PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of November 14, 2001, is made by and among
Xxxxx Inc., an Ohio corporation ("Pledgor"), to Palisade Concentrated Equity
Partnership, L.P. ("Palisade"), as Collateral Agent (as hereinafter defined).
BACKGROUND TO THE AGREEMENT
Pledgor, Palisade, the various other investors named in the Purchase
Agreement (as defined below) (Palisade and such other investors, collectively,
the "Investors") and Palisade as agent for Investors (Palisade in such capacity,
"Collateral Agent") are parties to a Securities Purchase Agreement dated as of
the date hereof (as amended, modified, restated or supplemented from time to
time, the "Purchase Agreement") pursuant to which, among other things,
Collateral Agent and Investors have agreed, subject to the terms and conditions
contained therein, to acquire from Pledgor an aggregate of $30,000,000 principal
amount of Pledgor's 6% Senior Secured Subordinated Convertible Notes due 2006
(collectively the "Notes").
In order to induce Collateral Agent and Investors to enter into the
Purchase Agreement, Pledgor, among other things, agreed to pledge and grant a
security interest to Collateral Agent, for its benefit and for the ratable
benefit of the Investors, in the Pledged Collateral (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. Defined Terms
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Unless otherwise defined herein, terms defined in the Purchase
Agreement shall have such defined meanings when used herein.
SECTION 2. Pledge
------
Pledgor hereby pledges, assigns, hypothecates, transfers and
grants a security interest to Collateral Agent, for its benefit and for the
ratable benefit of Investors, in all of the following (the "Pledged
Collateral"):
(a) the shares of stock of Pledgor set forth on Schedule A annexed
hereto and expressly made a part hereof (the "Pledged Stock"), the certificates
representing the Pledged Stock and all dividends, cash, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Stock;
(b) all additional shares of stock of any issuer of the Pledged
Stock (each an "Issuer") from time to time acquired by Pledgor in any manner,
including, without limitation, stock dividends or a distribution in connection
with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock split, spin-off or
split-off (which
shares shall be deemed to be part of the Pledged Collateral) with respect to the
Pledged Stock, and the certificates representing such additional shares, and all
dividends, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares;
(c) all shares issued pursuant to all options and rights, whether
as an addition to, in substitution of or in exchange for any shares of the
Pledged Stock and all dividends, cash and instruments; and
(d) all securities accounts holding Pledged Stock and/or any
security entitlements with respect to the Pledged Stock (the "Securities
Accounts") and all interest, dividends, options, warrants, increases, profits
and income received therefrom, all investment property in connection therewith,
all substitutions therefor and all proceeds thereof in any form.
SECTION 3. Indebtedness Secured
--------------------
This pledge is made to secure and the Pledged Collateral is
security for the payment of all obligations of Pledgor to Collateral Agent and
Investors under the Purchase Agreement, the Notes and all other agreements,
documents and instruments now or at any time hereafter executed and/or delivered
by Pledgor to, with or in favor of Collateral Agent and/or the Investors in
connection therewith or related thereto including, without limitation, all
reasonable expenses (including reasonable attorney fees) chargeable to the
Pledgor's account or incurred by the Collateral Agent and/or the Investors in
connection with the Pledgor's account whether provided for herein or in any
other agreement, instrument, or document executed by or on behalf of the Pledgor
in connection with this Agreement or the Pledged Stock (the "Indebtedness").
SECTION 4. Delivery of Pledged Collateral
------------------------------
All certificates representing or evidencing the Pledged Stock
shall be delivered to and held by or on behalf of Collateral Agent pursuant
hereto and shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to
Collateral Agent. Pledgor hereby authorizes any Issuer upon demand by Collateral
Agent to deliver any certificates, instruments or other distributions issued in
connection with the Pledged Collateral directly to Collateral Agent, in each
case to be held by Collateral Agent, subject to the terms hereof. Collateral
Agent shall have the right, at any time after an Event of Default (as defined in
the Notes) in its discretion and without notice to Pledgor, to transfer to or to
register in the name of Collateral Agent or any of its nominees any or all of
the Pledged Stock. In addition, Collateral Agent shall have the right at any
time to exchange certificates or instruments representing or evidencing Pledged
Stock for certificates or instruments of smaller or larger denominations.
SECTION 5. Representations and Warranties
------------------------------
Pledgor represents and warrants to Collateral Agent that:
(a) Pledgor is the direct and beneficial owner of each share of
the Pledged Stock as indicated on Schedule A hereto.
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(b) All of the shares of the Pledged Stock have been duly
authorized, validly issued and are fully paid and nonassessable.
(c) Upon delivery of the Pledged Stock to the Collateral Agent,
this Agreement creates and grants a valid first priority lien on and perfected
security interest in the Pledged Stock, subject to no prior security interest,
lien, charge or encumbrance, or to any agreement purporting to grant to any
third party a security interest in the property or assets of Pledgor which would
include the Pledged Collateral.
(d) There are no restrictions on transfer of the Pledged Stock
contained in the certificate of incorporation or by-laws of any Issuer or
otherwise which have not otherwise been enforceably and legally waived by the
necessary parties.
(e) To the knowledge of Pledgor, none of the Pledged Stock has
been issued or transferred in violation of the securities registration,
securities disclosure or similar laws of any jurisdiction to which such issuance
or transfer may be subject.
(f) No consent, approval, authorization or other order of any
Person and no consent, authorization, approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required by
the Pledgor for the exercise by the Collateral Agent of the voting or other
rights provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement, except as may be required in connection
with such disposition by laws affecting the offering and sale of securities
generally.
(g) No notification of the pledge evidenced hereby to any Person
is required.
(h) As of the date hereof, there are no existing options,
warrants, calls or commitments of any such character whatsoever relating to any
Pledged Stock and no indebtedness or other security convertible into any Pledged
Stock.
(i) The Pledged Stock constitutes one-hundred percent (100%) of
the issued and outstanding shares of capital stock of each Issuer thereof set
forth on Schedule A annexed hereto.
The representations and warranties set forth in this Section 5
(other than those contained in Section (k)) shall survive the execution and
delivery of this Agreement.
SECTION 6. Covenants
---------
Pledgor covenants that, until this Agreement is terminated in
accordance with the terms of Section 14 hereof:
(a) Pledgor will not sell, assign, transfer, convey or otherwise
dispose of its rights in or to the Pledged Collateral or any interest therein;
nor will Pledgor create, incur or permit to exist any pledge, mortgage, lien,
charge, encumbrance or any security interest whatsoever with respect to any of
the Pledged Collateral or the proceeds thereof other than that created hereby.
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(b) Pledgor will, at its expense, defend Collateral Agent's right,
title and security interest in and to the Pledged Collateral against the claims
of any Person.
(c) Pledgor shall at any time, and from time to time, upon the
written request of Collateral Agent, execute and deliver such further documents
and do such further acts and things as Collateral Agent may reasonably request
in order to effect the purposes of this Agreement including, but without
limitation, delivering to Collateral Agent upon the occurrence of an Event of
Default irrevocable proxies in respect of the Pledged Collateral in form
satisfactory to Collateral Agent. Until receipt thereof, following an Event of
Default this Agreement shall constitute Pledgor's proxy to Collateral Agent or
its nominee to vote all shares of Pledged Collateral then registered in
Pledgor's name.
(d) Pledgor shall not give any entitlement orders with respect to
any Securities Account or withdraw or trade any financial assets or investment
property in connection with any Securities Account.
(e) Pledgor will not consent to or approve the issuance of (i) any
additional shares of any class of capital stock of any Issuer; (ii) any
securities convertible either voluntarily by the holder thereof or automatically
upon the occurrence or nonoccurrence of any event or condition into, or any
securities exchangeable for, any such shares; or (iii) any warrants, options,
contracts or other commitments entitling any person to purchase or otherwise
acquire any such shares.
SECTION 7. Voting Rights and Dividends
---------------------------
In addition to Collateral Agent's rights and remedies set forth in
Section 9 hereof, in case an Event of Default shall have occurred and has been
declared by Collateral Agent, Collateral Agent shall (a) be entitled to vote the
Pledged Collateral, (b) be entitled to give consents, waivers and ratifications
in respect of the Pledged Collateral (Pledgor hereby irrevocably constituting
and appointing Collateral Agent, with full power of substitution, the proxy and
attorney-in-fact of Pledgor for such purposes) and (c) be entitled to collect
and receive for its own use cash dividends paid on the Pledged Collateral. Until
an Event of Default, and during the continuation thereof, Pledgor shall be
permitted to exercise or refrain from exercising any voting rights or other
powers unless, in the reasonable judgment of Collateral Agent, such action would
have a material adverse effect on the value of the Pledged Collateral or any
part thereof. After an Event of Default, all dividends and all other
distributions in respect of any of the Pledged Collateral, whenever paid or
made, shall be delivered to Collateral Agent to hold as Pledged Collateral and
shall, if received by Pledgor, be received in trust for the benefit of
Collateral Agent, be segregated from the other property or funds of Pledgor, and
be forthwith delivered to Collateral Agent as Pledged Collateral in the same
form as so received (with any necessary endorsement), provided that any
dividends payable in stock shall be immediately delivered to the Collateral
Agent to hold as Pledged Collateral hereunder.
SECTION 8. Event of Default
----------------
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
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(a) the occurrence of an "Event of Default" as such term is
defined in any of the Notes; or
(b) the pledge of the Pledged Collateral for any reason ceases to
be or is not a valid and perfected lien having a first priority.
SECTION 9. Remedies
--------
In case an Event of Default shall have occurred and be declared by
Collateral Agent, Collateral Agent may during the continuation thereof:
(a) Transfer any or all of the Pledged Collateral into its name,
or into the name of its nominee or nominees;
(b) Exercise all corporate rights with respect to the Pledged
Collateral including, without limitation, all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to any shares
of the Pledged Collateral as if it were the absolute owner thereof, including,
but without limitation, the right to exchange, at its discretion, any or all of
the Pledged Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the Issuer thereof, or upon the
exercise by the Issuer of any right, privilege or option pertaining to any of
the Pledged Collateral, and, in connection therewith, to deposit and deliver any
and all of the Pledged Collateral with any committee, depository, transfer
agent, registrar or other designated agent upon such terms and conditions as it
may determine, all without liability except to account for property actually
received by it; and
(c) Subject to any requirement of applicable law, sell, assign and
deliver the whole or, from time to time, any part of the Pledged Collateral at
the time held by Collateral Agent, at any private sale or at public auction,
with or without demand, advertisement or notice of the time or place of sale or
adjournment thereof or otherwise (all of which are hereby waived, except such
notice as is required by applicable law and cannot be waived), for cash or
credit or for other property for immediate or future delivery, and for such
price or prices and on such terms as Collateral Agent in its sole discretion may
determine, or as may be required by applicable law.
Pledgor hereby waives and releases any and all right or equity of
redemption, whether before or after sale hereunder. At any such sale, unless
prohibited by applicable law, Collateral Agent may bid for and purchase the
whole or any part of the Pledged Collateral so sold free from any such right or
equity of redemption. All moneys received by Collateral Agent hereunder whether
upon sale of the Pledged Collateral or any part thereof or otherwise shall be
held by Collateral Agent and applied by it as provided in Section 12 hereof. No
failure or delay on the part of Collateral Agent in exercising any rights
hereunder shall operate as a waiver of any such rights nor shall any single or
partial exercise of any such rights preclude any other or future exercise
thereof or the exercise of any other rights hereunder. Collateral Agent shall
have no duty as to the collection or protection of the Pledged Collateral or any
income thereon nor any duty as to preservation of any rights pertaining thereto,
except to apply the funds in accordance with the requirements of Section 12
hereof. Collateral Agent may exercise its rights with respect to all or a
portion of the Pledged Collateral and/or all or a portion of the
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property of Pledgor without resort to other security for or sources of
reimbursement for the Indebtedness. In addition to the foregoing, Collateral
Agent shall have all of the rights, remedies and privileges of a secured party
under the UCC (as defined under the Security Agreement) regardless of the
jurisdiction in which enforcement hereof is sought.
SECTION 10. Registration
------------
If Collateral Agent shall exercise its right to sell all or any
part of the Pledged Collateral, and if, in the opinion of counsel for Collateral
Agent, it is necessary to have the Pledged Collateral being sold registered
under the provisions of the 1933 Act, Pledgor will use its reasonable commercial
efforts to cause the Issuer to execute and deliver, and to cause the directors
and officers of the Issuer to execute and deliver, all at 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 Collateral being sold
under the provisions of the 1933 Act. Pledgor shall use its reasonable
commercial efforts to cause any such registration statement to become effective
and to remain effective for a period of one year from the date of the first
public offering of the Pledged Collateral being sold and to make all amendments
thereto and to related documents which, in the opinion of Collateral Agent or
its counsel, are necessary or advisable, all in conformity with the requirements
of the 1933 Act and the rules and regulations of the SEC applicable thereto.
Pledgor shall also cause the Issuer to comply with the provisions of the "Blue
Sky" law of any jurisdiction which Collateral Agent shall designate in
connection with any sale hereunder; and to cause the Issuer to make available to
its security holders, as soon as practicable, an earnings statement (which need
not be audited) covering a period of at least twelve months but not more than
eighteen months, beginning with the first month after the effective date of any
such registration statement, which earnings statement will satisfy the
provisions of Section 11(a) of the 1933 Act. Pledgor acknowledges that a breach
of any of the covenants contained in this Section may cause irreparable injury
to Collateral Agent, that Collateral Agent will have no adequate remedy at law
with respect to such breach and, as a consequence, such covenants of Pledgor
shall be specifically enforceable against Pledgor.
SECTION 11. Private Sale
------------
Notwithstanding anything contained in Section 10, Pledgor
recognizes that Collateral Agent may be unable to effect (or to do so only after
delay which would adversely affect the value that might be realized from the
Pledged Collateral) a public sale of all or part of the Pledged Collateral by
reason of certain prohibitions contained in the 1933 Act, and may be compelled
to resort to one or more private sales to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such Pledged Collateral
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor agrees that any such private sale may be at prices and
on terms less favorable to the seller than if sold at public sales and that such
private sales shall not be deemed to have been made in a commercially
unreasonable manner because they were not registered under the 1933 Act and the
seller received a less favorable price. Pledgor agrees that Collateral Agent has
no obligation to delay the sale of any Pledged Collateral for the period of time
necessary to permit the Issuer to register the Pledged Collateral for public
sale under the 1933 Act.
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SECTION 12. Proceeds of Sale
----------------
The proceeds of any collection, recovery, receipt, appropriation,
realization or sale of the Pledged Collateral shall be applied by Collateral
Agent as follows:
(a) First, to the payment of all costs, expenses and charges of
Collateral Agent, as such, or the reimbursement of Collateral Agent for the
prior payment of such costs, expenses and charges incurred in connection with
the care and safekeeping of any of the Pledged Collateral (including, without
limitation, the expenses of any sale or other proceeding, the expenses of any
taking, reasonable attorneys' fees and expenses, court costs, any other expenses
incurred or expenditures or advances made by Collateral Agent in the protection,
enforcement or exercise of its rights, powers or remedies hereunder) with
interest on any such reimbursement at the Interest Rate (as defined under the
Notes) then in effect under the Notes plus two percent (2%) from the date of
payment.
(b) Second, to the payment of the Indebtedness, in whole or in
part, in such order as Collateral Agent may elect, whether such Indebtedness is
then due or not due.
(c) Third, to such Persons as required by applicable law
including, without limitation, Section 9-615(a)(3) of the UCC.
(d) Fourth, to the extent of any surplus thereafter remaining, to
Pledgor or as a court of competent jurisdiction may direct.
In the event that the proceeds of any collection, recovery,
receipt, appropriation, realization or sale are insufficient to satisfy the
Indebtedness, Pledgor shall be liable for the deficiency together with (i)
interest thereon at the interest rate then in effect under the Notes and (ii)
the reasonable fees of any attorneys employed by Collateral Agent to collect
such deficiency.
Collateral Agent, in its sole and absolute discretion, with or
without notice to Pledgor, may deposit any proceeds of any collection, recovery,
receipt, appropriation or sale of the Pledged Collateral in a non-interest
bearing cash collateral deposit account to be maintained as security for the
Indebtedness.
SECTION 13. Information
-----------
Pledgor will promptly give or cause to be given written notice to
Collateral Agent of any notices or other documents received by it with respect
to Pledged Collateral registered in the name of Pledgor.
SECTION 14. Termination
-----------
This Agreement shall terminate and Pledgor shall be entitled to
the return, at Pledgor's expense, of such of the Pledged Collateral as has not
theretofore been sold or otherwise applied pursuant to this Agreement, upon the
earlier of (a) payment in full of the Indebtedness , and (b) such time as all of
the following claims have been finally and completely settled, adjudicated,
dismissed or otherwise resolved with prejudice to Pledgor and all of its
Subsidiaries without any material award, cost, penalty, charge or other expense
being incurred by, or assessed against the Pledgor or any Subsidiary: (i) those
certain tax assessments pending in Brazil against X'Xxxx-Xxxx & Xxxxxxxxxx do
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Brasil LTDA; (ii) that certain matter pending in the Ontario Superior Court of
Justice, encaptioned HSBC Securities (Canada) Inc. x. Xxxxxx, Xxxx & Xxxx x.
Xxxxxxxxx Xxxx Xxxxxxxxx Xxxxxxxxxxx Inc, et al., and (iii) those matters
identified in Item 1 of Pledgor's Quarterly Report on Form 10-Q for the period
ending June 30, 2001.
SECTION 15. Concerning Collateral Agent
---------------------------
The recitals of fact herein shall be taken as statements of
Pledgor for which Collateral Agent assumes no responsibility. Collateral Agent
makes no representation to anyone as to the value of the Pledged Collateral or
any part thereof or as to the validity or adequacy of the security afforded or
intended to be afforded thereby or as to the validity of this Agreement.
Collateral Agent shall be protected in relying upon any notice, consent, request
or other paper or document believed by it to be genuine and correct and to have
been signed by a proper person. The permissive rights of Collateral Agent
hereunder shall not be construed as duties of Collateral Agent. Collateral Agent
shall be under no obligation to take any action toward the enforcement of this
Agreement or rights or remedies in respect of any of the Pledged Collateral.
Collateral Agent shall not be personally liable for any action taken or omitted
by it in good faith and reasonably believed by it to be within the power or
discretion conferred upon it by this Agreement.
SECTION 16. Regarding Collateral Agent
--------------------------
(a) Each Investor hereby designates Palisade to act as the
Collateral Agent for such Investor under this Agreement. Each Investor hereby
irrevocably authorizes the Collateral Agent to take such action on its behalf
under the provisions of this Agreement and to exercise such powers and to
perform such duties hereunder as are specifically delegated to or required of
the Collateral Agent by the terms hereof and such other powers as are reasonably
incidental thereto and the Collateral Agent shall hold all Pledged Collateral
received pursuant to this Agreement for the ratable benefit of the Investors.
The Collateral Agent may perform any of its duties hereunder by or through its
agents or employees. As to matters not expressly provided for in this Agreement,
the Collateral Agent may exercise any discretion or take any action it deems
reasonable and necessary under the circumstances and the Collateral Agent shall
be fully protected in so acting.
(b) Nature of Duties. The Collateral Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement. Neither the
Collateral Agent nor any of its officers, directors, employees, partners or
agents shall be (i) liable for any action taken or omitted by them as such
hereunder or in connection herewith, unless caused by their gross (not mere)
negligence or willful misconduct, or (ii) responsible in any manner for any
recitals, statements, representations or warranties made by the Pledgor or any
officer thereof contained in this Agreement or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Collateral Agent under or in connection with, this Agreement or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or for any failure of the Pledgor to perform its obligations
hereunder. Collateral Agent shall not be under any obligation to any Investor to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Pledgor.
(c) Indemnification. To the extent the Collateral Agent is not
reimbursed and indemnified by the Pledgor, the Investors will reimburse and
indemnify Collateral Agent from and
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against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Collateral Agent in performing its duties hereunder, or in any way relating to
or arising out of this Agreement; provided that, the Investors shall not be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Collateral Agent's gross (not mere) negligence or willful misconduct.
SECTION 17. Notices
-------
Any notice or request hereunder shall be given in accordance with
the terms of the Purchase Agreement.
SECTION 18. Governing Law.
-------------
This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York without regard to the choice of
law principles thereof. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Agreement and the transactions contemplated thereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
SECTION 19. Amendments and Waivers.
----------------------
Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Pledgor and the Collateral Agent. The Pledgor waives presentment
and protest of any instrument and notice thereof, notice of default and all
other notices to which the Pledgor might otherwise be entitled.
SECTION 20. No Waiver; Cumulative Remedies.
------------------------------
No failure on the part of the Collateral Agent to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof nor shall any single or partial exercise of any such right, power
or remedy by Collateral Agent preclude any other or further exercise thereof or
the exercise of any right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
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SECTION 21. Severability.
------------
In case any security interest or other right of Collateral Agent
shall be held to be invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not affect any other security interest or
other right, privilege or power granted under this Agreement.
SECTION 22. Counterparts; Faxes.
-------------------
This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement may also be executed via facsimile,
which shall be deemed an original.
SECTION 23. Miscellaneous
-------------
The provisions of this Agreement shall be binding upon the
successors and assigns of Pledgor. The term "Collateral Agent", as used herein,
shall include any successor or assign of Collateral Agent at the time entitled
to the pledged interest in the Pledged Collateral.
SECTION 24. Titles and Subtitles.
--------------------
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
SECTION 25. Recapture.
---------
Anything in this Agreement to the contrary notwithstanding, if
Collateral Agent receives any payment or payments on account of the
Indebtedness, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver, or any other party under the
United States Bankruptcy Code, as amended, or any other federal or state
bankruptcy, reorganization, moratorium or insolvency law relating to or
affecting the enforcement of creditors' rights generally, common law or
equitable doctrine, then to the extent of any sum not finally retained by
Collateral Agent, Pledgor's obligations to Collateral Agent shall be reinstated
and this Agreement shall remain in full force and effect (or be reinstated)
until payment shall have been made to Collateral Agent, which payment shall be
due on demand.
SECTION 26. Subordination.
-------------
The pledge of the Pledged Stock hereunder shall be subordinate to
the liens granted in connection with the Senior Debt pursuant to the terms of an
intercreditor agreement among the Pledgor, Collateral Agent and the holders of
the Senior Debt which shall be requested by the holders of the Senior Debt and
in form and substance reasonably satisfactory to the Collateral Agent and the
other Investors.
SECTION 27. Construction.
------------
The parties acknowledge that each party and its counsel have
reviewed this Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the
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drafting party shall not be employed in the interpretation of this Agreement or
any amendments, schedules or exhibits hereto.
SECTION 28. Costs and Expenses; Indemnification.
-----------------------------------
(a) The Pledgor shall pay all of the Collateral Agent's reasonable
out-of-pocket costs and expenses, including without limitation reasonable fees
and disbursements of counsel and appraisers, in connection with the preparation,
execution and delivery of this Agreement and in connection with the prosecution
or defense of any action, contest, dispute, suit or proceeding concerning any
matter in any way arising out of, related to or connected with this Agreement.
The Pledgor shall also pay all of the Collateral Agent's reasonable
out-of-pocket costs and expenses, including, without limitation, reasonable fees
and disbursements of counsel, in connection with (i) the preparation, execution
and delivery of any waiver, any amendment thereto or consent proposed or
executed in connection with the transactions contemplated by this Agreement,
(ii) the Collateral Agent's obtaining performance of the Pledgor's obligations
under this Agreement, including, but not limited to, the enforcement or defense
of the security interest in the Pledged Collateral hereunder as valid perfected
security interests, (c) any attempt to inspect, verify, protect, collect, sell,
liquidate or otherwise dispose of any Pledged Collateral, and (d) any
consultations in connection with any of the foregoing.
(b) Any such amounts payable as provided hereunder shall be
additional Indebtedness secured hereby and by the other Agreements. The
provisions of this Section 28 shall remain operative and in full force and
effect regardless of the termination of this Agreement or any of the other
Agreements, the consummation of the transactions contemplated hereby, the
repayment of any of the Indebtedness, the invalidity or unenforceability of any
term or provision of this Agreement or any of the other Agreements, or any
investigation made by or on behalf of the Collateral Agent. All amounts due
under this Section 28 shall be payable on written demand therefor.
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IN WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the date first
above written.
XXXXX INC., as Pledgor
By: /s/
---------------------------------------
Name:
Title:
PALISADE CONCENTRATED EQUITY PARTNERSHIP, L.P.
By: Palisade Concentrate Holdings, LLC, its
General Partner, as the Collateral
Agent and an Investor
By: /s/
---------------------------------------
Name: Xxxx Xxxxxxx
Title: Member
PEGASUS PARTNERS II, L.P.,
By: Pegasus Investors II GP, LLC, its General
Partner, as an Investor
By: /s/
---------------------------------------
Name:
Title:
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