Exhibit 10.18
FIRST
UNION
PLEDGE AND ASSIGNMENT AGREEMENT
December 22, 1998
Energy Research Corporation
0 Xxxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000
(Individually and collectively "Debtor")
First Union National Bank
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
(Hereinafter referred to as the "Bank")
For value received and in order to secure payment and performance of the
obligations under the Unconditional Guaranty dated December 12, 1998, given by
Energy Research Corporation ("Guarantor") to Bank guaranteeing obligations of
Evercel, Inc. ("Borrower") to Bank, its successors and assigns (the "Guaranty"),
and all other Obligations (as defined herein) Debtor hereby executes and
delivers this Pledge and Assignment Agreement (the "Assignment") and sells,
pledges, assigns, transfers and grants to Bank a continuing security interest in
the Collateral (as defined herein), as security for the Obligations.
Debtor further covenants and agrees:
Collateral: "Collateral" means and all of the investment property, financial
assets, (which includes cash), securities, mutual funds, security entitlements,
evidence of indebtedness of governmental agencies and otherwise, evidence of
equity interests, instruments, and/or general intangibles, which are held in or
credited to an account with First Union National Bank, Capital Markets, who is a
Securities Intermediary (as defined herein) as of the Debtor (the "Account"),
and the Account itself, described as follows: Account No. 00000000; all
investment property, financial assets, security entitlements, money,
instruments, certificates of deposit, securities, documents, chattel paper,
credits, claims, demands and all other property and assets of the Debtor now or
hereafter in the possession, custody or control of Bank or any Affiliate, or in
any account of Debtor in which Bank has a security interest, and all dividends,
stock rights, subscription rights, warrants, interest, cash, instruments, new
securities, security entitlements and all other property to which the Debtor now
or hereafter becomes entitled by reason of its interest in any of the previously
described Collateral; all substitutions, additions, replacements, rollovers,
splits, products and accessions for, of and/or to any of the foregoing; and all
cash and non-cash proceeds or all of the foregoing.
Obligations: "Obligations" means the Guaranty and any and all other liabilities
and obligations of the Guarantor and/or Debtor, whether joint, several or joint
and several, to Bank or to any Affiliates, and any extensions, renewals, or
modifications thereof, currently existing or arising in the future, however
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now existing or hereafter acquired, including swap agreements (as
defined in 11 U.S.C. ss. 101), future advances, and all costs and expenses,
including all reasonable attorneys fees, incurred by Bank to obtain, preserve,
perfect and enforce the security interest granted herein and to maintain,
preserve and collect the property subject to the security interest.
Power of Attorney. Debtor irrevocably constitute and appoints Bank as its true
and lawful attorney-in-fact, with full power and authority in the place and name
of Debtor, to take any and all appropriate action and to execute any and all
documents and instruments that may be necessary or desirable to accomplish the
purpose and carry out the terms of this Assignment, including without
limitation, completion, execution, and delivery of the Account Control
Agreement(s) by Bank, Debtor and Third Party(s) (as defined herein) required in
connection herewith (individually and collectively) the "Account Control
Agreement"), instructions to Third Party regarding, among other things, control
and dispersion of any Collateral, endorsements desirable for transfer or
delivery of
any Collateral, registration of any Collateral under applicable laws, retitling
any Collateral, receipt, endorsement and/or collection of all checks and other
orders for payment of money payable to Debtor with respect to Collateral, and
the filing of financing statements, or a copy of this Assignment as such. This
power of attorney is coupled with an interest and shall be irrevocable. Neither
Bank nor anyone acting on its behalf shall be liable for acts, omissions, errors
in judgement, or mistakes in fact in such capacity as attorney-in-fact. The
Debtor ratifies all acts of Bank as its attorney-in-fact.
Debtor's Representations, Warranties and Agreements. Debtor represents, warrants
and agrees: (i) Debtor is the owner of the Collateral free and clear of any
liens, security interests, and claims, and has full power and authority to use
and encumber the same as Collateral, and as long as any of the Obligations
remain outstanding, Debtor will not grant a security interest or lien in, or
otherwise encumber, sell, transfer or assign, the Collateral to any other
person, and will keep the Collateral free from all adverse claims or
encumbrances; will otherwise preserve and protect by whatever means necessary
the respective rights of the Debtor and Bank in the Collateral, and will
promptly notify Bank of any claims against or notices asserting an interest in
the Collateral. All securities and security entitlements pledged as Collateral
are fully paid and non-assessable and if certificated, have been delivered to
Bank with unrestricted endorsements, (ii) All income, dividends, earnings and
profits with respect to the Collateral shall be reported for state and federal
income tax purposes as attributable to the Debtor and not Bank, and Third Party,
Bank or any other person authorized to report income distributions, are
authorized to issue IRS Forms 1099 indicating Debtor as the recipient of such
income, earnings and profits, (iii) If Debtor fails to pay any tax or assessment
relating to the Collateral or this Assignment as required to do so, (iv) Debtor
shall reimburse Bank immediately upon demand for and indemnify and hold it
harmless from and against all claims, liabilities, losses, costs and expenses,
including reasonable attorneys' fees and disbursements, incurred or suffered by
the Bank in connection with the Collateral, this Assignment or any Account
Control Agreement; such claims, liabilities, losses, costs and expenses shall
include, but not be limited to, all those in connection with the exercise of any
right or remedy granted hereunder, any claim and the prosecution or defense
thereof arising out of or in any way connected with this Assignment, the
collection of enforcement of the Obligations, the sale or purchase or attempted
sale or purchase of any part of the Collateral and any payments for whatever
reason made to Third Party. All amounts payable by Debtor under this subsection
shall be a part of the Obligations and secured by the Collateral, (v) Debtor's
principal place of business and/or residence is the address set forth herein:
Debtor maintains its books and records at such location, and if Debtor changes
such address it will give Bank at least 60 days prior written notice of the
intended change.
Collateral Value. The Fair Market Value of the Collateral shall at all times
exceed $2,000,000.00. If at any time the Fair Market Value of the Collateral
falls below this amount, Debtor shall, within three (3) business days, deliver
additional Collateral to Bank in an amount sufficient to restore the Fair Market
Value to the required amount. "Fair Market Value" means the value of the
Collateral based on the price per share or unit of any of the securities, debt
instruments, mutual funds, financial assets or other investment property which
is a part of the Collateral as set forth on the New York Stock Exchange, other
exchanges or asset value listings where such securities, debt instruments,
mutual funds, financial assets, or other investment property may be traded or
the value quoted as stated in The Wall Street Journal, or other customary
publication of such information if not available in The Wall Street Journal, at
the close of the business day, plus the amount of any certificates of deposit,
cash, or other financial assets compromising the Collateral. If any of the
Collateral is not subject to determination of a verifiable Fair Market Value
according to the procedures outlined in this paragraph than such Collateral
shall have at all times a value as determined by Bank in its sole discretion.
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Trading of Collateral. Until a Default occurs, if Collateral is held in the
Account, Debtor shall have the right to vote the Collateral, to exchange it or
any part thereof for other easily marketable investment property or cash of at
least equivalent value which property or cash shall be placed or paid into the
Account ("Trade"), to collect and receive all cash dividends and interest
distributed periodically in the ordinary course by the obligor or issuer of the
Collateral or part thereof, and unless otherwise restricted by this Assignment,
to exercise other rights with respect to the Collateral. However, without the
prior written consent of Bank, Debtor may not transfer any Collateral from the
Account, unless in connection with a Trade, or collect or receive any interest,
dividends (cash or non-cash), distributions or proceeds paid in connection with
any sale. Trade, liquidation, or redemption of the Collateral, unless such
proceeds or distributions are paid into the Accounts, and any such distributions
or proceeds received by the Debtor, shall be held in trust for, and immediately
delivered to Bank. Any consent pursuant to this paragraph shall be in Bank's
sole discretion.
Third Party Acknowledgment. Debtor authorizes and directs Third Party to comply
with the terms of this Assignment, to enter into a Account Control Agreement, to
xxxx its records to show the security interest of and/or the transfer to Bank of
the Collateral and to mail monthly statements to the Bank, in addition to
Debtor, to the address provided herein.
Collateral Duties. Debtor agrees that Bank shall be under no duty to: (i) sell,
realize upon, collect or protect the Collateral or give any notice with respect
thereto; (ii) preserve the rights of the Debtor with respect to the Collateral
against third parties; (iii) seek payment from any particular source; or (iv)
perform or fulfill any obligation of Debtor hereunder or under any other
agreement, including any agreement, between the Debtor and Third Party. Without
limiting the generality of the foregoing, Bank shall not be obligated to
ascertain, notify Debtor of, or take any action in connection with any
conversion, call, redemption, retirement or any other event relating to any of
the Collateral. Debtor acknowledges Bank is not an investment advisor or insurer
with respect to the Collateral; and Bank has no duty to advise the Debtor of any
actual or anticipated changes in the value of the Collateral.
Default. A default ("Default") under this Assignment occurs upon; (i) the
failure of timely payment or performance of any of the Obligations; (ii) any
default under, or any breach of any representation or agreement contained or
referred to in this Assignment or in any other Loan Document; (iii) any default
or breach of any representation or agreement of a Third Party contained in any
Account Control Agreement executed with respect to any of the Collateral; (iv)
any attempt to terminate, revoke, rescind, modify or violate the terms of this
Assignment without the prior written consent of Bank; or (v) the making of any
law, seizure or attachment upon any Collateral; and/or (vi) the death of,
appointment of a guardian for, dissolution of, termination of existence of, loss
of good standing status by, appointment of a receiver for, assignment for the
benefit of creditors of, or commencement of any insolvency or bankruptcy
proceeding by or against, an Debtor.
Right and Remedies. Upon the occurrence of a Default, and while such Default
continues:
Bank may deal with any and all of the Collateral as in deems fit, and/or may
liquidate all or a portion of the Collateral, applying the proceeds to the
Obligations in any manner it deems appropriate. Such rights include, but are not
limited to, the right, at Bank's option and without prior written notice to
Debtor or any obligor under the Obligations, to: (i) notify Third Party to
terminate immediately any trading, other rights or entitlements with respect to
the Collateral and any distributions from the Collateral; (ii) transfer into
Bank's name or the name of its nominee, all or any part of the Collateral; (iii)
receive all interest, dividends, and other proceeds of the Collateral; (iv)
notify any person obligated on any Collateral of the security interest of Bank
therein and require such person to make payment directly to Bank; (v) demand,
xxx for, collect or receive the Collateral and any proceeds thereof, and/or make
any settlements or compromise as Banks deems desirable
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with respect to any Collateral; and (vi) exercise any voting, conversion,
registration, purchase or other rights of an owner, holder or entitlement holder
of the Collateral. Debtor agrees that Bank may exercise its rights under this
Assignment without regard for the actual or potential tax consequences to Debtor
under federal or state law and without regard to any instructions or directives
given Bank by Debtor.
Debtor acknowledges that some of the Collateral is subject to rapid decline in
value and is customarily sold in recognized markets, and Bank may dispose of
such Collateral in its recognized market without providing notice of sale. Bank
shall have all of the rights and remedies of a secured party under the
applicable law. Notwithstanding anything herein, in the Loan Documents, or in
the applicable law to the contrary, Debtor waives any an all requirements that
the Bank sell or dispose of all or part of the Collateral at any particular
time, regardless of whether Debtor has requested such sale or disposition.
Upon Bank's request, Debtor will, at its own expense: (i) do all things
determined by Bank to be desirable to register such Collateral or qualify for an
exemption from registration, under the provisions of all applicable securities
laws, and (ii) otherwise do or cause to be done all other acts and things as may
be necessary to make the sale of the Collateral valid, binding and in compliance
with applicable law.
Remedies are Cumulative. No failure on the part of Bank 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 by Bank or any right,
power, or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law or in equity.
Discharge. All rights of the Bank and security interests hereunder, and all
obligations of the Debtor hereunder, shall be absolute and unconditional, not
discharged or impaired irrespective of: (i) any lack of validity or
enforceability of any Loan Document; (ii) any change in the time, manner or
place of payment or performance, or in any term, of all or any of the
Obligations or the Loan Documents or any other amendment of waiver of or any
consent to any departure from any Loan Document; (iii) any exchange, release or
non-perfection of any collateral, or any release of or modifications of the
obligations of any guarantor or other obligor; (iv) any amendment or waiver of
or consent to departure from any guaranty or other agreement. To the extent
permitted by law, the Debtor hereby waives any rights under any valuation, stay,
appraisement, extension or redemption laws now existing or which may hereafter
exist and which, but for this provision, might be applicable to any sale or
disposition of the Collateral by the Bank; and any other circumstance which
might otherwise constitute a defense available to, or a discharge of, the
Borrower, any guarantor, other obligor or the Debtor in respect of the
Obligations.
Definitions. The terms set forth below shall be defined as follows: "Affiliate"
means First Union Corporation and any of its direct and indirect affiliates and
subsidiaries; "Issuer" means a person who creates a share, participation or
other interest in its property or in an enterprise, or undertakes an obligation
that is an uncertified security, including a mutual fund or who directly or
indirectly creates a fractional interest in its rights or property which is
represented by a security certificate; "Loan Documents" means all documents
executed in connection with any of the Obligations and may include, without
limitation, notes, guaranty agreements, security agreements, security
instruments, financing statements, mortgage instruments, letter of credit
agreements, a commitment letter that survives closing and any modifications or
renewals, but, however, does not include swap agreements as defined in 11 U.S.C.
ss. 101 whenever executed; "Securities Intermediary" means any bank, custodian,
broker or other person that in the ordinary course of its business maintains
accounts similar to the Account described herein or securities accounts for
others and is acting in that capacity; "Third Party" means each and every issuer
or
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Securities Intermediary having, holding, issuing, or otherwise owing some or all
of the Collateral to the Debtor. Certain terms used herein, including,
"financial asset," "investment property," and "securities entitlements," shall
have the meanings ascribed thereto in the 1994 revisions to Article 8 and
Article 9 of the Uniform Commercial Code proposed by the American Law Institute
and the National Conference of Commissioners on Uniform State Laws.
Miscellaneous Provisions. Assignment. This Assignment and other Loan Documents
shall insure to the benefit of and be binding upon the parties and their
respective heirs, legal representatives, successors and assigns. Bank's
interests in and rights under this Assignment and other Loan Documents are
freely assignable, in whole or in part, by Bank. Any attempt by Debtor to assign
its interests and obligations hereunder without Bank's prior written consent is
null and void. Applicable Law: Conflict Between Documents. This Assignment and
other Loan Documents shall be governed by and construed under the laws of the
state named in Bank's address shown above without regard to that state's
conflict of laws principles. Jurisdiction. Debtor irrevocably agrees to a
non-exclusive personal jurisdiction in the state named in Bank's address shown
above. Severability. If any provision of this Assignment or of the other Loan
Documents shall be prohibited or invalid under applicable law, such provision
shall be ineffective but only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Assignment or other such document. Notices. Any notices to Debtor shall
be sufficiently given, if in writing and mailed or delivered to the Debtor's
address shown above or such other address as provided hereunder, and to Bank, if
in writing and mailed or delivered to Bank's office address shown above or such
other address as Bank may specify in writing from time to time. In the event
that Debtor changes Debtor's address at any time prior to the date the
Obligations are paid in full, Debtor agrees to promptly give written notice of
said change of address by registered or certified mail, return receipt
requested, all charges prepaid. Plural Captions. All references in the Loan
Documents to Debtor, guarantor, person, document or other nouns of reference
mean both the singular and plural form, as the case may be, and terms "Debtor"
or "person" shall mean any individual, person or entity, and if more than one
shall be joint and several. The captions contained in the Loan Documents are
inserted for convenience only and shall not affect the meaning or interpretation
of the Loan Documents. Binding Contract. Debtor by execution and Bank by
acceptance of this Assignment agree that each party is bound to all terms and
provisions of this Assignment.
IN WITNESS WHEREOF, the Debtor has caused this Assignment to be duly executed as
of the day and year first above written.
DEBTOR:
Energy Research Corporation
CORPORATE By: /s/ Xxxxxx X. Xxxxxx
SEAL -----------------------------------------
Xxxxxx X. Xxxxxx, Chief Financial Officer
ACCEPTED BY:
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx, Senior Vice President
First Union National Bank
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
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