Exhibit 4.14
NOTE PLEDGE AGREEMENT
---------------------
NOTE PLEDGE AGREEMENT dated as of March 1, 2000 made by and among
Aerovox Incorporated, a Delaware corporation (the "Pledgor"), The Huntington
National Bank, Columbus, Ohio, as Trustee and as Tender Agent ("Trustee") under
the Indenture (as hereinafter defined), and KeyBank National Association, as
Letter of Credit Bank (the "Bank"):
W I T N E S S E T H:
-------------------
WHEREAS, the Pledgor and the Trustee are entering into a certain Trust
Indenture (the "Indenture") dated as of March 1, 2000, pursuant to which the
Pledgor will issue its Taxable Adjustable Rate Notes, Series 2000 (the "Notes")
in the maximum principal amount of Eleven Million Dollars ($11,000,000);
WHEREAS, pursuant to the Indenture, a holder of any of the Notes may
instruct McDonald Investments Inc. (the "Remarketing Agent") to sell and
transfer such Notes and if the Remarketing Agent notifies the Trustee that no
sale can be made as contemplated by the Indenture, the Remarketing Agent may
instruct the Trustee to sell and transfer the Notes to the Pledgor;
WHEREAS, in connection with the issuance of the Notes, the Pledgor has
agreed to enter into a Reimbursement Agreement dated as of March 1, 2000, with
the Bank (hereinafter referred to, as the same may from time to time be amended
or supplemented, as the "Reimbursement Agreement") in order to cause the Bank to
issue the Letter of Credit thereunder which shall be used, inter alia, to pay
the purchase price of any Notes so purchased by the Pledgor (any of such Notes
so purchased by the Pledgor from a draw under the Letter of Credit being
hereinafter referred to as the "Drawing Notes"); and
WHEREAS, it is a condition precedent to the obligation of the Bank to
enter into the Reimbursement Agreement that the Pledgor shall have executed and
delivered this Note Pledge Agreement to the Bank.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Bank to enter into the Reimbursement Agreement and issue the Letter of
Credit thereunder and for other good and valuable consideration, receipt of
which is hereby acknowledged, the Pledgor and Trustee hereby agree with the Bank
as follows:
1. Defined Terms. Unless otherwise defined herein, words and terms
-------------
used as defined words and terms herein and in the above recitals shall have the
meanings given them in the Reimbursement Agreement.
2. Pledge. The Pledgor hereby pledges, assigns, hypothecates,
------
transfers, and delivers to the Bank or its designee all its right, title and
interest in and to the Drawing Notes
-1-
and hereby grants to the Bank a first lien on, and security interest in, its
right, title and interest in and to the Drawing Notes, the interest thereon and
all proceeds thereof, as collateral security for the prompt and complete
reimbursement by the Pledgor to the Bank of all monies paid by the Bank to the
Trustee pursuant to a Remarketing Drawing (as defined in the Letter of Credit)
(the "Obligations"). The Trustee shall hold any and all Drawing Notes as agent
for the Bank subject to the terms and conditions of this Note Pledge Agreement.
Trustee and Pledgor acknowledge that (i) the Bank's payment of
Remarketing Drawings (A) may create, under the Reimbursement Agreement, loans by
the Bank to, or for the benefit of, the Pledgor; and (B) are especially
conditioned upon the Trustee's certification, as Trustee, to the Bank, made in
the certificate accompanying the Remarketing Drawing, that the Trustee is either
contemporaneously delivering to the Bank an amount of money equal to the
Remarketing Drawing, or that the Trustee is holding for the benefit of the Bank
Drawing Notes together with an amount of money to be transmitted to the Bank,
the aggregate amount of such Notes and money to be delivered as is equal to the
amount of the Remarketing Drawing; (ii) upon such Drawing Notes being
remarketed, the Bank will automatically reinstate the amount of any Remarketing
Drawing under the Letter of Credit as being available for future drawings under
the Letter of Credit; and (iii) Drawing Notes are security for the repayment of
loans created by Remarketing Drawings.
3. Disposition of Drawing Notes.
----------------------------
(a) The Trustee, pursuant to the terms of the Indenture, shall, on
behalf of the Bank, accept delivery of all Drawing Notes delivered to it by or
for the account of the Pledgor, and shall hold all such Drawing Notes on behalf
of the Bank and subject to the security interest of the Bank therein. The
Pledgor hereby acknowledges that the Trustee is holding the Drawing Notes on
behalf of the Bank hereunder.
(b) Drawing Notes held by the Trustee may be registered in the name
of the Pledgor or the Trustee or its nominee, if the Trustee deems it advisable,
but upon the written request of the Bank, all Drawing Notes shall be registered
in the name of the Bank, as pledgee, or its nominee. No merger of ownership of
or title to the Notes or extinguishment of the Notes shall occur by virtue of
their registration in the name of the Pledgor or by virtue of any other
provision herein. While so registered in the name of the Pledgor, such Trustee,
its nominee, or the Bank, as pledgee, all interest on such Drawing Notes paid on
any Interest Payment Date shall be paid to the Bank and shall not be paid from
moneys drawn under the Letter of Credit. All such interest payments shall be
used to offset any payments due and owing under the Reimbursement Agreement. The
proceeds of the sale, redemption or other disposition of Drawing Notes shall be
delivered to the Bank and used to offset any amounts due and owing the Bank
under the Reimbursement Agreement. The foregoing notwithstanding, all accrued
interest on the Drawing Notes redeemed for any reason whatsoever shall be paid
to the Bank.
(c) Drawing Notes shall be released from the pledge of the Pledgor
herein created, and may be delivered to the Pledgor or otherwise pursuant to the
written direction of the
-2-
Pledgor, upon either the Trustee's receipt of written instructions from the Bank
directing the Trustee to release a specified principal amount of such Drawing
Notes or upon (i) the Trustee, holding for the benefit of the Bank an amount of
money equal to the principal amount of Drawing Notes being released and (ii) the
Trustee's being satisfied that the Pledgor has delivered, or is delivering, to
the Bank the accrued interest on the principal sum being delivered by the
Trustee, all pursuant to the Reimbursement Agreement. The Trustee shall
immediately deliver to the Bank any amounts of monies delivered to it for the
release of the Notes by Federal Reserve wire transfer in accordance with written
instructions from the Bank in regard thereto.
(d) If the Drawing Notes are issued in "book entry form" and are not
held by a "securities intermediary" (as defined in Article 8-A of the Maine
Uniform Commercial Code), the Bank shall be registered as a pledgee on the books
and records of the Pledgor or the Bank shall otherwise have "control" (as
defined in the Maine Uniform Commercial Code) of the Drawing Notes. If the
Drawing Notes are issued in "book entry form" and are held by a "securities
intermediary" (other than the Trustee on behalf of the Bank"), the Pledgor
shall, and shall cause the securities intermediary to, enter into an agreement
with the Bank, in form and substance reasonably satisfactory to the Bank,
pursuant to which the Bank shall have "control" (as defined in the Maine Uniform
Commercial Code) of the Drawing Notes. The parties hereto agree to execute such
documents, instructions and instruments as may be necessary to effectuate the
lien of the Bank on the Drawing Notes.
(e) In order to effect the transfer of the record ownership of the
Drawing Notes from that of the Pledgor or the Bank, as pledgee, each of the
Pledgor and the Bank hereby authorize the Trustee, its officers, employees and
agents, to endorse the Pledgor's, or the Bank's, name, as the case may be, to
the Drawing Notes (including any appropriate separate Note powers) to be
transferred hereunder, the Pledgor and the Bank each intending to grant hereby
to the Trustee sufficient authority and powers of transfer to effect the
purposes of this Note Pledge Agreement.
4. Collateral. All property at any time pledged to the Bank
----------
hereunder (whether described herein or not) and all income therefrom and the
proceeds thereof, are herein collectively sometimes called the "Collateral".
5. Rights of the Bank. The Bank shall not be liable for failure to
------------------
collect the Obligations or for failure to realize upon any collateral security
or guarantee therefor, or any part thereof, or for any delay in so doing nor
shall the Bank be under any obligation to take any action whatsoever with regard
thereto. If an Event of Default under the Reimbursement Agreement has occurred
and is continuing, the Bank may, thereafter without notice, exercise all rights,
privileges or options pertaining to any Notes as if it were the absolute owner
thereof, upon such terms and conditions as it may determine, all without
liability except to account for property actually received by it, but the Bank
shall have no duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do so or delay in so
doing.
-3-
6. Remedies. In the event that any portion of the Obligations has
--------
been declared due and payable, the Bank, 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, or any part thereof.
The Bank 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 Bank hereunder, including reasonable attorneys' fees and
legal expenses, to the payment in whole or in part of the Obligations in such
order as the Bank may elect, the Pledgor remaining liable for any deficiency
remaining unpaid after such application, and only after so paying over such net
proceeds and after the payment by the Bank of any other amount required by any
provision of law, the Bank shall account for the surplus, if any, to the
Pledgor. The Bank agrees to give the Pledgor and the Trustee not less than ten
(10) days written notice of the time and place any public disposition is to take
place. The Pledgor agrees that such notice is reasonable notification of such
matters. No notification need be given to the Pledgor if, after default, it has
signed a statement renouncing or modifying any right to notification of sale or
other intended disposition.
In addition to the rights and remedies granted to the Bank in this Note
Pledge Agreement and in any other instrument or agreement securing, evidencing
or relating to any of the Obligations, the Bank shall have all the rights and
remedies of a secured party under the Uniform Commercial Code of the State of
Maine. The Pledgor further agrees to waive and agrees not to assert any rights
or privileges which it may acquire under 11 M.R.S.A. ss.9-112 and the Pledgor
shall be liable for the deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all amounts to which the
Bank is entitled, and the fees of any attorneys employed by the Bank to collect
such deficiency.
7. Representations, Warranties and Covenants of the Pledgor. The
--------------------------------------------------------
Pledgor represents and warrants that: (a) except as otherwise permitted herein,
on the date of delivery to the Trustee, the Bank or the Bank's designee of any
Drawing Notes in accordance with Section 2 hereof, neither the Pledgor, the
Remarketing Agent nor the Trustee will have any right, title or interest in and
to the Drawing Notes; (b) it has, and on the date of delivery of any such
Drawing Notes to the Trustee, the Bank or the Bank's designee will have, full
power, authority and legal right to pledge all of Pledgor's right, title and
interest in and to the Drawing Notes pursuant to this Note Pledge Agreement; (c)
the pledge, assignment and delivery of such Drawing Notes pursuant to this Note
Pledge Agreement will create a valid first lien on, and a first perfected
security interest in, all right, title or interest of the Pledgor in or to such
Drawing Notes, and the proceeds thereof, subject to no prior pledge, lien,
mortgage, hypothecation, security interest, charge, option or encumbrance or to
any agreement purporting to grant to any third party a security interest in the
property or assets of the Pledgor which would include the Drawing Notes. The
Pledgor covenants and agrees that it will defend the Bank's right, title and
security interest in and to the Drawing Notes and the
-4-
proceeds thereof against the claims and demands of all persons whomsoever; and
covenants and agrees that it will have like title to and right to pledge any
other property at any time hereafter pledged to the Bank as Collateral hereunder
and will likewise defend the Bank's right thereto and security interest therein.
8. No Disposition, etc. The Pledgor agrees that it will not, without
-------------------
the prior written consent of the Bank, 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 Note
Pledge Agreement.
9. Sale of Collateral.
------------------
(a) The Pledgor recognizes that the Bank may be unable to effect a
public sale of any or all of the Drawing Notes by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, 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 sale
and, notwithstanding such circumstances, agrees and consents to any such private
sale. The Bank shall be under no obligation to delay a sale of any of the Notes
for the period of time necessary to permit the Pledgor to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if the Pledgor would agree to do so.
(b) 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 or all of the Drawing Notes 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 by Pledgor of any of
the covenants contained in this paragraph 9 will cause irreparable injury to the
Bank, that the Bank 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 Event of
Default has occurred under the Reimbursement Agreement. The Pledgor further
acknowledges the impossibility of ascertaining the amount of damages which would
be suffered by the Bank by reason of a breach of any of such covenants and,
consequently, agrees that if the Bank shall xxx for damages for breach, the
Pledgor shall pay, as liquidated damages and not as a penalty, an amount equal
to the value of the Notes on the date the Bank shall demand compliance with this
paragraph.
-5-
10. No Sale Without Reinstatement. Notwithstanding any other
-----------------------------
provision of this Agreement, the Bank shall not sell, transfer or otherwise
dispose of any of the Collateral in a manner that results in any of the Notes
comprising the Collateral being outstanding under and as defined in the
Indenture unless the Bank shall have reinstated the Letter of Credit in full
with respect to such Notes.
11. Further Assurances. The Pledgor agrees that at any time and from
------------------
time to time upon the written request of the Bank, the Pledgor will execute and
deliver such further documents and do such further acts and things as the Bank
may reasonably request in order to effect the purposes of this Note Pledge
Agreement.
12. Severability. Any provision of this Note Pledge 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.
13. No Waiver, Cumulative Remedies. The Bank 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
Bank, and then only to the extent therein set forth. A waiver by the Bank of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Bank would otherwise have on any future occasion.
No failure to exercise nor any delay in exercising, on the part of the Bank, 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.
14. Waivers, Notices, Amendments; Applicable Law. None of the terms
--------------------------------------------
or provisions of this Note Pledge Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by all parties hereto.
This Note Pledge 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 the Bank hereunder, inure to the benefit of the Bank
and its successors and assigns. This Agreement shall be governed by, and be
construed and interpreted in accordance with, the laws of the State of Maine.
Notices shall be delivered as the parties may from time to time agree. This Note
Pledge Agreement may be executed in one or more counterparts, all of which shall
be considered but one agreement.
IN WITNESS WHEREOF, the undersigned parties have caused this Note
Pledge Agreement to be duly executed and delivered by their duly authorized
officers on the day and year first above written.
AEROVOX INCORPORATED
-6-
By: XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx, President and Chief
Executive Officer
THE HUNTINGTON NATIONAL BANK, as Trustee
By: CANDADA X. XXXXX
Candada X. Xxxxx, Vice President
KEYBANK NATIONAL ASSOCIATION,
as Letter of Credit Bank
By: XXXXXXX X. XXXXXXXXX
Xxxxxxx X. Xxxxxxxxx, Senior Vice
President
-7-
