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EXHIBIT 10.4
PLEDGE AGREEMENT
PLEDGE AGREEMENT (as amended, modified or supplemented from
time to time, this "Agreement"), dated as of December 15, 1998, made by each of
the undersigned pledgors (each a "Pledgor" and, together with any other entity
that becomes a pledgor hereunder pursuant to Section 24 hereof, the "Pledgors")
to BANKERS TRUST COMPANY, as Collateral Agent (the "Pledgee"), for the benefit
of the Secured Creditors (as defined below). Except as otherwise defined herein,
capitalized terms used herein and defined in the Credit Agreement (as defined
below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Special Devices, Incorporated (the "Borrower"), the
lenders from time to time party thereto (the "Banks") and Bankers Trust Company,
as Lead Arranger and Administrative Agent (together with any successor
administrative agent, the "Administrative Agent"), have entered into a Credit
Agreement, dated as of December 15, 1998 (as amended, modified or supplemented
from time to time, the "Credit Agreement"), providing for the making of Loans
to, and the issuance of Letters of Credit for the account of, the Borrower as
contemplated therein (the Banks, the Issuing Bank, the Administrative Agent and
the Pledgee are herein called the "Bank Creditors");
WHEREAS, the Borrower may at any time and from time to time
enter into one or more Interest Rate Protection Agreements or Other Hedging
Agreements with one or more Banks or any affiliate thereof (each such Bank or
affiliate, even if the respective Bank subsequently ceases to be a Bank under
the Credit Agreement for any reason, together with such Bank's or affiliate's
successors and assigns, if any, collectively, the "Other Creditors," and
together with the Bank Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Subsidiaries Guaranty, each
Subsidiary Guarantor has jointly and severally guarantied to the Secured
Creditors the payment when due of all Guaranteed Obligations as described
therein;
WHEREAS, it is a condition to the making of Loans to, and the
issuance of Letters of Credit for the account of, the Borrower under the Credit
Agreement that each Pledgor shall have executed and delivered to the Pledgee
this Agreement; and
WHEREAS, each Pledgor desires to enter into this Agreement in
order to satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Pledgor, the receipt and sufficiency of which are
hereby acknowledged, each Pledgor hereby makes the following representations and
warranties to the Pledgee for the benefit of the Secured Creditors and hereby
covenants and agrees with the Pledgee for the benefit of the Secured Creditors
as follows:
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1. SECURITY FOR OBLIGATIONS. This Agreement is made by each
Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
indebtedness (including, without limitation, indemnities, Fees and
interest thereon) of such Pledgor to the Bank Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection
with the Credit Agreement and the other Credit Documents to which such
Pledgor is a party (including, in the case of each Subsidiary
Guarantor, all such obligations and indebtedness of such Subsidiary
Guarantor under the Subsidiaries Guaranty) and the due performance and
compliance by such Pledgor with all of the terms, conditions and
agreements contained in the Credit Agreement and such other Credit
Documents (all such obligations and liabilities under this clause (i),
except to the extent consisting of obligations or indebtedness with
respect to Interest Rate Protection Agreements or Other Hedging
Agreements, being herein collectively called the "Credit Document
Obligations");
(ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
liabilities owing by such Pledgor to the Other Creditors under, or with
respect to (including, in the case of each Subsidiary Guarantor, by
reason of the Subsidiaries Guaranty), any Interest Rate Protection
Agreement or Other Hedging Agreement, whether such Interest Rate
Protection Agreement or Other Hedging Agreement is now in existence or
hereafter arising, and the due performance and compliance by such
Pledgor with all of the terms, conditions and agreements contained
therein (all such obligations and liabilities described in this clause
(ii) being herein collectively called the "Other Obligations");
(iii) any and all sums advanced by the Pledgee in order to
preserve the Collateral (as hereinafter defined) or preserve its
security interest in the Collateral;
(iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations or liabilities of such
Pledgor referred to in clauses (i), (ii) and (iii) above, after an
Event of Default (which term to mean and include any Event of Default
under, and as defined in, the Credit Agreement or any payment default
by the Borrower under any Interest Rate Protection Agreement or Other
Hedging Agreement and shall, in any event, include, without limitation,
any payment default on any of the Obligations (as hereinafter defined))
shall have occurred and be continuing, the reasonable expenses of
retaking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the
Pledgee of its rights hereunder, together with reasonable attorneys'
fees and court costs; and
(v) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of
this Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section 1 being herein collectively called the
"Obligations," it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether
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outstanding on the date of this Agreement or extended from time to time after
the date of this Agreement.
2. DEFINITION OF STOCK, NOTES, SECURITIES, PARTNERSHIP
INTERESTS, ETC. (a) As used herein, (i) the term "Stock" shall mean (x) with
respect to corporations incorporated under the laws of the United States or any
State or territory thereto (each a "Domestic Corporation"), all of the issued
and outstanding shares of capital stock, and all warrants and options to
purchase any such capital stock, of any corporation at any time owned by any
Pledgor, and (y) with respect to corporations that are not Domestic Corporations
(each a "Foreign Corporation"), all of the issued and outstanding shares of
capital stock, and all warrants and options to purchase such capital stock, at
any time owned by any Pledgor of any Foreign Corporation, provided that, (A)
except as provided in the last sentence of this Section 2, no Pledgor shall be
required to pledge hereunder more than 65% of the total combined voting power of
all classes of capital stock entitled to vote for directors of such Foreign
Corporation (herein called "Voting Stock") owned by such Pledgor of any Foreign
Corporation, and (B) each Pledgor shall be required to pledge hereunder 100% of
the issued and outstanding shares of all capital stock which is not Voting Stock
(herein called "Non-Voting Stock") at any time owned by the Pledgor of any
Foreign Corporation, (ii) the term "Notes" shall mean all Intercompany Notes and
all other promissory notes or other evidences of indebtedness from time to time
issued to, or held by, any Pledgor and (iii) the term "Securities" shall mean
all of the Stock and Notes. Each Pledgor represents and warrants, that on the
date hereof, (A) the Stock held by such Pledgor consists of the number and type
of shares of the stock of the corporations as described in Annex A hereto for
such Pledgor, (B) such Stock constitutes that percentage of the issued and
outstanding capital stock of the issuing corporation as is set forth in Annex A
hereto, (C) the Notes held by such Pledgor consist of the promissory notes
described in Annex B hereto for such Pledgor, (D) such Pledgor is the holder of
record and sole beneficial owner of the Stock and the Notes held by such Pledgor
and (E) such Pledgor owns no other Securities. In the circumstances and to the
extent provided in Section 8.14 of the Credit Agreement, the 65% limitation set
forth in clause (i)(y) of this Section 2 and Section 3.2 hereof shall no longer
be applicable and such Pledgor shall duly pledge and deliver to the Pledgee such
of the Securities not theretofore required to be pledged hereunder.
(b) As used herein, the term "Partnership Interest" shall mean
the entire partnership interests (whether general and/or limited partnership
interests) at any time owned by each Pledgor in any Person (each a "Pledged
Partnership") to the extent such Partnership Interest is a security under the
UCC. Each Pledgor represents and warrants that, on the date hereof, (A) the
Partnership Interests held by such Pledgor constitutes that percentage of the
entire partnership interest of the respective Pledged Partnership as is set
forth on Annex C hereto for such Pledgor and (B) such Pledgor owns no other
Partnership Interests. Notwithstanding anything to the contrary contained in
this Agreement, no Pledgor shall be required to pledge any Partnership Interest
owned by such Pledgor in a Person that is not a Subsidiary of such Pledgor to
the extent a pledge of such Partnership Interest would violate any provision of
the partnership agreement pursuant to which such Partnership Interest is
created.
(c) All Stock at any time pledged or required to be pledged
hereunder is hereinafter called the "Pledged Stock;" all Notes at any time
pledged or required to be pledged hereunder are hereinafter called the "Pledged
Notes;" all Pledged Stock and Pledged Notes
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together are called the "Pledged Securities;" all Partnership Interests at any
time pledged or required to be pledged hereunder are hereinafter called the
"Pledged Partnership Interests", and the Pledged Securities and the Pledged
Partnership Interests, together with all proceeds thereof, including any
securities and moneys received and at the time held by the Pledgee hereunder,
are hereinafter called the "Collateral."
(d) Notwithstanding anything to the contrary contained in this
Agreement (including certain of the representations and warranties in Section 16
hereof), no Pledgor shall be required to pledge any Notes (other than
Intercompany Notes) hereunder with an outstanding principal amount of $50,000 or
less, provided that no more than $100,000 in the aggregate of all such $50,000
or less Notes (including, for this purpose, any Instruments (as defined in the
Security Agreement) not required to be delivered pursuant to the Security
Agreement) shall be excluded from the delivery requirements under this
Agreement.
3. PLEDGE OF SECURITIES, ETC.
3.1 Pledge. (a) To secure the Obligations of such Pledgor and
for the purposes set forth in Section 1 hereof, each Pledgor hereby (i) grants
to the Pledgee a security interest in all of the Collateral owned by such
Pledgor, (ii) pledges and deposits as security with the Pledgee, the Securities
owned by such Pledgor on the date hereof, and delivers to the Pledgee
certificates or instruments therefor, duly endorsed in blank by such Pledgor in
the case of Notes and accompanied by undated stock powers duly executed in blank
by such Pledgor (and accompanied by any transfer tax stamps required in
connection with the pledge of such Securities) in the case of Stock, or such
other instruments of transfer as are reasonably acceptable to the Pledgee, and
without limitation of clause (i), grants to Pledgee a security interest in such
Pledgor's Partnership Interests (and delivers any certificates or instruments
evidencing such partnership interests, duly endorsed in blank) and all of such
Pledgor's right, title and interest in each Pledged Partnership including,
without limitation:
(i) all of the capital thereof and its interest in all
profits, losses, Partnership Assets (as defined below) and other
distributions to which such Pledgor shall at any time be entitled in
respect of any such Collateral;
(ii) all other payments due or to become due to such Pledgor
in respect of any such Collateral, whether under any partnership
agreement or otherwise, whether as contractual obligations, damages,
insurance proceeds or otherwise;
(iii) all of its claims, rights, powers, privileges,
authority, options, security interest, liens and remedies, if any,
under any partnership or other agreement or at law or otherwise in
respect of any such Collateral;
(iv) all present and future claims, if any, of such Pledgor
against any Pledged Partnership for moneys loaned or advanced, for
services rendered or otherwise;
(v) all of such Pledgor's rights under any partnership
agreement or at law to exercise and enforce every right, power, remedy,
authority, option and privilege of such Pledgor relating to any
Partnership Interest, including any power, if any, to terminate, cancel
or modify any general or limited partnership agreement, to execute any
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instruments and to take any and all other action on behalf of and in
the name of such Pledgor in respect of such Partnership Interest and
any Pledged Partnership Interest, to make determinations, to exercise
any election (including, but not limited to, election of remedies) or
option or to give or receive any notice, consent, amendment, waiver or
approval, together with full power and authority to demand, receive,
enforce, collect, or receipt for any of the foregoing or for any
Partnership Asset, to enforce or execute any checks, or other
instruments or orders, to file any claims and to take any action in
connection with any of the foregoing;
(vi) all other property hereafter delivered in substitution
for or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such other property and all
cash, securities, interest, dividends, distributions, rights and other
property at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
thereof; and
(vii) to the extent not otherwise included, all proceeds of
any or all of the foregoing.
(b) As used herein, the term "Partnership Assets" shall mean
all assets, whether tangible or intangible and whether real, personal or mixed
(including, without limitation, all partnership capital and interests in other
partnerships), at any time owned by any Pledged Partnership or represented by
any Partnership Interest.
3.2 Subsequently Acquired Securities and/or Partnership
Interests. (a) If any Pledgor shall acquire (by purchase, stock dividend or
otherwise) any additional Securities at any time or from time to time after the
date hereof, such Pledgor will promptly thereafter deposit such Securities (or
certificates or instruments representing such Securities) as security with the
Pledgee and deliver to the Pledgee certificates or instruments therefor, duly
endorsed in blank in the case of such Notes, and accompanied by undated stock
powers duly executed in blank by such Pledgor (and accompanied by any transfer
tax stamps required in connection with the pledge of such Securities) in the
case of such Stock, or such other instruments of transfer as are reasonably
acceptable to the Pledgee, and will promptly thereafter deliver to the Pledgee a
certificate executed by a principal executive officer of such Pledgor describing
such Securities and certifying that the same has been duly pledged with the
Pledgee hereunder. Subject to the last sentence of Section 2 hereof, no Pledgor
shall be required at any time to pledge hereunder any Stock which is more than
65% of the total combined Voting Stock of any Foreign Corporation.
(b) If any Pledgor shall acquire (by purchase, distribution or
otherwise) any additional Partnership Interest at any time or from time to time
after the date hereof, and, to the extent such Partnership Interest is
certificated, such Pledgor shall forthwith deliver to the Pledgee certificates
therefor, accompanied by such instruments of transfer as are acceptable to the
Pledgee, and shall promptly thereafter deliver to the Pledgee a certificate
executed by a principal executive officer of such Pledgor describing such
Partnership Interest and certifying that the same has been duly pledged with the
Pledgee hereunder.
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3.3 Uncertificated Securities and Partnership Interests.
Notwithstanding anything to the contrary contained in Sections 3.1 and 3.2
hereof, if any Securities (whether now owned or hereafter acquired) or
Partnership Interests are uncertificated securities, the relevant Pledgor shall
promptly notify the Pledgee thereof, and shall promptly take all actions (to the
extent not already taken) required to perfect the security interest of the
Pledgee under applicable law (including, in any event, under the applicable
provisions of the relevant UCC). Each Pledgor further agrees to take such
actions as the Pledgee deems necessary or reasonably desirable to effect the
foregoing and to permit the Pledgee to exercise any of its rights and remedies
hereunder.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. If and to the
extent necessary to enable the Pledgee to perfect its security interest in any
of the Collateral or to exercise any of its remedies hereunder, the Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Pledged Securities or Pledged Partnership
Interests, which may be held (in the discretion of the Pledgee) in the name of
the relevant Pledgor, endorsed or assigned in blank or in favor of the Pledgee
or any nominee or nominees of the Pledgee or a sub-agent appointed by the
Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
there shall have occurred and be continuing an Event of Default and the Pledgee
shall have terminated any such entitlement by notice to the Pledgor (provided
that no such notice shall be required if a Default or an Event of Default under
Section 10.05 of the Credit Agreement exists and is continuing, in which case
such entitlement shall automatically terminate), each Pledgor shall be entitled
to exercise any and all (i) voting and other consensual rights pertaining to the
Pledged Securities owned by it, and to give consents, waivers or ratifications
in respect thereof, and (ii) voting, consent, administration, management and
other rights and remedies under any partnership agreement or otherwise with
respect to the Pledged Partnership Interests of such Pledgor; provided, that, in
each case, no vote shall be cast or any consent, waiver or ratification given or
any action taken or omitted to be taken which would violate or be inconsistent
with any of the terms of this Agreement, the Credit Agreement, any other Credit
Document or any Interest Rate Protection Agreement or Other Hedging Agreement
(collectively, the "Secured Debt Agreements"), or which would have the effect of
impairing the security interest of the Pledgee in the Collateral. All such
rights of each Pledgor to vote and to give consents, waivers and ratifications
shall cease in case an Event of Default has occurred and is continuing, and
Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there
shall have occurred and be continuing an Event of Default and the Pledgee shall
have terminated any such entitlement by notice to the Pledgor (provided that no
such notice shall be required if a Default or an Event of Default under Section
10.05 of the Credit Agreement exists and is continuing, in which case such
entitlement shall automatically terminate), (i) all cash dividends and
distributions payable in respect of the Pledged Stock and all payments in
respect of the Pledged Notes shall be paid to the respective Pledgor and (ii)
all cash distributions payable in respect of the Pledged Partnership Interests
shall be paid to the respective Pledgor. The Pledgee shall be entitled to
receive directly, and to retain as part of the Collateral:
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(i) all other or additional stock or other securities or
partnership interests (other than cash) paid or distributed by way of
dividend, distribution or otherwise in respect of the Collateral;
(ii) all other or additional stock or other securities or
partnership interests paid or distributed in respect of the Collateral
by way of merger, consolidation, conveyance of assets, liquidation,
exchange of stock, stock-split, spin-off, split-up, reclassification,
combination of shares or similar rearrangement; and
(iii) all other property (other than cash) paid or distributed
by way of dividend or distribution in respect of the Collateral.
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive proceeds of the Collateral in any form in accordance
with Section 3 of this Agreement. Furthermore, the foregoing provisions of this
Section 6 shall not apply to dividends or distributions made in connection with
the transactions contemplated by Sections 9.02(x) and (xi) of the Credit
Agreement, provided that such transactions are consummated in accordance with
the applicable terms and conditions set forth in the Credit Agreement. All
dividends, distributions or other payments which are received by any Pledgor
contrary to the provisions of this Section 6 and Section 7 hereof shall be
received in trust for the benefit of the Pledgee, shall be segregated from other
property or funds of such Pledgor and shall be forthwith paid over to the
Pledgee as Collateral in the same form as so received (with any necessary
endorsement).
7. REMEDIES IN CASE OF DEFAULT OR EVENT OF DEFAULT. If there
shall have occurred and be continuing an Event of Default, then and in every
such case, the Pledgee shall be entitled to exercise all of the rights, powers
and remedies (whether vested in it by this Agreement, any other Secured Debt
Agreement or by law) for the protection and enforcement of its rights in respect
of the Collateral, and the Pledgee shall be entitled to exercise all the rights
and remedies of a secured party under the Uniform Commercial Code and also shall
be entitled, without limitation, to exercise the following rights, which each
Pledgor hereby agrees to be commercially reasonable:
(a) to receive all amounts payable in respect of the
Collateral otherwise payable under Section 6 hereof to the respective
Pledgor;
(b) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(c) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other lawful action to collect
upon any Pledged Note (including, without limitation, to make any
demand for payment thereon);
(d) to vote all or any part of the Pledged Stock or Pledged
Partnership Interests (whether or not transferred into the name of the
Pledgee) and give all consents, waivers and ratifications in respect of
the Collateral and otherwise act with respect thereto as though it were
the outright owner thereof (each Pledgor hereby irrevocably
constituting and appointing the Pledgee the proxy and attorney-in-fact
of such Pledgor, with full power of substitution to do so); and
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(e) at any time and from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to
redeem or otherwise (all of which are hereby waived by each Pledgor),
for cash, on credit or for other property, for immediate or future
delivery without any assumption of credit risk, and for such price or
prices and on such terms as the Pledgee in its absolute discretion may
determine, provided that at least 10 days' written notice of the time
and place of any such sale shall be given to the respective Pledgor.
The Pledgee shall not be obligated to make any such sale of Collateral
regardless of whether any such notice of sale has theretofore been
given. Each Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if
any, of marshalling the Collateral and any other security for the
Obligations or otherwise. At any such sale, unless prohibited by
applicable law, the Pledgee on behalf of the Secured Creditors may bid
for and purchase all or any part of the Collateral so sold free from
any such right or equity of redemption. Neither the Pledgee nor any
other Secured Creditor shall be liable for failure to collect or
realize upon any or all of the Collateral or for any delay in so doing
nor shall any of them be under any obligation to take any action
whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each and every right, power and
remedy of the Pledgee provided for in this Agreement, or now or hereafter
existing at law or in equity or by statute shall be cumulative and concurrent
and shall be in addition to every other such right, power or remedy. The
exercise or beginning of the exercise by the Pledgee or any other Secured
Creditor of any one or more of the rights, powers or remedies provided for in
this Agreement or in any other Secured Debt Agreement or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any other Secured Creditor of
all such other rights, powers or remedies, and no failure or delay on the part
of the Pledgee or any other Secured Creditor to exercise any such right, power
or remedy shall operate as a waiver thereof. No notice to or demand on any
Pledgor in any case shall entitle it to any other or further notice or demand in
similar or other circumstances or constitute a waiver of any of the rights of
the Pledgee or any other Secured Creditor to any other or further action in any
circumstances without notice or demand. The Secured Creditors (by their
acceptance of the benefits of this Agreement) agree that this Agreement may be
enforced only by the action of the Administrative Agent or the Pledgee, in each
case acting upon the instructions of the Required Secured Creditors (as defined
in the Security Agreement) and that no Secured Creditor, other than the
Administrative Agent or the Pledgee, shall have any right individually to seek
to enforce or to enforce this Agreement or to realize upon the security to be
granted hereby, it being understood and agreed that such rights and remedies may
be exercised by the Administrative Agent or the Pledgee or the holders of at
least a majority of the outstanding Other Obligations, as the case may be, for
the benefit of the Secured Creditors upon the terms of this Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral pursuant to the
terms of this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied in the manner provided in the Security Agreement.
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(b) It is understood and agreed that the Pledgors shall remain
jointly and severally liable to the extent of any deficiency between the amount
of the proceeds of the Collateral hereunder and the aggregate amount of the
Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral
by the Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i)
to indemnify and hold harmless the Pledgee in such capacity and each other
Secured Creditor and their respective successors, assigns, employees, agents and
servants (individually an "Indemnitee," and collectively the "Indemnitees") from
and against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever kind or nature, and (ii) to
reimburse each Indemnitee for all costs and expenses, including reasonable
attorneys' fees, in each case growing out of or resulting from this Agreement or
the exercise by any Indemnitee of any right or remedy granted to it hereunder or
under any other Secured Debt Agreement (but excluding any claims, demands,
losses, judgments and liabilities or expenses to the extent incurred by reason
of gross negligence or willful misconduct of such Indemnitee (as finally
determined by a court of competent jurisdiction)). In no event shall the Pledgee
be liable, in the absence of gross negligence or willful misconduct on its part
(as finally determined by a court of competent jurisdiction), for any matter or
thing in connection with this Agreement other than to account for monies
actually received by it in accordance with the terms hereof. If and to the
extent that the obligations of any Pledgor under this Section 11 are
unenforceable for any reason, such Pledgor hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
12. PLEDGEE NOT BOUND. (a) Nothing herein shall be construed
to make the Pledgee or any other Secured Creditor liable as a general partner or
limited partner of any Pledged Partnership and the Pledgee or any other Secured
Creditor by virtue of this Agreement or otherwise (except as referred to in the
following sentence) shall not have any of the duties, obligations or liabilities
of a general partner or limited partner of any Pledged Partnership. The parties
hereto expressly agree that, unless the Pledgee shall become the absolute owner
of a Pledged Partnership Interest pursuant hereto, this Agreement shall not be
construed as creating a partnership or joint venture among the Pledgee, any
other Secured Creditor and/or any Pledgor.
(b) Except as provided in the last sentence of paragraph (a)
of this Section, the Pledgee, by accepting this Agreement, did not intend to
become a general partner or limited partner of any Pledged Partnership or
otherwise be deemed to be a co-venturer with respect to any Pledgor or any
Pledged Partnership either before or after an Event of Default shall have
occurred. The Pledgee shall have only those powers set forth herein and shall
assume none of the duties, obligations or liabilities of a general partner or
limited partner of any Pledged Partnership or of any Pledgor.
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(c) The Pledgee shall not be obligated to perform or discharge
any obligation of any Pledgor as a result of the security interest hereby
effected.
(d) The acceptance by the Pledgee of this Agreement, with all
the rights, powers, privileges and authority so created, shall not at any time
or in any event obligate the Pledgee to appear in or defend any action or
proceeding relating to the Collateral to which it is not a party, or to take any
action hereunder or thereunder, or to expend any money or incur any expenses or
perform or discharge any obligation, duty or liability under the Collateral.
13. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor
agrees that it will join with the Pledgee in executing and, at such Pledgor's
own expense, file and refile under the Uniform Commercial Code or other
applicable law such financing statements, continuation statements and other
documents in such offices as the Pledgee may reasonably deem necessary and
wherever required by law in order to perfect and preserve the Pledgee's security
interest in the Collateral and hereby authorizes the Pledgee to file financing
statements and amendments thereto relative to all or any part of the Collateral
without the signature of such Pledgor where permitted by law, and agrees to do
such further acts and things and to execute and deliver to the Pledgee such
additional conveyances, assignments, agreements and instruments as the Pledgee
may reasonably require or deem necessary to carry into effect the purposes of
this Agreement or to further assure and confirm unto the Pledgee its rights,
powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, to act from time to time solely after
the occurrence and during the continuance of an Event of Default in the
Pledgee's reasonable discretion to take any action and to execute any instrument
which the Pledgee may deem necessary or advisable to accomplish the purposes of
this Agreement.
14. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance
with this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed by each Secured Creditor that
by accepting the benefits of this Agreement each such Secured Creditor
acknowledges and agrees that the obligations of the Pledgee as holder of the
Collateral and interests therein and with respect to the disposition thereof,
and otherwise under this Agreement, are only those expressly set forth in this
Agreement. The Pledgee shall act hereunder on the terms and conditions set forth
herein and in Section 12 of the Credit Agreement.
15. TRANSFER BY THE PLEDGORS. No Pledgor will sell or
otherwise dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber any of the Collateral or any interest therein (except as may
be permitted in accordance with the terms of the Credit Agreement).
16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS.
Each Pledgor represents, warrants and covenants that (i) it is the legal, record
and beneficial owner of all Pledged Securities and Pledged Partnership Interests
pledged by it hereunder, subject to no Lien (except the Lien created by this
Agreement and, in the case of
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11
Pledged Partnership Interests, other Permitted Liens); (ii) it has full power,
authority and legal right to pledge all the Pledged Securities and Pledged
Partnership Interests pledged by it pursuant to this Agreement; (iii) this
Agreement has been duly authorized, executed and delivered by such Pledgor and
constitutes a legal, valid and binding obligation of such Pledgor enforceable in
accordance with its terms except to the extent that the enforceability hereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law);
(iv) except as have been obtained by the Pledgors as of the date hereof, no
consent of any other party (including, without limitation, any stockholder,
partner or creditor of such Pledgor or any of its Subsidiaries or any Pledged
Partnership) and no consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority is required to be obtained by such Pledgor in
connection with the execution, delivery or performance of this Agreement, the
validity or enforceability of this Agreement, the perfection or enforceability
of the Pledgee's security interest in the Collateral or, except for compliance
with or as may be required by applicable securities, antitrust and security
clearance laws, the exercise by the Pledgee of any of its rights or remedies
provided herein; (v) the execution, delivery and performance of this Agreement
by such Pledgor will not violate any provision of any applicable law or
regulation or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign, applicable to such
Pledgor, or of the certificate of incorporation or by-laws (or equivalent
organizational documents) of such Pledgor or of any securities issued by such
Pledgor or any of its Subsidiaries, or of any mortgage, indenture, lease, deed
of trust, loan agreement, credit agreement or other material contract, agreement
or instrument or undertaking to which such Pledgor or any of its Subsidiaries is
a party or which purports to be binding upon such Pledgor or any of its
Subsidiaries or upon any of their respective assets and will not result in the
creation or imposition of (or the obligation to create or impose) any lien or
encumbrance on any of the assets of such Pledgor or any of its Subsidiaries
except as contemplated by this Agreement; (vi) all the shares of Stock have been
duly and validly issued, are fully paid and non-assessable and are subject to no
options to purchase or similar rights; (vii) each of the Intercompany Notes
constitutes, or when executed by the obligor thereof will constitute, the legal,
valid and binding obligation of such obligor, enforceable in accordance with its
terms except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law); (viii) the
pledge, assignment and delivery to the Pledgee of the Securities (other than
uncertificated securities) pursuant to this Agreement creates a valid and
perfected first priority Lien in the Securities, and the proceeds thereof,
subject to no other Lien or to any agreement purporting to grant to any third
party a Lien on the property or assets of the Pledgor which would include the
Securities; (ix) each such Pledged Partnership Interest has been validly
acquired and is fully paid for (to the extent applicable) and is duly and
validly pledged hereunder; (x) each general or limited partnership agreement
delivered to the Pledgee is an original signed counterpart (or a copy thereof)
of the complete and entire such partnership agreement in effect on the date
hereof; (xi) each partnership agreement is the legal, valid and binding
obligation of each Pledgor, enforceable in accordance with its terms; (xii) the
pledge and assignment of the Pledged Partnership Interests pursuant to this
Agreement, together with the relevant filings or recordings under the UCC (which
filings and recordings have been or will be made), creates a valid,
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12
perfected and continuing first priority security interest in such Partnership
Interests and the proceeds thereof, subject to no prior lien or encumbrance or
to any agreement purporting to grant to any third party a lien or encumbrance on
the property or assets of such Pledgor which would include the Collateral;
(xiii) there are no currently effective financing statements under the UCC
covering any property which is now or hereafter may be included in the
Collateral and such Pledgor will not, without the prior written consent of the
Pledgee, execute and, until the Termination Date (as hereinafter defined), there
will not ever be on file in any public office any enforceable financing
statement or statements covering any or all of the Collateral, except financing
statements filed or to be filed in favor of the Pledgee as secured party; (xiv)
each Pledgor shall give the Pledgee prompt notice of any written claim it
receives relating to the Collateral; (xv) each Pledgor shall deliver to the
Pledgee a copy of each other demand, notice or document received by it which may
adversely affect the Pledgee's interest in the Collateral promptly upon, but in
any event within 10 days after, such Pledgor's receipt thereof; (xvi) a notice
in the form set forth in Annex D attached hereto and by this reference made a
part hereof (such notice the "Partnership Notice"), appropriately completed,
notifying each Pledged Partnership of the existence of this Agreement and a
certified copy of this Agreement have been delivered by each Pledgor to the
relevant Pledged Partnership, and to the extent obtainable by commercially
reasonable efforts, each such Pledgor has received and delivered to the
Collateral Agent an acknowledgment in the form set forth in Annex E attached
hereto (such acknowledgment, the "Partnership Acknowledgment"), duly executed by
the relevant Pledged Partnership; and (xvii) the chief executive office of such
Pledgor is set forth on Annex F hereto or such other office as such Pledgor may
establish in accordance with the terms of the Security Agreement. Each Pledgor
covenants and agrees that it will defend the Pledgee's right, title and security
interest in and to the Collateral against the claims and demands of all persons
whomsoever; and such Pledgor covenants and agrees that it will have like title
to and right to pledge any other property at any time hereafter pledged to the
Pledgee as Collateral hereunder and will likewise defend the right thereto and
security interest therein of the Pledgee and the other Secured Creditors.
17. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of
each Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever (other than for the indefeasible payment in full in cash
of all Obligations), including, without limitation: (i) any renewal, extension,
amendment or modification of or addition or supplement to or deletion from any
Secured Debt Agreement or any other instrument or agreement referred to therein,
or any assignment or transfer of any thereof; (ii) any waiver, consent,
extension, indulgence or other action or inaction under or in respect of any
such agreement or instrument including, without limitation, this Agreement;
(iii) any furnishing of any additional security to the Pledgee or its assignee
or any acceptance thereof or any release of any security by the Pledgee or its
assignee; (iv) any limitation on any party's liability or obligations under any
such instrument or agreement or any invalidity or unenforceability, in whole or
in part, of any such instrument or agreement or any term thereof; or (v) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to any Pledgor or any Subsidiary
of any Pledgor, or any action taken with respect to this Agreement by any
trustee or receiver, or by any court, in any such proceeding, whether or not
such Pledgor shall have notice or knowledge of any of the foregoing.
-12-
13
18. REGISTRATION, ETC. (a) If there shall have occurred and be
continuing an Event of Default then, and in every such case, upon receipt by any
Pledgor from the Pledgee of a written request or requests that such Pledgor
cause any registration, qualification or compliance under any Federal or state
securities law or laws to be effected with respect to all or any part of the
Pledged Stock of the Borrower, such Pledgor as soon as practicable and at its
expense will cause such registration to be effected (and be kept effective) and
will cause such qualification and compliance to be declared effected (and be
kept effective) as may be so requested and as would permit or facilitate the
sale and distribution of such Pledged Stock, including, without limitation,
registration under the Securities Act of 1933, as then in effect (or any similar
statute then in effect), appropriate qualifications under applicable blue sky or
other state securities laws and appropriate compliance with any other government
requirements, provided, that the Pledgee shall furnish to such Pledgor such
information regarding the Pledgee as such Pledgor may reasonably request in
writing and as shall be required in connection with any such registration,
qualification or compliance. Such Pledgor will cause the Pledgee to be kept
advised in writing as to the progress of each such registration, qualification
or compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars or other documents incident thereto
as the Pledgee from time to time may reasonably request, and will indemnify the
Pledgee, each other Secured Creditor and all others participating in the
distribution of such Pledged Stock against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in writing to such
Pledgor by the Pledgee or such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to
exercise its right to sell all or any part of the Pledged Securities or Pledged
Partnership Interests pursuant to Section 7 hereof, and such Pledged Securities
or Pledged Partnership Interests or the part thereof to be sold shall not, for
any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Securities or Pledged Partnership Interests, as the case may
be, or part thereof by private sale in such manner and under such circumstances
as the Pledgee may deem necessary or advisable in order that such sale may
legally be effected without such registration. Without limiting the generality
of the foregoing, in any such event the Pledgee, in its sole and absolute
discretion (i) may proceed to make such private sale notwithstanding that a
registration statement for the purpose of registering such Pledged Securities or
Pledged Partnership Interests or part thereof shall have been filed under such
Securities Act, (ii) may approach and negotiate with a single possible purchaser
to effect such sale, and (iii) may restrict such sale to a purchaser who will
represent and agree that such purchaser is purchasing for its own account, for
investment, and not with a view to the distribution or sale of such Pledged
Securities or Pledged Partnership Interests or part thereof. In the event of any
such sale, the Pledgee shall incur no responsibility or liability for selling
all or any part of the Pledged Securities or Pledged Partnership Interests at a
price which the Pledgee, in its sole and absolute discretion, in good xxxxx
xxxxx reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration as aforesaid.
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19. TERMINATION; RELEASE. (a) After the Termination Date (as
defined below), this Agreement and the security interest created hereby shall
terminate (provided that all indemnities set forth herein including, without
limitation, in Section 11 hereof shall survive any such termination), and the
Pledgee, at the request and expense of any Pledgor, will execute and deliver to
such Pledgor a proper instrument or instruments acknowledging the satisfaction
and termination of this Agreement, and will duly assign, transfer and deliver to
such Pledgor (without recourse and without any representation or warranty) such
of the Collateral as has not theretofore been sold or otherwise applied or
released pursuant to this Agreement, together with any moneys at the time held
by the Pledgee or any of its sub-agents hereunder. As used in this Agreement,
"Termination Date" shall mean the date upon which the Total Commitment and all
Interest Rate Protection Agreements and Other Hedging Agreements have been
terminated, all Loans have been repaid in full, all Letters of Credit have been
terminated and all Obligations then owing have been paid in full.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by Section 9.02 of the Credit Agreement (other
than a sale to any Pledgor or any Subsidiary thereof) or is otherwise released
at the direction of the Required Secured Creditors and the proceeds of such sale
or sales or from such release are applied in accordance with the provisions of
the Credit Agreement, to the extent required to be so applied, the Pledgee, at
the request and expense of any Pledgor, will duly assign, transfer and deliver
to such Pledgor (without recourse and without any representation or warranty)
such of the Collateral (and releases therefor) as is then being (or has been) so
sold or released and has not theretofore been released pursuant to this
Agreement.
(c) At any time that a Pledgor desires that the Pledgee
assign, transfer and deliver Collateral (and releases therefor) as provided in
Section 19(a) or (b) hereof, it shall deliver to the Pledgee a certificate
signed by a principal executive officer of such Pledgor stating that the release
of the respective Collateral is permitted pursuant to such Section 19(a) or (b).
(d) The Pledgee shall have no liability whatsoever to any
other Secured Creditor as the result of any release of Collateral by it in
accordance with this Section 19.
20. NOTICES, ETC. All such notices and communications
hereunder shall be sent or delivered by mail, telegraph, telex, telecopy, cable
or overnight courier service and all such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when delivered, or sent by telex or telecopier and shall
be effective upon receipt. All notices and other communications shall be in
writing and addressed as follows:
(a) if to any Pledgor, at the address set forth opposite such
Pledgor's signature below;
(b) if to the Pledgee, at:
Bankers Trust Company
One Bankers Trust Plaza
000 Xxxxxxx Xxxxxx
-00-
00
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000;
(c) if to any Bank Creditor, either (x) to the Administrative
Agent, at the address of the Administrative Agent specified in the
Credit Agreement or (y) at such address as such Bank Creditor shall
have specified in the Credit Agreement;
(d) if to any Other Creditor at such address as such Other
Creditor shall have specified in writing to the Pledgors and the
Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
21. WAIVER; AMENDMENT. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Pledgor directly affected
thereby and the Pledgee (with the written consent of the Required Secured
Creditors); provided, that any change, waiver, modification or variance
affecting the rights and benefits of a single Class (as defined below) of
Secured Creditors (and not all Secured Creditors in a like or similar manner)
shall also require the written consent of the Requisite Creditors (as defined
below) of such affected Class. For the purpose of this Agreement, the term
"Class" shall mean each class of Secured Creditors, i.e., whether (i) the Bank
Creditors as holders of the Credit Document Obligations or (ii) the Other
Creditors as the holders of the Other Obligations. For the purpose of this
Agreement, the term "Requisite Creditors" of any Class shall mean each of (i)
with respect to the Credit Document Obligations, the Required Banks and (ii)
with respect to the Other Obligations, the holders of at least a majority amount
of all obligations outstanding from time to time under the Interest Rate
Protection Agreements or Other Hedging Agreements.
22. MISCELLANEOUS. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of and be enforceable by each of the parties hereto and its
successors and assigns, provided that no Pledgor may assign any of its rights or
obligations under this Agreement without the prior consent of the Collateral
Agent. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK. The headings in this
Agreement are for purposes of reference only and shall not limit or define the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which shall constitute one
instrument. In the event that any provision of this Agreement shall prove to be
invalid or unenforceable, such provision shall be deemed to be severable from
the other provisions of this Agreement which shall remain binding on all parties
hereto.
23. RECOURSE. This Agreement is made with full recourse to the
Pledgors and pursuant to and upon all the representations, warranties, covenants
and agreements on the part of the Pledgors contained herein and in the other
Secured Debt Agreements and otherwise in writing in connection herewith or
therewith.
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16
24. FUTURE PLEDGORS. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement shall
automatically become a Pledgor hereunder by executing a counterpart hereof and
delivering the same to the Pledgee, at which time the Annexes to this Agreement
shall be appropriately modified to reflect the Collateral then owned by such
additional Pledgor.
25. MISCELLANEOUS. Notwithstanding anything to the contrary
contained herein or in the Credit Agreement, each Pledgor hereby covenants and
agrees that with respect to any Pledged Partnership Interest pledged by it
hereunder, such Pledgor will deliver to the respective Pledged Partnerships
(with copies to the Pledgee) a Partnership Notice (appropriately completed) and
such Pledgor will deliver to the Pledgee a Partnership Acknowledgment signed by
the respective Pledged Partnerships, in each case within 15 days following the
date any such Pledged Partnership Interests are pledged hereunder.
* * * *
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17
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
Address
SPECIAL DEVICES, INCORPORATED,
as a Pledgor
00000 X. Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Vice President
Telephone No.: (000) 000-0000 By: /s/ Xxxx X. Xxxxx
Telecopier No.: (000) 000-0000 ---------------------------
Name: Xxxx X. Xxxxx
Title: Chief Financial Officer
and
copy to:
X.X. Xxxxxx & Company, Inc.
000 Xxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
XXXX, INCORPORATED,
as a Pledgor
0000 Xxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxx Xxxxxx
Telephone No.: (000) 000-0000 By: /s/ Xxxx X. Xxxxx
Telecopier No.: (000) 000-0000 ---------------------
Name: Xxxx X. Xxxxx
Title: Vice President
and
copy to:
X.X. Xxxxxx & Company, Inc.
000 Xxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
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18
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Collateral Agent
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
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19
ANNEX A
to
PLEDGE AGREEMENT
LIST OF STOCK
I. Special Devices, Incorporated
Percentage of
Name of Issuing Certificate Type of Number of Outstanding Shares of
Corporation Number Shares Shares Capital Stock
--------------------------- ----------- ------- --------- ----------------------
Xxxx, Incorporated 2 Common 1,000 100%
II. Xxxx, Incorporated
Percentage of
Name of Issuing Certificate Type of Number of Outstanding Shares of
Corporation Number Shares Shares Capital Stock
--------------------------- ----------- ------- --------- ----------------------
None.
20
ANNEX B
to
PLEDGE AGREEMENT
LIST OF NOTES
I. Special Devices, Incorporated
Principal Amount Maturity Date
Obligor (if any) (if any)
------------------ ---------------- -------------
Xxxx, Incorporated Intercompany Note Demand
II. Xxxx, Incorporated
Principal Amount Maturity Date
Obligor (if any) (if any)
----------------------------- -------------
Special Devices, Incorporated Intercompany Note Demand
21
ANNEX C
to
PLEDGE AGREEMENT
PARTNERSHIP INTERESTS
I. Special Devices, Incorporated
Pledged Partnership Percentage Owned Type of Interest
None.
II. Xxxx, Incorporated
Pledged Partnership Percentage Owned Type of Interest
None.
22
ANNEX D
to
PLEDGE AGREEMENT
FORM OF PARTNERSHIP NOTICE
[Letterhead of Pledgor]
-------- --, ----
TO: [Name of Pledged Partnership]
Notice is hereby given that pursuant to a Pledge Agreement (a
true and correct copy of which is attached hereto), dated as of December 15,
1998 (as amended, modified or supplemented from time to time in accordance with
the terms thereof, the "Pledge Agreement"), among [NAME OF PLEDGOR] (the
"Pledgor"), the other pledgors from time to time party thereto and Bankers Trust
Company (the "Pledgee"), as Collateral Agent on behalf of the Secured Creditors
described therein, the Pledgor has pledged and assigned to the Pledgee for the
benefit of the Secured Creditors, and granted to the Pledgee for the benefit of
the Secured Creditors, a continuing security interest in, all right, title and
interest of the Pledgor, whether now existing or hereafter arising or acquired,
as a [limited] [general] partner in [NAME OF PLEDGED PARTNERSHIP] (the
"Partnership"), and in, to and under the [TITLE OF APPLICABLE PARTNERSHIP
AGREEMENT] (the "Partnership Agreement"), including, without limitation:
(i) the Pledgor's interest in all of the capital of the
Partnership and the Pledgor's interest in all profits, losses,
Partnership Assets (as defined in the Pledge Agreement) and other
distributions to which the Pledgor shall at any time be entitled in
respect of such partnership interest;
(ii) all other payments due or to become due to the Pledgor in
respect of such partnership interest, whether under the Partnership
Agreement or otherwise, whether as contractual obligations, damages,
insurance proceeds or otherwise;
(iii) all of the Pledgor's claims, rights, powers, privileges,
authority, options, security interest, liens and remedies, if any,
under the Partnership Agreement or at law or otherwise in respect of
such partnership interest;
(iv) all present and future claims, if any, of the Pledgor
against the Partnership for moneys loaned or advanced, for services
rendered or otherwise;
(v) all of the Pledgor's rights under the Partnership
Agreement or at law to exercise and enforce every right, power, remedy,
authority, option and privilege of the Pledgor relating to the
partnership interest, including any power to terminate, cancel or
modify the Partnership Agreement, to execute any instruments and to
take any and all other action on behalf of and in the name of the
Pledgor in respect of the Partnership Interest and the Partnership, to
make determinations, to exercise any election (including, but not
limited, election of remedies) or option or to give or receive any
notice, consent, amendment, waiver or approval, together with full
power and authority to demand,
23
Annex D
Page 2
receive, enforce, collect or receipt for any of the foregoing or for
any Partnership Asset, to enforce or execute any checks, or other
instruments or orders, to file any claims and to take any action in
connection with any of the foregoing;
(vi) all other property hereafter delivered to the Pledgor in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such other
property and all cash, securities, interest, dividends, distributions,
rights and other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all thereof; and
(vii) to the extent not otherwise included, all proceeds of
any or all of the foregoing.
The Pledgor hereby irrevocably agrees and authorizes and
directs the Partnership that instructions originated by the Pledgee on behalf of
the Secured Creditors with respect to the Pledgor's claims, rights, interests,
powers, remedies, authorities, options and privileges set forth above shall, if
such instructions state that an "Event of Default" has occurred and is
continuing, unless written notice to the contrary is given by the Pledgee to the
Partnership, be complied with by the Partnership, without further consent by the
Pledgor and notwithstanding contrary instructions given by the Pledgor.
The Pledgor hereby requests the Partnership to indicate the
Partnership's acceptance of this Notice and consent to and confirmation of its
terms and provisions by signing a copy hereof where indicated on the attached
page and returning the same to the Pledgee on behalf of the Secured Creditors.
[NAME OF PLEDGOR]
By:_____________________________
Name:
Title:
24
ANNEX E
to
PLEDGE AGREEMENT
FORM OF ACKNOWLEDGMENT
[NAME OF PLEDGED PARTNERSHIP] (the "Partnership") hereby
acknowledges receipt of a copy of the assignment by [NAME OF PLEDGOR]
("Pledgor") of its interest under the [TITLE OF APPLICABLE PARTNERSHIP
AGREEMENT] (the "Partnership Agreement") pursuant to the terms of the Pledge
Agreement, dated as of December 15, 1998 (as amended, modified or supplemented
from time to time in accordance with the terms thereof, the "Pledge Agreement"),
among the Pledgor, the other pledgors from time to time party thereto and
Bankers Trust Company (the "Pledgee"), as Collateral Agent on behalf of the
Secured Creditors described therein. The undersigned hereby further confirms the
registration of the Pledgor's pledge of its interest to the Pledgee on behalf of
the Secured Creditors on the Partnership's books.
The Partnership hereby irrevocably agrees to comply with the
instructions originated by the Pledgee, on behalf of the Secured Creditors, of
the type and containing the certification referred to in the penultimate
paragraph of the Partnership Notice dated ___________ __, ____ signed by the
Pledgor without further consent by the Pledgor and notwithstanding contrary
instructions given by the Pledgor. The undersigned further hereby irrevocably
agrees, except upon the prior written consent of the Pledgee, not to honor any
such instructions given by any other person or entity.
Dated: ___________ __, ____
[NAME OF PLEDGED PARTNERSHIP]
By:_____________________________
Name:
Title:
25
ANNEX F
to
PLEDGE AGREEMENT
CHIEF EXECUTIVE OFFICE LOCATIONS
I. Special Devices, Incorporated
Xxxxxx Xxxxxxxxx Xxxxxx
00000 X. Xxxxxxxxx Xxxxxx Xxxx Xxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Vice President
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
II. Xxxx, Incorporated
Office Locations County
0000 Xxxxxxx Xxxxxx Du Page
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
