtedness also
secured by such collateral.
The provisions of this Agreement shall extend and be applicable to all renewals,
increases, amendments, extensions, modifications of and substitutions for the
Credit Agreement and the other Loan Documents, and all references herein to the
Credit Agreement and the other Loan Documents shall be deemed to include any
renewal, increase, extension, amendment or modification thereof or substitution
therefor.
14. No Impairment. The obligations, guaranties, undertakings, covenants,
agreements and duties of the Pledgor under this Agreement shall not be affected
or impaired by any of the following, although without notice to or consent of
the Pledgor:
(a) any failure, omission or delay on the part of the Pledgee or the
Lenders (i) to enforce, assert or exercise any right, power or remedy conferred
on the Pledgee by the provisions of the Credit Agreement and the other Loan
Documents or otherwise inuring to the holders of the rights of the Pledgee or
the Lenders under the Credit Agreement and the other Loan Documents, or (ii) to
make demand first upon Pledgor or to proceed against Pledgor;
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(b) the voluntary or involuntary liquidation, dissolution, sale of
all or substantially all assets, marshaling of assets or liabilities,
receivership, conservatorship, assignment for the benefit of creditors,
insolvency, bankruptcy, reorganization, arrangement, composition or other
proceedings under laws for the protection of debtors affecting Pledgor or any of
the assets of Pledgor, or any discharge from liability or rejection of
burdensome contracts or obligations in the course of or resulting from any such
proceedings;
(c) the release, by operation of law or otherwise, of Pledgor from
any obligation under the Credit Agreement or any of the other Loan Documents;
(d) the invalidity, deficiency, illegality or unenforceability of the
Credit Agreement or any of the other Loan Documents, in whole or in part, or of
any of the provisions thereof, or failure to perfect or maintain perfection of
any security, or any defense or excuse for failure to perform on account of
force majeure, act of God, casualty, impossibility, impracticability, or other
defense or excuse whatsoever; or
(e) without limiting the foregoing, any fact or event (whether or not
similar to any of the foregoing) which in the absence of this provision would or
might constitute or afford a legal or equitable discharge or release of or
defense to a guarantor or surety.
None of the foregoing shall be a defense to this Agreement, and this Agreement
is a primary obligation of the Pledgor.
15. Other Pledgors or Guarantors. The liabilities and obligations of the
Pledgor hereunder shall not be reduced or limited by reason of any guaranty or
pledge executed in favor of the Pledgee or any of the Lenders by any other
Person, and this Agreement shall be enforceable against the Pledgor without
regard to any such guaranty or pledge.
16. Representations, Warranties and Covenants of the Pledgor. The Pledgor
represents and warrants that (a) it is the legal, record and beneficial owner
of, and has good and, subject to applicable securities laws described in
Section 11 hereof, marketable title to, the Initial Pledged Stock, subject to no
pledge, lien, mortgage, hypothecation, security interest, charge, option, voting
proxy or other encumbrance whatsoever, except the existing lien and security
interest created by this Agreement; (b) this Agreement has been duly authorized,
executed and delivered by Pledgor and constitutes a legal, valid and binding
obligation of the Pledgor, and is enforceable in accordance with its terms; (c)
no consent of any other party (including, without limitation, the stockholders
or creditors 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, domestic or foreign, is required
to be obtained by the Pledgor, the Pledgee or any Lender in connection with the
execution, delivery or performance of this Agreement or the pledge of such
shares hereunder, in each case which has not been obtained or made, as the case
may be, and is not in full force and effect; (d) the execution, delivery and
performance of this Agreement will not violate any provision of any applicable
Law, or of any mortgage, indenture, lease, contract, or other agreement,
instrument or undertaking to which Pledgor is a party or which purports to be
binding upon Pledgor or upon any of its assets and will
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not result in the creation or imposition of any lien, charge or encumbrance on
or security interest in any of the assets of Pledgor except as contemplated by
this Agreement or the Credit Agreement; (e) all the shares of the Initial
Pledged Stock have been duly and validly issued, are fully paid and non-
assessable and have not been issued in violation of any preemptive or other
rights of any person; (f) the Pledgor has not created any options, warrants,
rights, calls, commitments, plans, contracts or other agreements of any
character, which provide for the purchase, issuance or transfer of any shares of
capital stock of Issuer pledged hereby; and (g) the pledge, assignment and
delivery of such Initial Pledged Stock pursuant to this Agreement constitutes
and, provided Pledgee retains possession of the Initial Pledged Stock, at all
times (disregarding, however the effects of the change in any law relating to
the pledge of stock generally) will constitute a valid first lien on and a first
perfected security interest in such shares of the Initial Pledged Stock, and the
proceeds thereof, subject to no prior Lien, or to any agreement purporting to
grant to any third party other than Pledgee for the benefit of the Lenders a
security interest in the property or assets of the Pledgor which would include
the Initial Pledged Stock. Pledgor covenants and agrees that at its expense it
will defend the right, title and security interest of the Pledgee in and to the
Pledged Stock and the proceeds thereof against the claims and demands of all
persons whomsoever; and covenants and agrees that he will have like title to and
right to pledge any other property at any time hereafter pledged to the Pledgee
for the benefit of the Lenders as Collateral hereunder and will likewise defend
the right of the Pledgee for the benefit of the Lenders thereto and security
interest therein.
17. No Disposition, etc. Except as otherwise permitted in the Credit
Agreement, without the prior written consent of the Pledgee, Pledgor agrees that
it will not sell, assign, transfer, exchange, or otherwise dispose of, or grant
any option with respect to, the Collateral, nor will it create, incur or permit
to exist any pledge, lien, mortgage, hypothecation, security interest, charge,
option or any other encumbrance with respect to any of the Collateral, or any
interest therein, or any proceeds thereof, except for the lien and security
interest provided for by this Agreement and except as permitted by this
Agreement or by the Credit Agreement. Without the prior written consent of the
Pledgee, the Pledgor agrees that it will not vote to enable Issuer to issue or
sell any stock or other securities of any nature in addition to or in exchange
or substitution for the Pledged Stock or grant or issue any options, warrants,
or rights of any kind to acquire, or securities convertible into, shares of
Issuer's stock.
18. Further Assurances. Pledgor agrees that at any time and from time to
time upon the written request of the Pledgee, the Pledgor will execute and
deliver such further documents and do such further acts and things which are
necessary in the reasonable judgment of the Pledgee to effect the purpose of
this Agreement or to obtain, maintain and perfect the security interest granted
under this Agreement in any applicable jurisdiction, and any expense of Pledgee
and/or the Lenders so incurred shall be a part of the Obligations.
19. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating 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.
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20. No Waiver; Cumulative Remedies. The Pledgee shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder and no waiver shall be valid unless in writing, signed by the
Pledgee, and then only to the extent therein set forth. A waiver by the Pledgee
or any Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Pledgee and each Lender would
otherwise have on any future occasion. No failure to exercise nor any delay in
exercising on the part of the Pledgee or any Lender, any right, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by Law.
21. Waivers, Amendments, Entirety. None of the terms or provisions of
this Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by the Pledgee. This Agreement and all
obligations of the Pledgor hereunder shall be binding upon the successors and
assigns of the Pledgor, and shall, together with the rights and remedies of
Pledgee and each Lender hereunder, inure to the benefit of each of Pledgee and
the Lenders and their successors and assigns. THIS AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
22. GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED AT AND SHALL BE
DEEMED TO HAVE BEEN MADE XXXXXX COUNTY, TEXAS AND SHALL BE INTERPRETED, AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS APPLICABLE TO AGREEMENTS EXECUTED, DELIVERED AND
PERFORMED WITHIN SUCH STATE EXCEPT WITH RESPECT TO PERFECTION AND THE EFFECT OF
PERFECTION OR NONPERFECTION OF A SECURITY INTEREST, AND IN SUCH CASE, THE LAW OF
THE STATE APPLICABLE UNDER THE UNIFORM COMMERCIAL CODE SHALL APPLY AS PART OF
THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED. DEBTOR HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN TEXAS, WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO IT AT THE ADDRESS STATED BELOW
ITS SIGNATURE HEREOF. IN ADDITION, DEBTOR HEREBY WAIVES TRIAL BY JURY AND WAIVES
ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.
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23. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute one and the same Agreement.
24. Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against the
Pledgor or Issuer for liquidation or reorganization, should the Pledgor or
Issuer become insolvent or make an assignment for the benefit of creditors or
should a receiver or trustee be appointed for all or any significant part of the
Pledgor's or Issuer's assets and shall continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the
Obligations, or any part thereof is, pursuant to applicable Law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee of
the Obligations, whether as a "voidable preference", "fraudulent conveyance", or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount and not so rescinded, reduced, restored or returned.
25. Effectiveness. This Agreement shall be effective as to Axia
Incorporated after the Effective Time, as such term is defined in the Merger
Agreement.
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IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly executed
and delivered as of the day and year first above written.
AXIA INCORPORATED
BY: /s/ XXXX X. XXXX
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Xxxx X. Xxxx
Vice President-Finance
