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EXHIBIT 2
STOCK PLEDGE AND SECURITY AGREEMENT
This Stock Pledge and Security Agreement (the "Agreement") is made and
entered into as of April 16, 2001, by and between Kyzen Corporation, a Tennessee
corporation ("Lender"), and Xxxxxxx X. Xxxxxxxx ("Pledgor").
WITNESSETH:
WHEREAS, Pledgor is indebted to Lender pursuant to that certain
Promissory Note dated April 16, 2001 in the original principal amount of $30,000
(the "Promissory Note"); and
WHEREAS, Pledgor has agreed to pledge and assign all of Pledgor's
right, title and interest in and to certain shares of stock of Lender owned by
Pledgor as security for the payment and performance of the obligations of
Pledgor under the Promissory Note.
NOW, THEREFORE, for and in consideration of the premises, the covenants
and agreements contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, Pledgor
and Lender agree as follows:
1. Pledge, Assignment and Security Interest. Pledgor pledges,
assigns, sets over and grants to Lender a continuing security interest in and to
all of Pledgor's right, title and interest in and to the shares of stock
evidenced by the certificate(s) referenced below, together with all
replacements, accessions, split ups, substitutions, additions, and products and
proceeds and distributions thereof and any and all other rights as may now or
hereafter derive or accrue therefrom (the "Collateral"):
Stock Certificate Nos. KZ-242 evidencing an
aggregate of two hundred thousand (200,000) shares
of the common stock of Lender (the "Stock").
2. Secured Obligations. This Agreement secures the prompt payment
in full when due, whether at the stated maturity, by acceleration or otherwise,
of the indebtedness evidenced by the Promissory Note, as the same may be amended
from time to time, and all extensions and renewals thereof, and the obligations
of Pledgor hereunder (together, the "Obligations"). Lender's security interest
in the Stock shall be perfected by Lender's possession thereof, together with
stock powers executed in blank.
3. Warranties. Pledgor represents and warrants as follows:
a. Pledgor is the sole owner of the Collateral free and clear of
any claims, liens, security interests, encumbrances and the like (other than to
Lender). Pledgor will defend the Collateral against all persons who, at any
time, may claim an interest in the Collateral adverse to Lender.
b. Pledgor has full power and authority to pledge the Collateral
and enter into this Agreement.
c. All certificates, shares of stock, bonds or other securities
or instruments comprising the Collateral are validly issued, fully paid and
non-assessable.
d. There are no outstanding security interests in the Collateral
other than to Lender.
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e. During the term of this Agreement and as long as any of the
Obligations remain outstanding, Pledgor will not grant a security interest in
the Collateral to any other person and will otherwise keep the Collateral free
from any and all claims or encumbrances.
4. Income and Profits. Pledgor agrees that all income, earnings
and profits with respect to the Collateral shall be reported for local, state
and federal income tax purposes as attributable to Pledgor and not Lender.
Pledgor hereby instructs and authorizes any person authorized to report income
distributions, to issue IRS Form 1099 indicating Pledgor as the recipient of
such income, earnings and profits.
5. Delivery of Certificates; Appointment as Attorney in Fact.
Pledgor has or hereafter shall deliver to Xxxx X. Xxxxx, as agent for Lender,
the Collateral pledged hereby, and for all other property required to be
hereafter pledged to Lender, promptly, after Pledgor becomes the owner of such
in every instance accompanied by a power of attorney, or assignment sufficient
to transfer thereto, with signatures guaranteed or otherwise evidenced to
Lender's satisfaction. Without limiting the foregoing, Pledgor hereby
irrevocably constitutes and appoints Lender and Xxxx X. Xxxxx, as agent for
Lender, with full power of substitution, as Pledgor's true and lawful Attorney
in Fact, with full irrevocable power and authority in the place and stead of
Pledgor and in the name of Pledgor or in Pledgor's own name, from time to time,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
Lender deems necessary to accomplish the purpose of this Agreement, which power
of attorney is coupled with an interest and shall be irrevocable. Without
limiting the generality of the foregoing, Lender or Xxxx X. Xxxxx, as agent for
Lender, shall have the right and power following a default under any of the
Obligations to receive, endorse, and collect all checks and other orders for the
payment of money made payable to Pledgor representing any interest payment,
dividend, or other distribution payable or distributable in respect of the
Collateral, or any part thereof, and to give full discharge for the same. Upon
such a default, Lender, in its discretion, may direct Pledgor or Pledgor's
agent, to transfer the Collateral, into the name and account of Lender or its
designee.
6. Rights of Pledgor Prior to Default. Unless and until a default
under any one or more of the Obligations shall have occurred, but not
thereafter, (i) Pledgor shall have the right, from time to time, to vote and
give consents with respect to any shares of stock included in the Collateral
with the same force and effect as if such shares of stock were not included in
the Collateral, and (ii) Pledgor shall be entitled to receive and retain cash
dividends or interest as may be paid on or in respect of the property included
in the Collateral. However, if any default under the Obligations shall have
occurred, then, during the continuance thereof, Lender, in addition to the other
remedies provided, may collect and receive all such dividends and interest and,
in its discretion, may vote or cause its nominee to vote the shares of any stock
included in the Collateral.
7. Rights of Lender to Other Distributions. All dividends and
interest (other than cash dividends and interest which Pledgor is permitted to
receive by the terms of the immediately preceding Section 6) and other
distributions upon or with respect to the Collateral (including distributions
with respect to the dissolution, liquidation, redemption, stock dividends,
split-ups or other recapitalizations, rearrangements, mergers or consolidations
of the capital structure of Lender) shall be received by Lender or Xxxx X.
Xxxxx, as agent for Lender, and held as security for the Obligations.
8. Rights of Lender on Default. In the event that any one or more
of the Obligations shall become payable, whether at maturity or by acceleration,
declaration or otherwise as a result of a default on the Note, and the full
amount of such Obligations shall not have been paid in full, Lender may deal
with any and all of the Collateral as it deems fit, transfer into Lender's name
(or
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the name of its nominees), all or any part of the Collateral and/or may
liquidate all or any portion of the Collateral, applying the proceeds of such
liquidation to the Obligations, in such order of priority as Lender shall
determine in its sole discretion, and may forthwith apply any cash constituting
a part of the Collateral to the payment of the Obligations, and may collect or
otherwise realize upon any of the Collateral, or any part thereof. Without
limiting the generality of the foregoing, Lender, in making such realization
may, on one (1) calendar day prior written notice to Pledgor, sell, assign or
otherwise dispose of, or give options to purchase, the Collateral through any
stock exchange, intradealer quotation system, non-public transaction or
otherwise, for cash or credit, or for future delivery, without assumption by
Lender of any credit risk, with the right of Lender upon any such sale or sales,
public or private, to purchase the whole or any part of the Collateral free from
any right or equity of redemption in Pledgor or anyone claiming through or under
Pledgor, which right or equity of redemption is hereby expressly waived and
released, and to apply the net proceeds of such realization, after deducting all
costs and expenses of every kind, to the payment of the Obligations in such
order of priority as Lender shall determine in its sole discretion. Any surplus
shall be returned to Pledgor. Pledgor waives, to the full extent permitted by
law, all rights of appraisement or valuation, whether before or after sale.
Without limiting the foregoing, Lender shall also have, in addition to any other
rights and remedies contained in this Agreement and any other agreements,
guarantees, notes, instruments and documents heretofore, now or at any time or
times hereafter executed by Pledgor and/or guarantors, and delivered to Lender,
all of the rights and remedies of a secured party, under law, including without
limitation all of the rights and remedies of a secured party under the Uniform
Commercial Code in force in Tennessee, all of which rights and remedies shall be
cumulative, and non-exclusive, to the extent permitted by law.
9. Discharge of Pledge. If the whole amount of the principal of
and interest on, the Obligations or any modification, renewal or extension
thereof shall have been paid in full and discharged then, and in that event, all
rights and interest assigned and pledged hereby or pursuant hereto by Pledgor
shall revert to Pledgor and cease, terminate and be void and the Collateral
belonging to Pledgor shall forthwith be transferred and delivered to Pledgor.
10. Right of Exoneration. Pledgor hereby waives, releases and
discharges any right of exoneration with respect to the Obligations and also any
right at law, in equity or by statute to require Lender to pursue or otherwise
avail itself of any rights or remedies which Lender has or may have against
Pledgor, any obligor or any other person with respect to payment of the
Obligations, or to pursue or exhaust any of Lender's rights or remedies with
respect to any other security at any time held by Lender for the payment of the
Obligations.
11. Pledgor's Rights of Reimbursement or Subrogation. Pledgor
shall have no right of reimbursement or subrogation with respect to the
Obligations unless and until Lender shall have received payment in full of all
principal and interest on the Obligations. Pledgor hereby waives and releases
any equity or right of marshaling.
12. Notices. All notices hereunder shall be deemed to have been
sufficiently given or served, for all purposes hereof, when delivered personally
or when mailed by certified or registered mail, postage prepaid, return receipt
requested, to the last known address of said party. When personally delivered
any notice shall be deemed given when actually received. Any mailed notice shall
be deemed given when mailed. Any notice given pursuant to this Section 12 shall
be deemed reasonable and shall be effective regardless of whether actually
received.
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13. Indemnity and Expenses. Pledgor agrees to indemnify Lender
from any and all claims, losses and liabilities growing out of or resulting from
this Agreement, and Pledgor will, upon demand, pay or reimburse Lender, as the
case may be, the amount of any and all expenses, including attorneys' fees and
disbursements and the fees and disbursements of experts and agents, which Lender
may incur in connection with the administration of this Agreement; the custody,
preservation, or the sale of, collections from, or other realization upon, the
Collateral; the exercise or enforcement of any of the rights of Lender
hereunder; or the failure by Pledgor to perform or observe any of the provisions
hereof.
14. Persons Bound. The term "Pledgor" herein shall be deemed to
include all signers, and all agreements, representations, covenants and
obligations hereof shall be joint and several of and for all such signers. This
Pledge Agreement shall be binding upon Pledgor, Pledgor's successors and
permitted assigns and shall inure to the benefit of and be enforceable by
Lender, its successors and assigns; provided, however, that Pledgor may not
assign his obligations hereunder without the prior written consent of Lender.
15. General Provisions.
a. Each reference herein to Lender shall be deemed to include its
successors and assigns, and each reference to the Pledgor and any pronouns
referring thereto as used herein shall be construed in the masculine, feminine
or neuter, singular or plural, as the context may require, and shall be deemed
to include Pledgor's respective heirs, administrators, legal representatives,
successors and assigns, all of whom shall be bound by the provisions hereof.
b. No delay on the part of Lender in exercising any rights
hereunder or failure to exercise the same shall operate as a waiver of such
rights; no notice to or demand on the Pledgor shall be deemed to be a waiver of
any obligations of the Pledgor or of the right of Lender to take other or
further action without notice or demand as provided herein. In any event, no
modification or waiver of the provision hereof shall be effective unless in
writing and signed by Lender nor shall any waiver be applicable except in the
specific instance or matter for which given.
c. The headings contained in this Agreement have been inserted
for convenience or reference only and are not to be used to interpret this
Agreement.
d. This Agreement is and shall be deemed to be a contract entered
into and made pursuant to the laws of Tennessee and shall in all respects be
governed, construed, applied and enforced in accordance with the laws of said
state.
e. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
Should any portion of this Agreement be declared invalid for any reason in any
jurisdiction, such declaration shall have no effect upon the remaining portions
of this Agreement.
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IN WITNESS WHEREOF, this Stock Pledge and Security Agreement has been
executed effective as of April 16, 2001.
PLEDGOR:
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Agreed to and Accepted
KYZEN CORPORATION
By: /s/ Xxxx X. Xxxxx
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Title: President and CEO
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