EXHIBIT 10.4 - SUBORDINATED PLEDGE AGREEMENT
SUBORDINATED PLEDGE AGREEMENT
This Subordinated Pledge Agreement (as the same may be amended, restated,
modified, or supplemented from time to time, the "AGREEMENT") dated as of June
30, 2000, is made by each of the entities set forth under the heading "Pledgors"
on the execution pages of this Agreement (collectively, the "PLEDGORS" and
individually, each a "PLEDGOR") whose addresses are set forth on the execution
pages hereof in favor of SJMB, L.P., a Delaware limited partnership ("SJMB") as
agent (herein so called) for itself and any other holder from time to time (SJMB
as Agent, the "SECURED PARTY").
WITNESSETH:
WHEREAS, Industrial Holdings, Inc. ("IHI"), and SJMB have entered into the
following agreements: (1) that certain Reimbursement Agreement dated as of June
13, 2000, between IHI, and SJMB (the "REIMBURSEMENT AGREEMENT"), pursuant to
which the Company is required to issue to SJMB certain promissory notes (the
"SUBORDINATED REIMBURSEMENT NOTES"); and (2) that certain Letter Agreement dated
as of June 30, 2000, among IHI, SJMB, OF Acquisition, L.P., St. Xxxxx
Management, L.L.C. and Philform, Inc. (the "OF LETTER AGREEMENT"), pursuant to
which, among other things, IHI shall issue one or more promissory notes to SJMB
in the aggregate principal amount of $6,900,000 (whether one or more, the "OF
NOTE", and together with the Subordinated Reimbursement Notes, the "NOTES"); all
of the foregoing documents, together with all related documents referred to
herein as the "TRANSACTION DOCUMENTS";
WHEREAS, pursuant to that certain Amended and Restated Credit Agreement
dated June 17, 1999, as amended (the "SENIOR CREDIT FACILITY"), among IHI as
Borrower and Comerica Bank-Texas, National Bank of Canada and Hibernia National
Bank as Lenders (the "SENIOR LENDERS"), IHI is indebted to the Senior Lenders as
provided therein;
WHEREAS, pursuant to the Amended and Restated Pledge Agreement, Pledgors
have pledged shares of stock (the "PLEDGED SHARES") to secure the obligations
under the Senior Credit Facility;
WHEREAS, SJMB have agreed to subordinate their right of payment by IHI
under the Transaction Documents, and any liens securing such obligations and the
right to exercise any remedy, to the rights and liens of the Senior Lenders
under the Senior Credit Facility (such liens referred to herein as the "SENIOR
LIENS") and the other agreements and documents referred to therein, all as more
fully described in that certain Subordination Agreement dated the date hereof
among IHI, SJMB, the Senior Lenders and the Agent (the "SUBORDINATION
AGREEMENT");
WHEREAS, pursuant to the terms of the Transaction Documents, Pledgors have
agreed to grant to Secured Party a second lien on the Pledged Shares;
WHEREAS, each of the Pledgors will benefit, directly or indirectly, from
the execution of this Agreement and the granting of a security interest in the
"Pledged Collateral" (hereinafter defined) in which each Pledgor, respectively,
has any right, title or interest as security for all of the "Secured
Obligations" (hereinafter defined);
WHEREAS, it is a condition precedent to the obligations of SJMB under the
Transaction Documents that the Pledgors shall execute and deliver this Agreement
to the Secured Party; and
WHEREAS, the Pledgors desire to execute this agreement in order to satisfy
such condition precedent and to secure the Obligations under the Loan Agreement.
NOW THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
J-1
Section 1. DEFINED TERMS AND RELATED MATTERS.
(a) Each capitalized term used herein (including, without
limitation, in the introductory paragraph and recitals hereof) and not
defined herein shall have the meaning assigned to such term in the
Purchase Agreement.
(b) "PERMITTED LIENS" has the meaning as ascribed in the Purchase
Agreement.
(c) "SECURED OBLIGATIONS" means the "Obligations" as defined in the
Security Agreement.
(d) "UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of Texas; PROVIDED that if by mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
security interests granted pursuant to SECTION 2 hereof, as well as all
other security interests created or assigned as additional security for
the Secured Obligations pursuant to the provisions of this Agreement is
governed by the UCC as in effect in another jurisdiction, "UCC" means the
UCC as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or
non-perfection.
Section 2. PLEDGES. Subject to the prior interests of the Senior Lenders and the
terms of the Subordination Agreement, the Pledgors hereby pledge to the Secured
Party and grant to the Secured Party, a lien and security interest in the
following collateral (collectively, the "PLEDGED COLLATERAL") as set forth
below:
(i) One hundred percent (100%) of the Shares (collectively, the
"PLEDGED SHARES") as evidenced by the stock certificates identified in
SCHEDULE I hereto, and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of, or in exchange for, any or all of the Pledged Shares;
(ii) All additional shares of stock of the issuer of such stock from
time to time acquired by any Pledgor in any manner, and the certificates,
if any, representing such additional shares and/or ownership interests,
and all dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of such shares and/or ownership interests; and
(iii) All proceeds of any of the foregoing.
The inclusion of proceeds in this Agreement does not authorize the
Pledgors to sell, dispose of or otherwise use the Pledged Collateral in
any manner not specifically authorized hereby.
Section 3. SECURITY FOR OBLIGATIONS. Subject to the prior interests of the
Senior Lenders and the terms of the Subordinated Agreement, this Agreement
secures the prompt and complete payment and performance of the Secured
Obligations owing to SJMB.
Section 4. DELIVERY OF PLEDGED COLLATERAL. Subject to the terms of the
Subordination Agreement, all certificates, if any, representing or evidencing
the Pledged Collateral shall be delivered to and held by the Agent, and shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Secured Party. Subject to the rights of the Senior
Lenders, the Secured Party shall have the right at any time to exchange
certificates representing or evidencing the Pledged Collateral for certificates
of smaller or larger denominations.
Section 5. REPRESENTATIONS AND WARRANTIES. Each of the Pledgors hereby
represents and warrants as follows:
(a) This Agreement is a legal, valid and binding obligation of the
Pledgors enforceable against the Pledgors in accordance with its terms,
except as enforceability may be (i) limited by applicable liquidation,
conservatorship, bankruptcy, moratorium, arrangement, receivership,
insolvency, reorganization or similar laws and (ii) subject to the effect
of general principles of equity (regardless of whether such enforceability
is considered in a proceeding to be in equity or at law).
J-2
(b) The Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable.
(c) The Pledgors are the legal and beneficial owners of the Pledged
Collateral free and clear of any lien, security interest, option or other
charge or encumbrance except for the Permitted Liens and the security
interests created by this Agreement.
(d) No authorization, approval, or other action by, and no notice to
or filing with, any Governmental Authority is required either (i) for the
pledge by the Pledgors of the Pledged Shares pursuant to this Agreement or
for the execution, delivery or performance of this Agreement by the
Pledgors or (ii) for the exercise by the Secured Party of the voting or
other rights provided for in this Agreement (except as may be required in
connection with such disposition by laws affecting the offering and sale
of securities generally).
Section 6. FURTHER ASSURANCES.
(a) Each Pledgor agrees that from time to time, at the reasonable
expense of the Pledgor, each Pledgor will promptly execute and deliver all
further instruments and documents, and take all further action, that the
Secured Party may reasonably request as being necessary or desirable, in
order to perfect and protect any security interest granted or purported to
be granted hereby or to enable the Secured Party to exercise and enforce
its rights and remedies hereunder with respect to any Pledged Collateral.
Without limiting the generality of the foregoing, each Pledgor will
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices as the Secured Party may
reasonably request as being necessary or desirable in order to perfect and
preserve the security interests granted or purported to be granted hereby.
(b) Each Pledgor hereby authorizes the Secured Party to file one or
more financing or continuation statements, and amendments thereto,
relative to all or any part of the Pledged Collateral without the
signature of such Pledgor, in each case where permitted by law. A carbon,
photographic or other reproduction of any financing statement executed by
each Pledgor covering the Pledged Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(c) Each Pledgor will furnish to the Secured Party from time to time
statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged
Collateral as the Secured Party may reasonably request, all in reasonable
detail.
(d) Each Pledgor will promptly notify the Secured Party of any
change of its name, corporate structure, federal employer identification
number or the address of its principal place of business or chief
executive office where its books and records are maintained.
Section 7. VOTING-RIGHTS.
(a) So long as no Event of Default shall have occurred and be
continuing, the Pledgors shall be entitled to exercise any and all voting
and other rights pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms of this Agreement or the
Transaction Documents.
(b) Upon the occurrence and during the continuance of an Event of
Default, and subject to the provisions of the Subordination Agreement all
rights of the Pledgors to exercise the voting rights which they would
otherwise be entitled to exercise pursuant to SECTION 7(A) hereof shall
cease for so long as such Event of Default shall continue, and subject
only to the rights of the Agent, the Secured Party shall thereupon have
the right to exercise such voting rights.
Section 8. DIVIDENDS AND OTHER DISTRIBUTIONS. Subject to the provisions of the
Subordination Agreement and subject to the rights of the Senior Lenders, if
dividends or other distributions and/or payments with respect to the Pledged
Collateral are received by the Pledgors other than in accordance with the terms
of the Transaction
J-3
Documents, such dividends shall be received in trust for the benefit of the
Secured Party, shall be segregated from other funds of the Pledgors and shall be
forthwith paid over to the Secured Party as Pledged Collateral in the same form
as so received.
Section 9. TRANSFERS AND OTHER LIENS: ADDITIONAL SHARES.
(a) The Pledgors shall not: (i) sell, assign (by agreement,
operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, any of the Pledged Collateral or (ii) create or
permit to exist any Lien upon or with respect to any of the Pledged
Collateral, except for the Permitted Liens and for the security interest
created by this Agreement.
(b) The Pledgors agree that they will (i) cause the companies that
issued the shares or ownership interests that constitute the Pledged
Collateral not to issue any stock, other securities or ownership interests
in addition to, or in substitution for, the Pledged Collateral, except to
the Pledgor and (ii) subject to the rights of Agent, pledge to the Secured
Party hereunder, immediately upon such acquisition (directly or
indirectly) thereof, any and all additional shares of stock, other
securities or other ownership interests of such companies, subject,
however, to the proviso set forth in clause ii of SECTION 2 hereinabove.
Section 10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Subject to the provisions
of the Subordination Agreement and subject to the rights of the Senior Lenders,
the Pledgors hereby irrevocably appoint the Secured Party as the Pledgors'
attorney-in-fact, with full authority in the place and stead of the Pledgors and
in the name of the Pledgors, from time to time in the Secured Party's sole
discretion after the occurrence of an Event of Default to take any action and to
execute any instrument which the Secured Party may deem necessary or advisable
to accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all certificates made payable to the Pledgors
representing any dividend or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same. Subject
to the provisions of the Subordination Agreement and upon the occurrence and
during the continuance of an Event of Default, the Secured Party shall, subject
to the rights of the Senior Lenders, have the right, in its sole discretion and
without notice to the Pledgors, to transfer to or to register in the name of the
Secured Party or any of its nominees, for the benefit of the itself and the
Lenders, any or all of the Pledged Collateral.
Section 11. SECURED PARTY MAY PERFORM. Subject to the rights of the Senior
Lenders, if the Pledgors fail to perform any agreement contained herein, the
Secured Party may itself perform, or cause performance of, such agreement, and
the reasonable expenses of the Secured Party incurred in connection therewith
shall be payable upon demand (subject to the terms of the Loan Agreement) by
such Pledgor and if not paid shall bear interest at the Default Rate set forth
in the Loan Agreement.
Section 12. THE SECURED PARTY'S DUTIES. The powers conferred on the Secured
Party hereunder are solely to protect its interest in the Pledged Collateral and
shall not impose any duty upon it to exercise any such powers. In regard to any
Pledgor, except for reasonable care in the custody of any Pledged Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Secured Party shall have no duty as to any Pledged Collateral or as to the
taking of any reasonably necessary steps to preserve rights against prior
parties or any other rights pertaining to any Pledged Collateral. The Secured
Party shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the Pledged
Collateral is accorded treatment substantially equal to that which the Secured
Party accords its own property, it being understood that the Secured Party shall
not have any responsibility for (a) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Collateral, whether or not the Secured Party has or is deemed to
have knowledge of such matters, or (b) taking any necessary steps to preserve
rights against any parties with respect to any Pledged Collateral.
Section 13. REMEDIES UPON DEFAULT. Subject to the provisions of the
Subordination Agreement, if any Event of Default shall have occurred and be
continuing:
(a) Subject to the rights of the Senior Lenders, the Secured Party
may exercise in respect of the Pledged Collateral, in addition to other
rights and remedies provided for herein or otherwise available to
J-4
it, all the rights and remedies of a secured party under the UCC
(whether or not the UCC applies to the affected Collateral), and the
Secured Party may also, without notice except as specified below, sell the
Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any of the Secured
Party's offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Secured Party may deem commercially
reasonable. Each Pledgor agrees that, to the extent notice of sale shall
be required by applicable law, at least ten (10) days' notice to the
Pledgors of the time and place of any public sale or of the time after
which any private sale is to be made shall constitute reasonable
notification thereof. Subject to the rights of the Senior Lenders, the
Secured Party shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Secured
Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(b) Any cash received by the Secured Party shall be applied first to
repay the reasonable costs and expenses of the Secured Party and
thereafter to repay the Secured Obligations. Any surplus of such cash or
cash proceeds held by the Secured Party and remaining after payment in
full of all the Secured Obligations shall be paid over to the Pledgors or
to whomsoever may be lawfully entitled to receive such surplus.
(c) In connection with the sale of any Pledged Collateral, the
Secured Party, as applicable, is authorized, but not obligated, to limit
prospective purchasers to the extent deemed necessary or desirable by the
Secured Party to render such sale exempt from the registration
requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), and any applicable state laws and regulations, and no sale so made
in good faith by the Secured Party shall be deemed not to be "commercially
reasonable" because so made.
(d) All rights and remedies of the Secured Party expressed herein
are in addition to all other rights and remedies possessed by the Secured
Party under the Loan Agreement and any other agreement or instrument
relating to the Obligations.
Section 14. ADDITIONAL PROVISIONS CONCERNING ,SALES OF PLEDGED COLLATERAL.
(a) The Pledgors recognize that the Secured Party may be unable to
effect a public sale of any or all of the Pledged Collateral by reason of
certain prohibitions contained in the laws of any jurisdiction outside the
United States or in the Securities Act and applicable state securities
laws, but may instead be compelled to resort to one or more private sales
thereof to a restricted group of purchasers who shall be obligated to
agree, among other things, to acquire such Pledged Collateral for their
own account for investment and not with a view to the distribution or
resale thereof. The Pledgors acknowledge and agree that any such private
sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale arid, notwithstanding such
circumstances, agree that any such private sale shall, to the extent
permitted by law, be deemed to have been made in a commercially reasonable
manner. The Secured Party shall not be under any obligation to delay sale
of any of the Pledged Collateral for the period of time necessary to
permit the Pledgors to register such securities under the laws of any
jurisdiction outside the United States, under the Securities Act or under
any applicable state securities laws, even if the Pledgors would agree to
do so.
(b) The Pledgors further agree to do or cause or be done, to the
extent that the Pledgors may legally do so, all such other acts and things
as may be necessary to make such sales or resales of any portion or all of
the Pledged 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 Authorities,
domestic or foreign, having jurisdiction over any such sale or sales, all
at the Pledgors' expense. The Pledgors further agree that a breach of any
of the covenants contained in this Section shall cause irreparable injury
to the Secured Party, and that the Secured Party has no adequate remedy at
law in respect of such breach and, as a consequence, agrees that each and
every covenant contained in this Section shall be specifically enforceable
against the Pledgors, and, to the fullest extent permitted by law, the
Pledgors hereby waive and agree not to assert as a defense against an
action for specific performance of such covenants that (i) the Pledgors'
failure to perform such covenants shall not
J-5
cause irreparable injury to the Secured Party or the Lenders or (ii)
the Secured Party has an adequate remedy at law in respect of such breach.
Section 15. INDEMNITY AND EXPENSES.
(a) The Pledgors hereby agree to indemnify the Secured Party from
and against any and all claims, losses and liabilities growing out of or
resulting from enforcement of this Agreement, except claims, losses or
liabilities, if any, resulting from the Secured Party's gross negligence
or willful misconduct. SUBJECT TO THE FOREGOING, IT IS THE EXPRESS
INTENTION OF THE PLEDGORS THAT THE SECURED PARTY SHALL BE INDEMNIFIED AND
HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS,
DEFICIENCIES, JUDGMENTS OR EXPENSES ARISING OUT OF OR RESULTING FROM THE
ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE OF ANY SUCH PERSON OR IMPOSED
UPON ANY SUCH PERSON UNDER ANY THEORY OF STRICT LIABILITY.
(b) The Pledgors shall, upon demand, but subject to the terms of the
Loan Agreement, pay to the Secured Party the amount of any and all
reasonable expenses, including the reasonable fees and expenses of the
such party's counsel and of its experts, that the Secured Party may incur
in connection with (i) administration of this Agreement, (ii) the
evaluation, appraisal, custody or preservation of, or sale of, collection
from, or other realization upon any of the Pledged Collateral, (iii) the
exercise or enforcement of any of the rights of the Secured Party for
itself and hereunder or (iv) the failure by the Pledgors to perform or
observe any of the provisions of this Agreement. Each Pledgor agrees to
pay interest on any sums payable to the Secured Party hereunder that are
not paid when due at a rate per annum equal to the Default Rate set forth
in the Loan Agreement.
Section 16. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by the Pledgors herefrom, shall in any
event be effective unless the same shall be in writing and signed by the Secured
Party and the Pledgors, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose of which given.
Section 17. ADDRESSES FOR NOTICES. All notices and other communications provided
for hereunder shall be given in the manner and at the addresses for the Pledgors
and the Secured Party as set forth in the Loan Agreement, and shall become
effective as specified therein.
Section 18. WAIVER OF MARSHALING. All rights of marshaling of assets of the
Pledgors, including any such right with respect to the Pledged Collateral, are
hereby waived by the Pledgors.
Section 19. LIMITATION BY LAW. All rights, remedies and powers provided in this
Agreement may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they shall not render this Agreement invalid, unenforceable, in whole or in
part, or not entitled to be recorded, registered or filed under the provisions
of any applicable law.
Section 20. SEVERABILITY. Should any clause, sentence, paragraph, subsection or
Section of this Agreement be judicially declared to be invalid, unenforceable or
void, such decision shall not have the effect of invalidating or voiding the
remainder of this Agreement, and the parties hereto agree that the part or parts
of this Agreement so held to be invalid or unenforceable shall be deemed to have
been stricken herefrom by the parties hereto, and the remainder of this
Agreement shall have the same force and effectiveness as if such stricken part
or parts had never been included herein.
Section 21. TERMINATION REINSTATEMENT.
(a) Each Pledgor agrees that this Agreement and the Liens granted
hereunder shall terminate when, but only when, all Secured Obligations
have been fully and finally paid and performed, and all of the obligations
of IHI under the Transaction Documents have expired or been terminated. At
any time thereafter upon the Pledgor's request, the Secured Party shall
promptly reassign and redeliver, including the
J-6
termination of any financing statements (or cause to be reassigned
and redelivered) to the Pledgors, or to such Person or Persons as the
Pledgors shall designate in writing, against receipt, such of the Pledged
Collateral (if any) as shall not have been sold or otherwise applied by
the Secured Party for the benefit of itself or the Lenders pursuant to the
terms hereof and shall still be held by it hereunder. Any such
reassignment shall be without recourse upon, or representation or warranty
by, the Secured Party (other than that the Secured Party has not sold,
encumbered or otherwise transferred any interest in the Collateral except
as provided in this Agreement) and shall be at the sole reasonable cost
and expense of the Pledgors.
(b) This Agreement shall continue to be effective or be reinstated,
as the case may be, if at any time any amount received by the Secured
Party in respect of the Secured Obligations is rescinded or must otherwise
be restored or returned by the Secured Party upon the filing of any
bankruptcy proceeding by or of the Pledgors or upon the appointment of any
intervenor or conservator of, or trustee or similar official for, the
Pledgors or any substantial part of their assets, or otherwise, all as
though such payments had not been made.
Section 22. NO WAIVER REMEDIES. No failure on the part of the Secured Party to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by applicable law.
Section 23. CONTINUING SECURITY INTEREST: TRANSFER OF THE NOTE. This Agreement
creates a continuing security interest in the Pledged Collateral and shall (a)
remain in full force and effect until the full and final payment and performance
of the Secured Obligations after the Lender shall have no further obligation
under the Transaction Documents, (b) be binding upon each Pledgor, its
successors and assigns and (c) inure to the benefit of the Secured Party and its
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (d), the Lender may assign or otherwise transfer all or
a portion of its interests, rights and obligations in the Pledged Collateral
held by it pursuant to the Loan Agreement, the Loan Agreement, or any other
Transaction Document, to any other Person in accordance with the terms of such
agreement, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Secured Party herein or otherwise.
Upon the termination of the Secured Obligations, the Liens granted hereby in
accordance with the foregoing shall revert to Pledgors, and the Secured Party
will, at the Pledgors' sole cost and expense, promptly execute and deliver to
the Pledgor such documents as the Pledgor shall reasonably request to evidence
such termination.
Section 24. SECURITY INTEREST ABSOLUTE. All rights of the Secured Party and
security interests hereunder, and all obligations of the Pledgors hereunder,
shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Loan Agreement,
the Note, or any other Transaction Document;
(b) any change in the time, manner or place or payment of, or in any
other term of all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Loan
Agreement, the Note or any other Transaction Documents;
(c) any exchange, release or non-perfection of any other collateral,
or any, release or amendment or waiver of or consent to departure from any
guaranty for all or any of the Secured Obligations; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgors or any other third
party.
Section 25. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA (WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAWS),
EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT
THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
J-7
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF TEXAS.
Section 26. INCONSISTENCIES. In the event of any irreconcilable inconsistencies
between any provision of this Agreement and any provision of the Loan Agreement
and/or the Transaction Documents, the provisions of the Loan Agreement shall
control.
Section 27. INTERPRETATION.
(a) In this Agreement, unless a clear contrary intention appears:
(i) the singular number includes the plural number and vice
versa;
(ii) the words "herein," "hereof' and "hereunder" and other
words of similar import refer to this Agreement as a whole and not
to any particular Article, Section or other subdivision;
(iii) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors
and assigns are permitted by this Agreement, and reference to a
Person in a particular capacity excludes such Person in any other
capacity or individually, provided that nothing in this clause (iii)
is intended to authorize any assignment not otherwise permitted by
this Agreement;
(iv) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or Section
hereof or such Schedule or Exhibit hereto;
(v) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(vi) with respect to the determination of any period of time,
the word "from" means "from and including" and the word "to" means
"to but excluding"; and
(vii) reference to any law means such as amended, modified,
codified or reenacted, in whole or in part, and in effect from time
to time.
(b) The Section headings herein are for convenience only and shall
not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted or construed
against any Person solely because that Person or its legal representative
drafted such provision.
Section 28. SUBMISSION TO JURISDICTION.
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
AND THE OTHER TRANSACTION DOCUMENTS MAY BE BROUGHT BY THE SECURED PARTY IN
XXX XXXXXX XX XXXXXX XXXXXX, XXXXX XX XXXXX, XXX XXXXXX XXXXXX FOR THE
SOUTHERN DISTRICT OF TEXAS AT THE ELECTION OF THE SECURED PARTY, OR IN
SUCH COURTS AS MAY BE REQUIRED BY MANDATORY PROVISIONS OF LAW. BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PLEDGOR HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS WITH RESPECT TO ANY SUCH
ACTION OR PROCEEDING. EACH PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS PROVIDED FOR IHI IN
SECTION 30 HEREOF. SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER
SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE SECURED PARTY
OR ANY OF THE
J-8
PARTIES TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE PLEDGORS IN
ANY OTHER JURISDICTION.
(b) EACH PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID
ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
Section 29. WAIVER OF JURY TRIAL. Each Pledgor hereby waives, to the extent
permitted by applicable law, any right to a trial by jury in any action or
proceeding to enforce or defend any rights under this Agreement or under any
amendment, instrument, document or agreement delivered or which may in the
future be delivered in connection herewith or arising from or relating to any
banking or financial relationship existing in connection with this Agreement.
And agrees, to the extent permitted by applicable law, that any such action or
proceeding shall be tried before a court and not before a jury.
Section 30. NOTICE; ADDRESS OF PARTIES. Except as otherwise provided, all
communications to the Company or SJMB provided for herein or with reference to
this Reimbursement Agreement shall be deemed to have been sufficiently given or
served for all purposes on the third business day after being sent as certified
or registered mail, postage and charges prepaid, to the following addresses:
If to The Company: Industrial Holdings, Inc.
0000 Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: President
Telecopy: (000) 000-0000
or at any other address designated by the Company in writing to St. Xxxxx;
If to St. Xxxxx: SJMB, L.P.
000 Xxxx Xxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
or at any other address designated by St. Xxxxx to the Company in writing.
Section 31. SECOND LIEN. Notwithstanding anything to the contrary contained
herein, the liens granted by Pledgors to Secured Party are secondary and
inferior to those certain liens granted by Pledgors to the Agent under the
Senior Credit Facility.
J-9
IN WITNESS WHEREOF, the Pledgors have caused this Agreement to be duly
executed and delivered as of the date first above written.
PLEDGORS:
Industrial Holdings, Inc., a Texas
corporation
BY:________________________________________
NAME:
TITLE:
The Xxx Group, Inc., a Texas corporation
BY:________________________________________
NAME:
TITLE:
GHX, Incorporated, a Texas corporation
BY:________________________________________
NAME:
TITLE:
Pipeline Valve Specialty, Inc., a Texas
corporation
BY:________________________________________
NAME:
TITLE:
LSS - Lone Star- Houston, Inc.
BY:________________________________________
NAME:
TITLE:
J-10
United Wellhead Service, Inc., a Texas
corporation
BY:________________________________________
NAME:
TITLE:
SJMB, L.P.,
a Delaware limited partnership, as Agent
By: SJMB, L.L.C., General Partner
BY:
NAME:
TITLE:
J-11
