EXHIBIT 10.4
PLEDGE AGREEMENT
AND IRREVOCABLE PROXY
THIS PLEDGE AGREEMENT AND IRREVOCABLE PROXY, dated as of September 7,
1999 (this "Pledge Agreement"), is given by Veridian Corporation, a Delaware
corporation (the "Company"), in favor of First Union National Bank,, a national
banking association, as administrative agent (in such capacity, the
"Administrative Agent") for the benefit of itself and the lenders (the
"Lenders") now or hereafter parties to the Credit Agreement described below.
RECITALS
A. The Company, the Administrative Agent and the Lenders have
entered into a Revolving Credit Agreement dated as of even date herewith (as may
be amended or modified, the "Credit Agreement").
B. In connection with the acquisition by the Company of MRJ Group,
Inc., a Delaware corporation ("MRJ"), Erim International, Inc., a Michigan
corporation ("ERIM") and Trident Data Systems, Inc., a California corporation
("Trident"), the Company has agreed to execute a pledge agreement to evidence
the pledge of the shares of certain of its Subsidiaries.
C. As a condition to the effectiveness of the obligations of the
Administrative Agent and the Lenders under the Credit Agreement, the Company is
required to execute the Pledge Agreement as set forth herein.
AGREEMENTS
For value received and pursuant to the Credit Agreement, the Company
hereby grants a first-priority security interest to the Administrative Agent,
for the benefit of the Lenders, in and to all of the outstanding capital stock
of the companies listed on the schedule attached hereto as Schedule 1 (the
"Pledged Subsidiaries", and said shares of stock, together with any other shares
and securities from time to time receivable or otherwise distributed in respect
of or in exchange for any or all of such shares, being called the "Pledged
Stock"), the certificates representing the Pledged Stock and the property
referred to in paragraph 2 below, to secure the Secured Obligations (as defined
in that certain Security Agreement dated September 7, 1999 among the Company,
the Administrative Agent and the Lenders) and all of the documents, agreements
and instruments among the Company, the Guarantors, the Administrative Agent, the
Lenders, or any of them, evidencing or securing the repayment of, or otherwise
pertaining to, the Secured Obligations being herein collectively called the
"Operative Documents"). The Company is herewith delivering to the Administrative
Agent for the benefit of the Lenders originals of all
stock certificates of the Pledged Stock or taking such other action acceptable
to the Administrative Agent and the Required Lenders to perfect the security
interest in the Pledged Stock granted hereby.
The Company further represents and warrants to, and agrees with, the
Administrative Agent for the benefit of the Lenders as follows:
1. Representations and Warranties. (a) The Company represents and
warrants that the Pledged Stock is represented by the stock certificate or
certificates or shares described on Schedule 1 hereto, and that such stock
certificate or certificates, accompanied by an instrument of assignment or
transfer duly executed in blank by the Company as the owner named in such stock
certificate or certificates, have been delivered to the Administrative Agent by
the Company. The Company further represents and warrants that (i) the Pledged
Stock is duly authorized and validly issued, fully paid and nonassessable and
constitutes 100% of all of the issued and outstanding shares of the capital
stock of each Pledged Subsidiary, except as otherwise noted on Schedule 1, (ii)
the Company is the legal and beneficial owner of the Pledged Stock, free and
clear of all Liens other than the Lien of Administrative Agent hereunder, with
full right and power to deliver, pledge and assign the Pledged Stock to the
Administrative Agent hereunder, (iii) the pledge of the Pledged Stock pursuant
to this Pledge Agreement creates in favor of the Administrative Agent a valid
and perfected first priority security interest in the Pledged Stock enforceable
against the Company and all third parties and securing the payment of the
Secured Obligations and (iv) no shareholder agreement, buy/sell agreement or
similar agreement among shareholders exists with respect to the capital stock of
any Pledged Subsidiary.
(b) The Company shall not (i) sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to,
any of the Pledged Stock, or (ii) create or permit to exist any lien, security
interest, option or other charges or encumbrance upon or with respect to any of
the Pledged Stock, except for the security interest under this Pledge Agreement.
(c) The Company agrees that it will (i) cause each issuer of
the Pledged Stock not to issue any stock or other securities in addition to or
in substitution for the Pledged Stock issued by such issuer, except to the
Company and (ii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock or other securities
of each issuer of the Pledged Stock.
2. Title; Stock Rights, Dividends, Etc. The Company will warrant and
defend the Administrative Agent's title to the Pledged Stock, and the security
interest herein created, against all claims of all persons, and will maintain
and preserve such security interest. It is understood and agreed that the
collateral hereunder includes any additional shares of stock of any issuer of
the Pledged Stock from time to time acquired by the Company in any manner and
the certificates representing such additional shares, and any stock rights,
stock dividends, liquidating dividends, new securities, payments, distributions
and proceeds (including cash dividends and sale
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
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proceeds) and other property to which the Company may become entitled by reason
of the ownership of the Pledged Stock or any additional shares of stock during
the existence of this Pledge Agreement, and any such property received by the
Company shall be held in trust and forthwith delivered to the Administrative
Agent to be held hereunder in accordance with the terms of this Pledge
Agreement.
3. Registration Rights. (a) If the Administrative Agent shall
determine to exercise its right to sell all or any of the Pledged Stock pursuant
to Section 4, the Company agrees that, upon request of the Administrative Agent,
the Company will, at its own expense: (i) execute and deliver, and cause each
issuer of the Pledged Stock contemplated to be sold and the directors and
officers thereof to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts and things, as may be necessary or,
in the opinion of the Administrative Agent, advisable to register such Pledged
Stock under the provisions of the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and to cause the registration statement relating
thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto; (ii) use its best efforts
to qualify the Pledge Stock under the state securities or "Blue Sky" laws and to
obtain all necessary governmental approvals for the sale of the Pledged Stock,
as requested by the Administrative Agent; (iii) cause each such issuer to make
available to its security holders, as soon as practicable, an earning statement
which will satisfy the provisions of Section 11(a) of the Securities Act; and
(iv) do or cause to be done all such other acts and things as may be necessary
to make such sale of the Pledged Stock or any part thereof valid and binding and
in compliance with applicable law. The Company further acknowledges the
impossibility of ascertaining the amount of damages which would be suffered by
the Administrative Agent and the Lenders by reason of the failure by the Company
to perform any of the covenants contained in this Section 3 and, consequently,
agrees that, if the Company shall fail to perform any of such covenants, it
shall pay, as liquidated damages and not as a penalty, an amount equal to the
value of the Pledged Stock on the date the Administrative Agent shall demand
compliance with this Section 3.
(b) If any Pledged Subsidiary at any time or from time to
time proposes to register any of its securities under the Securities Act, the
Company will at each such time give notice to the Administrative Agent of such
Pledged Subsidiary's intentions so to do. Upon the request of the Administrative
Agent given 30 days after receipt of such notice, the Company will cause all
Pledged Stock of such Pledged Subsidiary to be included in the registration
statement proposed to be filed, all to the extent requisite to permit the public
sale or other public disposition of such Pledged Stock so registered by the
holders thereof. The costs and expenses of all such registrations and
qualifications under said Act shall be paid by the Company or such Pledged
Subsidiary, except that underwriting discounts and commissions in respect of any
Pledged Stock sold pursuant to any such registration statement shall be borne by
the sellers
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
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thereof. As expeditiously as possible after the effective date of any such
registration statement, the Company will deliver in exchange for any
certificates representing shares of Pledged Stock so registered pursuant to such
registration, which bear any restrictive legend, new Pledged Stock certificates
not bearing such legend or any similar legend. In the event of any such
registration, the Company hereby agrees to indemnify and hold harmless the
Administrative Agent as pledgee and the Lenders and their respective officers,
directors, employees, affiliates and agents against any losses, claims, damages
or liabilities to which the Administrative Agent or any Lender or any of their
respective officers, directors, employees, affiliates or agents may become
subject to the extent that such losses, claims, damages or liabilities arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any such registration statement, and any preliminary
prospectus or filed prospectus, or in any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Administrative Agent
and the Lenders for any legal or other expenses reasonably incurred by the
Administrative Agent and the Lenders in connection with investigating or
defending any such loss, claim, damage or liability. The indemnifications
contained in this paragraph shall include each person, if any, who controls the
Administrative Agent or any Lender.
4. Events of Default; Remedies. (a) Upon the occurrence of any Event
of Default under the Credit Agreement, an Event of Default shall be deemed to
have occurred hereunder and the Administrative Agent shall have all of the
rights and remedies provided by law and/or by this Pledge Agreement, including
but not limited to all of the rights and remedies of a secured party under the
North Carolina Uniform Commercial Code, and the Company hereby authorizes the
Administrative Agent to sell all or any part of the Pledged Stock at public or
private sale and to apply the proceeds of such sale to the costs and expenses
thereof (including the reasonable attorneys' fees and disbursements incurred by
the Administrative Agent) and then to the payment of the other Secured
Obligations in the manner specified in Section 6.3 of the Credit Agreement. Any
requirement of reasonable notice shall be met if the Administrative Agent sends
such notice to the Company, by registered or certified mail, at least 5 days
prior to the date of sale, disposition or other event giving rise to the
required notice. The Administrative Agent or any Lender may be the purchaser at
any such sale. The Company expressly authorizes such sale or sales of the
Pledged Stock in advance of and to the exclusion of any sale or sales of or
other realization upon any other collateral securing indebtedness or other
obligations owed to the Lenders. The Administrative Agent shall be under no
obligation to preserve rights against prior parties.
(b) The Company hereby waives as to the Administrative Agent
and the Lenders any right of subrogation or marshalling of such stock and other
collateral for indebtedness or other obligations owed to the Administrative
Agent and the Lenders. To this end, the Company hereby expressly agrees that any
such collateral or other security of the Company or any other party which the
Administrative Agent or any Lender may hold, or which may come to any of their
possession, may be dealt with in all respects and particulars as though
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
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this Pledge Agreement were not in existence. The Company agrees and acknowledges
that because of applicable securities laws, the Administrative Agent may not be
able to effect a public sale of the Pledged Stock and sales at a private sale
may be on terms less favorable than if such securities were sold at a public
sale and may be at a price less favorable than a public sale. The Company agrees
that all such private sales made under the foregoing circumstances shall be
deemed to have been made in a commercially reasonable manner.
(c) The Company irrevocably designates, makes, constitutes
and appoints the Administrative Agent (and all persons designated by the
Administrative Agent) as its true and lawful attorney (and agent-in-fact),
effective upon and after an Event of Default hereunder which has not been
waived, and thereafter the Administrative Agent may with notice to the Company
if the Secured Obligations have not been accelerated and without notice if the
Secured Obligations have been accelerated, take any action as the Administrative
Agent reasonably deems necessary under the circumstances to enforce or otherwise
take action in respect to the Pledged Stock as required hereby, or to carry out
any other obligation or duty of the Company under this Agreement. The Company
shall pay all reasonable fees and expenses, including reasonable attorneys' fees
and expenses, incurred by the Administrative Agent in connection with such
action.
5. Additional Remedies; Irrevocable Proxy. (a) Upon the occurrence
of any Event of Default, the Administrative Agent shall have also the right to
vote the Pledged Stock on all questions after giving notice to the Company of
its election to exercise such rights. In the absence of any such Event of
Default, the Company shall have the right to vote the Pledged Stock on all
questions, provided that voting by the Company of the Pledged Stock shall be in
conformity with performance of the obligations of the Company under the
Operative Documents.
(b) Whenever a Default has occurred, the Administrative Agent
may transfer into its name, or into the name of its nominee or nominees, any or
all of the Pledged Stock and, as provided above, may vote any or all of the
Pledged Stock (whether or not so transferred) and may otherwise act with respect
thereto as though it were the outright owner thereof, the Company hereby
irrevocably constituting and appointing the Administrative Agent as the proxy
and attorney-in-fact of the Company, with full power of substitution, to do so.
(c) In furtherance of the foregoing subparagraphs (a) and
(b), whenever a Default or Event of Default has occurred, it is acknowledged
that the Administrative Agent may vote the Pledged Stock to remove the directors
and officers of any Pledged Subsidiary, and to elect new directors and officers
of any Pledged Subsidiary, who thereafter shall manage the affairs of such
Pledged Subsidiary, operate its properties and carry on its business and
otherwise take any action with respect to the business, properties and affairs
of such Pledged Subsidiary which such new directors shall deem necessary or
appropriate, including, but not limited to, the maintenance, repair, renewal or
alteration of any or all of the properties of such Pledged Subsidiary, the
leasing, subleasing, sale or other disposition of any or all of such properties,
the borrowing of money on the credit of such Pledged Subsidiary, and the
employment of attorneys,
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
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agents or other employees deemed by such new directors to be necessary for the
proper operation, conduct, winding up or liquidation of the business, properties
and affairs of such Pledged Subsidiary, and all revenues from the operation,
conduct, winding up or liquidation of the business, properties and affairs of
such Pledged Subsidiary after the payment of expenses thereof shall be applied
to the payment of the Secured Obligations.
(d) The Company agrees that the proxy granted in this
paragraph 5 is coupled with an interest and is and shall be both valid and
irrevocable so long as the Pledged Stock is subject to this Pledge Agreement.
The Company further acknowledges that the term of said proxy may exceed three
years from the date hereof.
6. Remedies Cumulative. No right or remedy conferred upon or
reserved to the Administrative Agent and the Lenders under any Operative
Document is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative in addition to every other right or remedy
given hereunder or now or hereafter existing under any applicable law. Every
right and remedy of the Administrative Agent and the Lenders under any Operative
Document or under applicable law may be exercised from time to time and as often
as may be deemed expedient by the Administrative Agent and the Lenders. To the
extent that it lawfully may, the Company agrees that it will not at any time
insist upon, plead, or in any manner whatever claim or take any benefit or
advantage of any applicable present or future stay, extension or moratorium law,
which may affect observance or performance of any provisions of any Operative
Document; nor will it claim, take or insist upon any benefit or advantage of any
present or future law providing for the valuation or appraisal of any security
for its obligations under any Operative Document prior to any sale or sales
thereof which may be made under or by virtue of any instrument governing the
same; nor will it, after any such sale or sales, claim or exercise any right,
under any applicable law to redeem any portion of such security so sold.
7. Conduct No Waiver. No waiver of default shall be effective unless
in writing executed by the Administrative Agent and waiver of any default or
forbearance on the part of the Administrative Agent in enforcing any of its
rights under this Pledge Agreement shall not operate as a waiver of any other
default or of the same default on a future occasion or of such right.
8. Governing Law; Consent to Jurisdiction; Definitions. THIS PLEDGE
AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS OR
CHOICE OF LAW PRINCIPLES THEREOF. The Company hereby irrevocably consents to the
personal jurisdiction of the state and federal courts located in Mecklenburg
County, North Carolina, in any action, claim or other proceeding arising out of
any dispute in connection with this Pledge Agreement, any rights or obligations
hereunder or thereunder, or the performance of such rights and obligations. The
Company hereby irrevocably consents to the service of a summons and complaint
and other process in any action, claim or proceeding brought by the
Administrative Agent or any Lender in connection with this Pledge Agreement, any
rights or obligations hereunder, or the performance of any rights and
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
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obligations, on behalf of itself or its property, in the manner specified in
Section 8.2 of the Credit Agreement. Nothing in this Paragraph 8 shall affect
the right of the Administrative Agent or any Lender to serve legal process in
any other manner permitted by applicable law or affect the right of the
Administrative Agent or any Lender to bring any action or proceeding against the
Company or its properties in the courts of any other jurisdictions. Terms used
but not defined herein shall have the respective meanings ascribed thereto in
the Credit Agreement.
9. Notices. All notices, demands, requests, consents and other
communications hereunder shall be delivered in the manner described in the
Credit Agreement.
10. Rights Not Construed as Duties. The Administrative Agent neither
assumes nor shall it have any duty of performance or other responsibility under
any contracts in which the Administrative Agent has or obtains a security
interest hereunder. If the Company fails to perform any agreement contained
herein, the Administrative Agent may but is in no way obligated to itself
perform, or cause performance of, such agreement, and the reasonable expenses of
the Administrative Agent incurred in connection therewith shall be payable by
the Company under paragraph 13. The powers conferred on the Administrative Agent
hereunder are solely to protect its and the Lenders' interests in the Pledged
Stock and shall not impose any duty upon it to exercise any such powers. Except
for the safe custody of any Pledged Stock in its possession and accounting for
monies actually received by it hereunder, the Administrative Agent shall have no
duty as to any Pledged Stock or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Pledged Stock.
11. Amendments. None of the terms and provisions of this Pledge
Agreement may be modified or amended in any way except by an instrument in
writing executed by each of the parties hereto.
12. Severability. If any one or more provisions of this Pledge
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected, impaired or prejudiced thereby.
13. Expenses. (a) The Company agrees to indemnify the Administrative
Agent and each Lender and their respective officers, directors, employees,
affiliates and agents from and against any and all claims, losses and
liabilities growing out of or resulting from this Pledge Agreement (including,
without limitation, enforcement of this Pledge Agreement), except claims, losses
or liabilities resulting from such indemnified party's gross negligence or
willful misconduct.
(b) The Company will, upon demand, pay to the Administrative
Agent and each Lender an amount of any and all reasonable expenses, including
the reasonable fees and disbursements of its counsel and of any experts and
agents, which the Administrative Agent or any Lender may incur in connection
with (i) the administration of this Pledge Agreement, (ii) the
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
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custody, preservation, use or operation of, or the sale of, collection from or
other realization upon, any of the Pledged Stock, (iii) the exercise or
enforcement of any of the rights of the Administrative Agent or the Lenders
hereunder or under the Operative Documents, or (iv) the failure of the Company
to perform or observe any of the provisions hereof.
14. Successors and Assigns; Termination. This Pledge Agreement shall
create a continuing security interest in the Pledged Stock and shall be binding
upon the Company, its successors and assigns, and inure, together with the
rights and remedies of the Administrative Agent hereunder, to the benefit of the
Administrative Agent and its successors, transferees and assigns. Upon the
payment in full in immediately available funds of all of the Secured Obligations
and the termination of all commitments to lend under the Operative Documents,
the security interest granted hereunder shall terminate and upon such
termination the Administrative Agent shall assign, transfer and deliver without
recourse and without warranty the Pledged Stock to the Company (and any property
received in respect thereof) as has not theretofore been sold or otherwise
applied pursuant to the provisions of this Pledge Agreement.
15. Binding Arbitration; Waiver of Jury Trial.
(a) Binding Arbitration. Upon demand of any party, whether
made before or after institution of any judicial proceeding, any dispute, claim
or controversy arising out of, connected with or relating to this Pledge
Agreement or any other of the Operative Documents ("Disputes"), between or among
parties to this Pledge Agreement, or any other Operative Document shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, claims brought as class actions, claims arising from Operative
Documents executed in the future, disputes as to whether a matter is subject to
arbitration, or claims concerning any aspect of the past, present or future
relationships arising out of or connected with the Operative Documents.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and the Federal Arbitration Act. All arbitration
hearings shall be conducted in Charlotte, North Carolina. The expedited
procedures set forth in Rule 51, et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000. All applicable statutes of
limitations shall apply to any Dispute. A judgment upon the award may be entered
in any court having jurisdiction. Notwithstanding anything foregoing to the
contrary, any arbitration proceeding demanded hereunder shall begin within
ninety (90) days after such demand thereof and shall be concluded within
one-hundred twenty (120) days after such demand. These time limitations may not
be extended unless a party hereto shows cause for extension and then such
extension shall not exceed a total of sixty (60) days. The panel from which all
arbitrators are selected shall be comprised of licensed attorneys selected from
the Commercial Finance Dispute Arbitration Panel of the AAA. The single
arbitrator selected for expedited procedure shall be a retired judge from the
highest court of general jurisdiction, state or federal, of the state where the
hearing will be conducted. The parties hereto do not waive any applicable
Federal or state substantive law except as provided herein.
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(b) JURY TRIAL. THE ADMINISTRATIVE AGENT, EACH LENDER AND THE COMPANY
HEREBY ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY
WAIVED THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM
OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS PLEDGE
AGREEMENT OR THE OTHER OPERATIVE DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER
OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(c) Preservation of Certain Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties hereto and the other Operative
Documents preserve, without diminution, certain remedies that such Persons may
employ or exercise freely, either alone, in conjunction with or during a
Dispute. Each such Person shall have and hereby reserves the right to proceed in
any court of proper jurisdiction or by self help to exercise or prosecute the
following remedies: (i) all rights to foreclose against any real or personal
property or other security by exercising a power of sale granted in the
Operative Documents or under applicable law or by judicial foreclosure and sale,
(ii) all rights of self help including peaceful occupation of property and
collection of rents, set off, and peaceful possession of property, (iii)
obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and in filing an
involuntary bankruptcy proceeding, and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
IN WITNESS WHEREOF, the Company has caused this Pledge Agreement to be
duly executed as of the day and year first above written.
[Corporate Seal] VERIDIAN CORPORATION
By:/s/ XXXXXXXXX X. XXXXXXX
---------------------------------------------
Xxxxxxxxx X. Xxxxxxx
Its: Senior Vice President, Finance, Chief
Financial Officer, Treasurer & Secretary
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as Administrative Agent
By: /s/ XXXXXXXXXXX XXXXXXXX
-------------------------------------
Xxxxxxxxxxx Xxxxxxxx
Its: Director
Accepted and Agreed:
FIRST UNION NATIONAL BANK,
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
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