American National Bank
and Trust Company of Chicago
CONTINUING PLEDGE AGREEMENT
This Continuing Pledge Agreement is made by the undersigned,
Circuit Systems, Inc., an Illinois corporation (hereinafter
"Pledgor" or the "Undersigned"), to and for the benefit of
American National Bank and Trust Company of Chicago (hereinafter
referred to as the "Bank").
R E C I T A L S:
Circuit Systems of Tennessee, L.P., a Tennessee limited
partnership, with principal offices located at 0000 Xxxx Xxxx
Xxxxxx, Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000 ( "Borrower" ), is
executing those certain term notes in the principal amounts of
TWO MILLION TWO HUNDRED SEVENTY THOUSAND AND NO/100 DOLLARS
($2,270,000.00) and TWO MILLION EIGHT HUNDRED THOUSAND AND NO/100
DOLLARS ($2,800,000.00) (hereinafter individually a "Note" and
collectively the "Notes"), and that certain master lease (the
"Master Lease" ), each made as of even date herewith payable to
the order of, and held by Bank.
The Notes and the Master Lease are the Notes and Master
Lease referred to in that certain Loan and Security Agreement
( "Loan Agreement") among Borrower, Circuit Systems of
Tennessee, Inc., an Illinois corporation and the general partner
of Borrower ( "Circuit/Tennessee"), Pledgor and Bank. The
Notes, the Master Lease and any documents evidencing and/or
securing the indebtedness under the Notes, Master Lease or Loan
Agreement are hereinafter referred to as the "Loan Documents."
Pledgor is the sole shareholder of Circuit/Tennessee, and,
as such, will benefit from the Loan and financial accommodations
of Bank to Borrower described in the Loan Agreement.
Bank requires as a condition precedent to its making the
financial accommodations evidenced by the Notes, the Master Lease
and the Loan Agreement, that Pledgor grant to Bank a security
interest in the property herein described.
Pledgor desires to give such security interest to Bank in
order to induce Bank to extend such financial accommodations to
Borrower.
NOW, THEREFORE, for value received, and in consideration of
the advances, credits or other financial accommodations
heretofore, now or hereafter at any time extended to Borrower by
Bank (all of such financial accommodations, including, without
limitation, the amounts due under the Notes, the Master Lease and
the Loan Agreement, are hereinafter referred to as the
"Liabilities"), the Undersigned agrees as follows:
PLEDGE: Pledgor pledges and transfers to the Bank, and grants
the Bank a continuing security interest in the property listed
below under the heading "Schedule of Collateral (the "Collateral").
If the Collateral consists of securities, the grant
includes any stock rights, stock dividends, liquidating
dividends, new securities and other property to which the Pledgor
may become entitled because it owns the Collateral. The Pledgor
has transferred the securities to the Bank. This security
interest shall secure all Liabilities and includes principal,
interest, expenses, reasonable attorneys' fees, and all other
costs of collection. The Pledgor agrees to hold the Bank
harmless from any liability caused by its reliance on this
Pledge.
SCHEDULE OF COLLATERAL:
400,000 shares of the stock of Sigmatron International, Inc.,
represented by Certificate Nos. SI 1991, SI 1992, SI 1993 & SI 1994
substitions, replacements, additions and proceeds. Any
securities or other property of the Pledgor at any time in the
custody, possession or control of the Bank shall also constitute
Collateral unless the Bank holds such property solely in a
fiduciary capacity.
WARRANTIES AND COVENANTS: The Pledgor warrants it owns the
Collateral free and clear of any liens. The Pledgor will not
attempt to sell or assign the Collateral or create any lien or
claim against it. The Pledgor agrees to reimburse the Bank, on
demand, for any amounts paid or advanced by the Bank for the
purpose of preserving all or any part of the Collateral. The
Bank shall exercise reasonable care in the custody and
preservation of the Collateral to the extent required by
applicable statute. The Bank shall use its best efforts to take
any action the Pledgor may reasonably request in writing, but the
failure to do so shall not be construed as a failure to exercise
reasonable care.
REGISTRATION RIGHTS: If any of the collateral consists of
securities not registered under the Securities Act of 1933, and
the issuer proposes to register any of its securities, the
Pledgor will give the Bank notice of that fact. In addition, and
at no cost to the Bank, the Pledgor will use its best efforts to
induce the issuer to register the pledged securities so that they
may be disposed of by public sale or other public disposition.
Upon the completion of registration, the Pledgor will deliver
certificates without any restrictive legend in exchange for the
unregistered securities. The Pledgor indemnifies and holds the
Bank harmless against any loss, claim, damage or liability
arising out of the registration process, and will reimburse the
Bank for any legal or other expenses incurred by the Bank as a
result.
INSTRUCTIONS REGARDING THE COLLATERAL: The Bank may act upon any
instructions given by the Pledgor whether in writing or not, with
regard to additions or substitutions or sale or other disposition
of the Collateral and its proceeds. The Pledgor agrees that any
additions to, substitutions for or proceeds of the Collateral
that it receives will be held for the Bank's benefit and turned
over to the Bank. The Pledgor also gives the Bank permission to
have the Collateral or any part of it transferred to or
registered in the Bank's name or in the name of any other person
or business entity with or without designation of the capacity of
that nominee, and will hold the Bank harmless from any liability
or responsibility that might result. In furtherance of the
Bank's rights under this Pledge, the Pledgor irrevocably appoints
the Bank as its attorney-in-fact, with full power of
substitution.
CONTINUED RELIANCE: The Bank may continue to make loans or
extend credit to the Borrower based on this Pledge until it
receives written notice of termination from the Pledgor. That
notice shall be effective at the opening of the Bank for business
on the third business day after receipt of the notice. The
termination will not affect any of the rights given to the Bank
in this Pledge with respect to any of the Liabilities that were
created, assumed or committed to prior to the effective date of
the termination, and all subsequent renewals, extensions,
modifications and amendments of the Liabilities. Upon receipt of
the notice, the Bank does not have to take any action against the
Borrower or the Collateral in order to maintain its rights. If
this Pledge secures Liabilities of the Pledgor only, this Pledge
is not terminable.
LOAN-TO-VALUE RATIO: If the ratio of the unpaid balance of the
Liabilities to the then fair market value (as reasonably
determined by the Bank) of any securities constituting all or any
portion of the Collateral shall exceed the Bank's fifty percent
(50%) loan-to-value requirements for the 60-Month Term Loan (as
defined in the Loan Agreement), and Pledgor fails, within five
(5) days following the demand of Bank (a Margin Call
pledge such additional Collateral as is required by the Bank to
maintain such fifty percent (50%) loan-to-value requirement, the
Pledgor shall be in default under this Pledge and the Bank may
sell all or any portion of such securities and otherwise exercise
any or all of the rights and remedies set forth in this Pledge.
DEFAULT/REMEDIES: If the Borrower fails to pay any of the
Liabilities when due, or otherwise defaults under the terms of
any agreement related to any of the Liabilities, or if the
Pledgor fails to observe or perform any term of this Pledge, or
if any representation or warranty of the Pledgor contained in
this Pledge is untrue in any material respect, then the Bank
shall have all of the rights and remedies provided by any law to
liquidate or foreclose on and sell the Collateral, including but
not limited to the rights and remedies of a secured party under
the Uniform Commercial Code. The Pledgor agrees and acknowledges
that because of applicable securities laws, the Bank may not be
able to effect a public sale of the Collateral, and sales at a
private sale may be on terms and at a price less favorable than
if the securities were sold at a public sale. The Pledgor agrees
that all private sales made under these circumstances shall be
construed to have been made in a commercially reasonable manner.
These rights and remedies shall be cumulative and not exclusive.
If the Pledgor is entitled to notice, that requirement will be
met if the Bank sends notice at least seven (7) days prior to the
date of sale, disposition or other event requiring notice. The
proceeds of any sale shall be applied first to costs, then toward
payment of the Liabilities, whether or not the Liabilities have
been declared to be due and owing; provided that, to the extent
any Liabilities consists of extensions of credit to the Borrower
by the issuance of letters of credit or other like obligations of
the Bank to third parties which have not been utilized, such
proceeds shall be held by the Bank in a cash collateral account
as security for the Liabilities.
LIQUIDATION: Upon the occurrence of an Event of Default or
Unmatured Event of Default, each as defined in the Loan
Agreement, or upon any Margin Call, which remains unsatisfied in
whole or in part by Pledgor, Pledgor agrees that it shall not,
for a period ending 180 days following the occurrence of such
event, sell and/or offer to sell any securities of Sigmatron
International, Inc. then held by Pledgor. Pledgor further agrees
that, in such event, it shall not cause or authorize any
Affiliate, as such term is described in the Loan Agreement, to
sell and/or offer to sell any securities of Sigmatron
International, Inc. held by any such Affiliate.
SALE OF COLLATERAL:
(a) Pledgor recognizes that Bank may be unable to effect a
public sale or disposition (including, without limitation, any
disposition in connection with a merger of any Subsidiary) of any
or all of the Collateral by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the
"Act"), and applicable state securities laws, but may be
compelled to resort to one or more private sales or dispositions
thereof to a restricted group of purchasers who will be obliged
to agree, among other things, to acquire such securities for
their own account for investment and not with a view to the
distribution or resale thereof. Pledgor acknowledges and agrees
that any such private sale or disposition may result in prices
and other terms (including the terms of any securities or other
property received in connection therewith) less favorable to the
seller than if such sale or disposition were a public sale or
disposition and, notwithstanding such circumstances, agrees that
any such private sale or disposition shall be deemed to have been
made in a commercially reasonable manner. Bank shall be under no
obligation to delay a sale or disposition of any of the
Collateral to permit Pledgor or any Subsidiary to register such
securities for public sale under the Act, or under applicable
state securities laws, even if Pledgor or any Subsidiary would
agree to do so.
(b) Pledgor further agrees to do or cause to be done all
such other acts and things as may be necessary to make such sale
or sales or dispositions of any portion or all of the Collateral
valid and binding and in compliance with any and all applicable
laws, regulations, orders, writs, injunctions, decrees or awards
of any and all courts, arbitrators or governmental
instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales or dispositions, all at Pledgor's expense,
provided that Pledgor shall be under no obligation to take any
action to enable any or all of the Collateral to be registered
under the provisions of the Act or to prepare and file a
prospectus in connection therewith. Pledgor further agrees that
a breach of any of the covenants contained in this paragraph will
cause irreparable injury to Bank, that Bank has no adequate
remedy at law in respect of such breach and, as a consequence,
agrees that each and every covenant contained in this paragraph
shall be specifically enforceable against Pledgor, and Pledgor
hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Loan
Agreement.
WAIVERS: The Pledgor waives any right it may have to receive
notice of any of the following matters before the Bank enforces
any of its rights: (a) the Bank's acceptance of this Pledge, (b)
any credit that the Bank extends to the Borrower, (c) the
Borrower's default, (d) any demand, or (e) any action that the
Bank takes regarding anyone else, any collateral, or any
Liability, which it might be entitled to take by law or under any
other agreement. No modification or waiver of this Pledge is
effective unless it is in writing and signed by the party against
whom it is being enforced. The Bank may waive or delay enforcing
any of its rights without losing them. Any waiver affects only
the specific terms and time period stated in the waiver. The
Bank shall not be obligated to take any action in connection with
any conversion, call, redemption, retirement or any other event
relating to any of the Collateral.
REPRESENTATION BY PLEDGOR: Each Pledgor represents that: (a)
the execution and delivery of this Pledge and the performance of
the obligations it imposes do not violate any law, do not
conflict with any agreement by which it is bound, or require the
consent or approval of any governmental authority or any third
party; (b) this Pledge is a valid and binding agreement,
enforceable according to its terms; and (c) all balance sheets,
profit and loss statements, and other financial statements
furnished to the Bank are accurate and fairly reflect the
financial condition of the organizations and persons to which
they apply on their effective dates, including contingent
liabilities of every type, which financial condition has not
changed materially and adversely since those dates. Each
Pledgor, other than a natural person, further represents that:
(a) it is duly organized, existing and in good standing under the
laws where it is organized: and (b) the execution and delivery of
this Pledge and the performance of the obligations it imposes (i)
are within its powers and have been duly authorized by all
necessary action of its governing body; and (ii) do not
contravene the terms of its articles of incorporation or
organization, its by-laws, or any agreement governing its
affairs.
NOTICES: Notice from one party to another relating to this
Pledge is effective if made in writing (including
telecommunications) and delivered to the recipient's address,
telex number or facsimile number set forth in this Pledge by any
of the following means: (a) hand delivery, (b) registered or
certified mail, postage prepaid, (c) first class or express mail
postage prepaid, (d) Federal Express or like overnight courier
service, or (e) facsimile, telex or other wire transmission with
request for assurance of receipt in a manner typical with respect
to communications of that type. Notice made in accordance with
this section shall be construed as delivered on receipt if
delivered by hand or wire transmission, on the third business day
after mailing if mailed by first class, registered or certified
mail, or on the next business day after mailing or deposit with
an overnight courier service if delivered by express mail or
overnight courier. Notwithstanding the foregoing, notice of
termination of the Pledge is received only upon the receipt of
actual written notice by the Bank in accordance with the
paragraph above labeled Continued Reliance.
MISCELLANEOUS: The Pledgor consents to (a) any extension,
postponement, renewal, modification and amendment of any
Liability, (b) the release or discharge of all or any part of any
security for the Liabilities and (c) the release or discharge or
suspension of any rights and remedies against any person who may
be liable for the Liabilities. The Bank does not have to look to
any other right, any other collateral, or any other person for
payment before it exercises its rights under this Pledge. The
Pledgor's obligations to the Bank under this Pledge are not
subject to any condition, precedent or subsequent, and shall not
be released or affected by any change in the composition or
structure of the Pledgor, including a merger or consolidation
with any other person or entity. If this Pledge is signed by
more than one person, all are jointly and severally bound. This
Pledge is binding on the Pledgor and its heirs, successors and
assigns, and is for the benefit of the Bank and its successors
and assigns. This Agreement is governed by Illinois law. The
use of section headings does not limit the provisions of this
Pledge.
WAIVER OF JURY TRIAL: The Bank and the Pledgor, after consulting
or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right either of them may
have to a trial by jury in any litigation based upon or arising
out of this Pledge or any related instrument or agreement, or any
of the transactions contemplated by this Pledge, or any course of
conduct, dealing, statements (whether oral or written), or
actions of either of them. Neither the Bank nor the Pledgor
shall seek to consolidate, by counterclaim or otherwise, any
action in which a jury trial has been waived with any other
action in which a jury trial cannot be or has not been waived.
These provisions shall not be deemed to have been modified in any
respect or relinquished by either the Bank or the Pledgor except
by a written instrument executed by both of them.
Dated: July 24, 1997
Address: Pledgor:
0000 Xxxx Xxxx Xxxxxx XXXXXXX XXXXXXX,XXX., an
Elk Xxxxx Xxxxxxx, Xxxxxxxx 00000 Illinois corporation
Facsimile/Telex No. (000) 000-0000
By: /s/ Xxxxx X. Xxxx
Its: Vice-President
