SHARE PLEDGE AGREEMENT
WHEREAS:
A. The Pledgees have made available to Freedom a USD 27,500,000 million
revolving credit facility dated 26 May 1994 and certain term loan
facilities aggregating USD 84,500,000.
B. By an amendment to the aftersaid amended and restated revolving credit
and term loan agreement dated as of 9 January 1995 (such agreement as
from time to time amended, varied, cancelled, restated, supplemented or
novated being herein referred to as the "Agreement") Freedom and the
Pledgees have extended the facilities to a USD 42,500,000 million revolv-
ing credit and a USD 85,500,000 term loan facility to enable Freedom and
Hilton to form a German subsidiary to purchase certain assets in Germa-
ny.
C. Freedom and Hilton have agreed in return to grant certain security as more
detailed herein in respect of their respective obligations under and with
respect to the Agreement.
NOW IT IS AGREED as follows:
1. Pledged Share(s)
(a) The Pledgors are the sole shareholders of Freedom Chemical Diamalt
GmbH - before change of name Vilicius Vier Vermogensverwaltung GmbH
- (the "Company"), a German company with limited liability with
business address at Xxxxx-Xxxxxxxxxx-Xxx. 00, 00000 Xxxxxxx,
Xxxxxxx Xxxxxxxx of Germany, which is registered in the Commercial
Register of the Local Court of Frankfurt am Main under No. HRB
37781.
(b) The total stated share capital of the Company amounts to DM 50,000
(in words: fifty thousand), consisting of two shares in the nominal
amount of DM 25,000 and DM 500 (the "Freedom Shares") held by
Freedom and one share in the nominal amount of DM 24,500 held by
Hilton (the "Hilton Share"). By shareholders' resolution of 11
January 1995, notarized before the notary public Xx. Xxxxxxx
Xxxxxxxxxx, Frankfurt am Main, a resolution was
passed to increase the Company's nominal share capital by DM
1,950,000 to DM 2,000,000 of which one share in the nominal amount
of DM 994,500 was subscribed for (fully paid in cash) by Freedom
(the "Subscribed Freedom Share") and one share in the nominal amount
of DM 955,500 was subscribed for (fully paid in cash) by Hilton (the
"Subscribed Hilton Share"). The parties acknowledge that the capital
increase has not yet been registered and that it will only become
effective with its registration in the Commercial Register.
(c) Each of the Freedom Shares and the Hilton Share is fully paid in.
There is no obligation for Freedom or Hilton to make additional
contributions.
2. Secured Obligations
The pledges and undertakings to pledge hereunder are constituted in
order to secure the prompt and complete satisfaction of any and all
present and future, actual or contingent obligations and liabilities
whatsoever of the Pledgors to the Pledgees, whether for principal,
interest, fees, expenses or otherwise under the Agreement,
guarantees thereof, and under this Share Pledge Agreement, as
amended, varied or supplemented from time to time (together the
"Secured Obligations").
3. Pledge
(a) Freedom hereby pledges to each of the Pledgees for their ratable
benefit the Freedom Shares (the "Pledged Share") together with all
ancillary rights and claims associated with the Pledged Share (the
"Freedom Pledge").
(b) Hilton hereby pledges to each of the Pledgees for their ratable
benefit by way of partial pledge (Teilverpfandung) an amount equal
to approximately 15 per cent. of the Hilton Share, i.e. of
DM 3,600 (in words: three thousand six hundred Deutschmarks)
and an amount equal to approximately 15 per cent. of the Sub-
scribed Hilton Share, i.e. of DM 143,300 (in words: one hundred
forty three thousand three hundred Deutschmarks) (the "Pledged
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Part of the Share"), in each case together with all ancillary rights
and claims, associated with the Pledged Part of the Share (the
"Hilton Pledge").
(c) The Pledged Share and the Pledged Part of the Share (together with
in each case any future share(s) or parts of future share(s) held or
acquired by Freedom or Hilton respectively) are together hereinafter
referred to as the "Pledged Shares". The Freedom Pledge and the
Hilton Pledge (and in each case the Future Freedom Pledge and the
Future Hilton Pledge respectively) are together hereinafter referred
to as the "Pledges".
(d) Each Pledgee hereby accepts the Pledges to it, including the pledg-
es under lit. (f) below. The Pledges are in addition, and without
prejudice, to any other security any of the Pledgees may now or
hereafter hold in respect of the Secured Obligations.
(e) The Pledges shall rank equally with each other. The Pledges shall
rank ahead of any other security interest or third party right now
in existence or created in future in or over any of the Pledged
Shares. The validity and effect of each of the Pledges shall be
independent from the validity and the effect of the other Pledges
created hereunder.
(f) Freedom hereby pledges to each of the Pledgees for their ratable
and equally ranking benefit as aforesaid any and all additional
shares in the capital of the Company, including the Subscribed
Freedom Share, in whatever nominal value which Freedom may
acquire in future in the event of an increase in the capital of the
Company or otherwise, together with all ancillary rights and claims
associated with such future share(s) (the "Future Freedom
Pledge").
(g) Hilton hereby undertakes to grant to the Pledgees a partial pledge
over any and all additional shares in the capital of the Company in
whatever nominal value which Hilton may acquire in future in the
event of an increase of the capital of the Company or otherwise,
together with all ancillary rights and claims associated with the
pledged part of the future share(s) (the "Future Hilton Pledge").
The Future Hilton Pledge shall cover at least an amount equal to
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15 per cent. of the nominal value of the future share(s) or such
greater percentage permitted or lesser percentage required from time
to time which shall not cause the earnings of the Company to be
deemed to be distributed to Hilton for purposes of United States
Federal Income Taxation (rounded down in each case to the nearest DM
100).
4. Dividends
(a) The Pledges, the Future Freedom Pledge and the Future Hilton Pledge
that are or are to be constituted pursuant to this Share Pledge
Agreement include the present and future rights to receive
-- dividends payable on the Pledged Shares, if any; and
-- liquidation proceeds, consideration for redemption
(Einziehungsentgelt), repaid capital in case of a capital de-
crease, any compensation in case of termination (Kundigung)
and/or withdrawal (Austritt) of a shareholder of the Company,
the surplus in case of surrender (Preisgabe) and all other
pecuniary claims associated with the Pledged Shares as well as
any other substitute received by the pledgors in lieu of the
Pledged Shares.
(b) Notwithstanding that the dividends are pledged hereunder to the
extent mentioned under Clause 4(a), the Pledgors shall be entitled
to receive and retain all dividend payments in respect of their
Pledged Shares until such time as the Pledgees are entitled to
enforce the Pledges constituted hereunder.
5. Exercise of Voting Rights
(a) The voting rights resulting from the Pledged Shares shall remain
with the Pledgors. Each Pledgor shall, however, at all times until
the full satisfaction of au Secured Obligations, be required in
exercising its voting rights to act in good faith to ensure that the
Pledgees are not in any way adversely affected. Each Pledgor
undertakes to exercise its voting rights from time to time in such a
way that, without the prior consent of the Pledgee, which consent
may not unreasonably be withheld, no resolutions are passed which
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adversely affect the value of the Pledged Shares, in particular but
not limited to, resolutions with respect to the reduction of the
Company's share capital, its liquidation, dissolution or the
termination of its existence or its business.
(b) No Pledgor shall take, or participate in, any action which results
or might result in the Pledgors' loss of ownership of the Pledged
Shares, and any other transaction which would have. the same result
as a sale, transfer, encumbrance or other disposal of the Pledged
Shares or any ancillary rights and claims associated with the
Pledged Shares or which would for any other reason be inconsistent
with the security interest of the Pledgees or the security purpose
(as described in Clause 2 hereof without the prior written consent
of the Pledgee, which consent may not unreasonably be withheld.
(c) Each Pledgor shall inform the Pledgees without undue delay of all
other actions concerning the Company which might materially affect
the security interest of the Pledgees.
6. Enforcement of Pledges
(a) If the requirements set forth inss. 1294 et. seq. of the German
Civil Code (Burgerliches Gesetzbuch) with regard to the enforcement
of the Pledges are met (Pfandreife), in particular, if the Pledgors
or either of them have failed to pay any sum due and payable under
the Secured Obligations and the Secured Obligations have become due
and payable, and the Pledgee has given written notice tot he
relevant Pledgor that the Pledgees will enforce their rights under
the Pledges, then in order to enforce the Pledges, the Pledgees may
at any time hereafter avail themselves of all rights and remedies
that a pledgee has upon default of a pledgor under the laws of the
Federal Republic of Germany. The Pledgees shall be entitled to have
the Pledged Shares sold at public auction without a prior court
ruling to the extent they are pledged. The Pledgors hereby ex-
pressly agree that five (5) days prior written notice to the
Pledgors of the place and time of any such public auction shall be
sufficient. The public auction may take place at any place in the
Federal Republic of Germany.
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(b) In case the Pledgees should seek to enforce the Pledges pursuant to,
and in accordance with Clause 6(a) above, the Pledgors shall, at
their own expense, render forthwith all necessary assistance in
order to facilitate the prompt sale of the Pledged Shares and/or the
exercise by the Pledgees of any other right they may have as
pledgee.
(c) In case of enforcement of the Pledges, no rights of the Pledgees
shall pass to the Pledgors by subrogation or otherwise unless and
until all of the Secured Obligations have been satisfied and
discharged in full. Until then, the Pledgees shall be entitled to
treat all enforcement proceeds as additional collateral for the
Secured Obligations, notwithstanding their right to seek
satisfaction from such proceeds at any time.
(d) Provided that the requirements for enforcement referred to under
Clause 6 (a) above are met, all subsequent dividend payments in
relation to the Pledged Shares, if any, which will be made to the
Pledgors and, as the case may be, all payments based on similar
ancillary rights attributed to the Pledged Shares may be applied by
the Pledgees in satisfaction in whole or in part of the Secured
Obligations; notwithstanding the Pledgees' right to treat such
payments as additional collateral.
(e) Even if the requirements for enforcement referred to under Clause 6
(a) above are met, the Pledgees shall not, whether as proxy or
otherwise, be entitled to exercise the voting right attached to the
Pledged Shares. However, the Pledgors shall, upon occurrence of an
event which allows the Pledgees to enforce the Pledges, inform the
Pledgees or, as the case may be, their proxy or any other person
designated by the Pledgees, of any ordinary and extraordinary
meeting of the shareholders of the Company; the Pledgors shall allow
the Pledgees or, as the case may be, their proxy or any other person
designated by the Pledgees to participate in all shareholders'
meetings of the Company, but in no event shall the provisions
contained in Clause 5 hereof be affected or overruled by this
Clause. Save for the provision contained in Clause 9 (a) hereof, the
Pledgees' right to attend the shareholders' meeting shall lapse
immediately upon complete satisfaction and discharge of the Secured
Obligations.
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(f) The proceeds from the enforcement of the Pledges shall be applied
in the following order:
(i) expenses incurred by the enforcement of the Pledges
and/or in the realization of other securities provided
in respect of the Secured Obligations (including, but
not limited to, taxes, legal fees and other costs);
(ii) payment of any sums due as part or in respect of the
Secured Obligations as interest, late or penalty
interest, commission, fees and ancillary expenses;
(iii) repayment of any sums due as part or in respect of the
Secured Obligations as principal; and
(iv) payment of any other sums due under the Agreement, any
guarantees thereof or hereunder.
The balance of such proceeds attributable to each of the Pledged Shares, if any,
will be paid to the relevant Pledgor unless the Pledgees are required by law to
pay such balance to a third party.
(g) The Pledgees may, in their sole discretion, determine which of
several securities they may hold, if applicable, shall be used to
satisfy the Secured Obligations.
7. Undertakings of the Pledgors
During the term of this Share Pledge Agreement, the Pledgors undertake to
the Pledgees:
(i) not to create or agree or attempt to create any other security
interest or third party right in or over the Pledged Shares;
(ii) to effect promptly any payments to be made in respect of
the Pledged Shares;
(iii) to notify the Pledgees promptly of any change in the
shareholding in or in the capital of the Company;
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(iv) to increase the capital of the Company only with the prior
written consent of the Pledgee which consent shall not
unreasonably be withheld; and
(v) in the event of any increase of the capital of the Company,
not to allow, without the prior written consent of the
Pledgee, which consent shall not unreasonably be withheld, any
other party to subscribe to any future share(s), and not, by
modification of the Articles of Association of the Company or
otherwise, to defeat or impair the rights of the Pledgees
created hereunder.
8. Representations and Warranties
Each of the Pledgors represents and warrants to the Pledgees that:
(a) at the date hereof the Company is validly existing and neither
overindebted nor insolvent nor subject to any composition or
bankruptcy proceedings;
(b) the Freedom Shares and the Hilton Share are the only shares in the
Company in existence at the date hereof;
(c) all necessary corporate action has been taken and all necessary
consents for the execution and performance of this Share Pledge
Agreement have been obtained; and
(d) it is the legal and beneficial owner, free from encumbrances of the
Freedom Shares or the Hilton Share (as the case may be), and that it
will in future be the legal and beneficial owner, free from
encumbrances, of the Freedom Shares or the Hilton Share (as the case
may be).
9. Duration and Independence
(a) This Share Pledge Agreement shall remain in full force and effect
until complete satisfaction of the Secured Obligations. The Pledges
shall not cause to exist, if the Pledgors or any of them have only
temporarily discharged the Secured Obligations.
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(b) This Share Pledge Agreement shall create a continuing security and
no change or amendment whatsoever in the Agreement or in any
document or agreement related to the Agreement shall affect the
validity or the scope of this Share Pledge Agreement nor the
obligations which are imposed on the Pledgors pursuant to it. The
Pledges continue irrespective of any transfer of ownership in the
Pledged Shares or of the change of legal form of the Company.
(c) This Share Pledge Agreement is independent from any other security
or guarantee which may have been given to the Pledgees with respect
to any obligation of the Pledgors. None of such other securities
shall prejudice, or shall be prejudiced by, or shall be merged in
any way with, this Share Pledge Agreement.
10. Costs and Expenses
All costs, charges, fees and expenses triggered by this Share Pledge
Agreement or incurred in connection with its preparation, execution and
enforcement (including the fees of legal advisers and notarial fees) shall
be borne by the Pledgors. The Acting Notary advises the Deponents that his
notarial fees are owed by all Parties as joint debtors.
11. Partial Invalidity
If any provision of this Share Pledge Agreement should be or become
invalid or unenforceable, this shall not affect the validity of the
remaining provisions hereof The invalid or unenforceable provision shall
be replaced by that provision which best meets the intent of the replaced
provision.
12. Amendments
Changes and amendments of this Share Pledge Agreement including this
Clause must be made in writing unless notarial form is required. The
waiving of this requirement must also be made in writing, unless mandatory
law requires notarization.
13. Notices and their Language
(a) Any notice or other communication under or in connection with this
Share Pledge Agreement shall be in writing and shall be
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delivered personally, or sent by post, telex (with answerback
received), or facsimile transmission (to be confirmed in writing) to
the following addresses:
to Freedom: Freedom Chemical Company
Mellon Center, Suite 3905
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
XXX
Attn.: Xxxxxx X. Xxxxxxxx
fax: 000 000 0000
to Hilton: c/o Freedom as above
to Pledgees: Citicorp USA, Inc.
000 Xxxx Xxxxxx
0xx Xxxxx, Xxxx 4
Xxx Xxxx, Xxx Xxxx 00000
XXX
Attn.: Xxxxxxxx X. Xxxxxx, Xx.
fax: 212 - 758 - 6278
or to such other address as the recipient may have notified to the
other parties in writing before receiving such notice or other
communication.
(b) Any notices or other communications under or in connection with
this Share Pledge Agreement to any party hereto shall be deemed
to have been given when delivered by hand, when sent by telex or
facsimile transmission, two (2) days after being delivered to any
overnight delivery service freight pre-paid or five (5) days after
deposit in the mail, postage prepaid, and addressed to such party at
the address given under Clause 13 (a) of this Share Pledge Agree-
ment or at any other address specified in writing.
(c) Save for the notice pursuant to ss. 16 of the German Limited
Liability Companies Act (GmbHG) any notice or other communication
under or in connection with this Share Pledge Agreement shall be
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in the English language or, if in any other language, accompanied by
a translation into English. In the event of any conflict between the
English text and the text in any other language, the English text
shall prevail.
14. Applicable Law; Jurisdiction; Service of Process
(a) This Share Pledge Agreement shall be governed by and construed in
accordance with the laws of the Federal Republic of Germany.
(b) The place of jurisdiction for all parties shall be Frankfurt am
Main. The Pledgees, however, shall also be entitled to take legal
action against either of the Pledgors before any other court of law
having jurisdiction over such Pledgor or any of its assets. The
Acting Notary advised the Deponents about the consequences of this
clause.
(c) For any service of process in any court in the Federal Republic of
Germany the Pledgors hereby appoint:
Xx. Xxxxxx Xxxxxxxxxxx, Rechtsanwalt,
c/o Boesebeck, Barz & Partner,
Darmstadter Xxxxxxxxxxx 000,
00000 Xxxxxxxxx xx Xxxx,
Xxxxxxx Xxxxxxxx of Germany
as agent for the receipt of service of process and acknowledges its obligation
to retain this process agent for the whole duration of this Share Pledge
Agreement, unless otherwise agreed with the Pledgees.
(d) The Pledgors and the Pledgees hereby instruct and authorize the
undersigned Notary Public to notify the Company of the pledge of the
Pledged Shares pursuant to, and in accordance with, ss.16 GmbHG by
means of forwarding a certified copy of this Share Pledge Agreement
to the Company, Xxxxx-Xxxxxxxxxxxxxxxxx 00, 00000 Xxxxxxx,
Xxxxxxx Xxxxxxxx of Germany, by registered mail (return receipt
requested).
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Annex I
Lenders
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Citicorp USA, Inc.
The Bank- of New York
Caisse Nationale De Credit Agricole
Bank of America Illinois
Crescent/Mach I Partners, L.P.
Xxxxx Xxxxx Prime Rate Reserves
The First National Bank of Boston
Xxxxxx Financial, Inc.
The Long-Term Credit Bank of Japan, Limited, New York Xxxxxx Xxxxxxx Xxxxx
Senior Floating Rate Fund, Inc.
Mitsui Leasing (USA) Inc.
United States National Bank of Oregon
Van Xxxxxx Xxxxxxx Prime Rate Income Trust
Issuing Banks
-------------
Citibank, N.A.
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