EXHIBIT 10.5
PLEDGE AGREEMENT
----------------
PLEDGE AGREEMENT, dated as of November 7, 1996 (as amended, modified
or supplemented from time to time, the "Agreement"), made by each of the
undersigned (each, a "Pledgor" and collectively, the "Pledgors"), in favor
of BANKERS TRUST COMPANY, as Collateral Agent (the "Pledgee"), for the
benefit of the Secured Creditors (as defined below). Except as otherwise
defined herein, 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, Motors and Gears Industries, Inc. (the "Borrower"), various
financial institutions from time to time party thereto (the "Banks"), and
Bankers Trust Company, as Agent (the "Agent", and together with the Banks
and the Pledgee, the "Bank Creditors"), have entered into a Credit
Agreement, dated as of November 7, 1996, providing for the making of Loans
to the Borrower and the issuance of, and participation in, Letters of
Credit for the account of the Borrower as contemplated therein (as used
herein, the term "Credit Agreement" means the Credit Agreement described
above in this paragraph as amended, modified, extended, renewed, replaced,
restated, supplemented, restructured or refinanced from time to time, and
including any agreement extending the maturity of, refinancing or
restructuring (including, but not limited to, the inclusion of additional
borrowers thereunder that are Subsidiaries of the Borrower and whose
obligations are guaranteed by the Borrower thereunder or any increase in
the amount borrowed) all, or any portion of, the Indebtedness under such
agreement or any successor agreements; provided, that with respect to any
agreement providing for the refinancing of Indebtedness under the Credit
Agreement, such agreement shall only be treated as, or as part of, the
Credit Agreement hereunder if (i) either (A) all obligations under the
Credit Agreement being refinanced shall be paid in full at the time of such
refinancing, and all commitments under the refinanced Credit Agreement
shall have terminated in accordance with their terms or (B) the Required
Banks shall have consented in writing to the refinancing Indebtedness being
treated, along with their Indebtedness, as Indebtedness pursuant to the
Credit Agreement, (ii) the refinancing Indebtedness shall be permitted to
be incurred under the Credit Agreement being refinanced (if such Credit
Agreement is to remain outstanding) and (iii) a notice to the effect that
the refinancing Indebtedness shall be treated as issued under the Credit
Agreement shall be delivered by the Borrower to the Collateral Agent);
WHEREAS, the Borrower may from time to time enter into one or more (i)
interest rate protection agreements (including, without limitation,
interest rate swaps, caps, floors, collars and similar agreements), (ii)
foreign exchange contracts, currency swap agreements, commodity agreements
or other similar agreements or arrangements designed to protect against the
fluctuations in currency values and/or (iii) other types of hedging
agreements from time to time (each such agreement or arrangement with an
Other Creditor (as hereinafter defined), an "Interest Rate Protection
Agreement or Other Hedging Agreement"), with Bankers Trust Company in its
individual capacity ("BTCo"), any Bank or a syndicate of financial
institutions organized by BTCo or any such Bank, or an affiliate of BTCo or
any such Bank (BTCo, any such Bank or Banks or affiliate or affiliates of
BTCo or such Bank or Banks (even if BTCo or any such Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason) and any such
institution that participates in such Interest Rate Protection Agreements
or Other Hedging Agreements, and their subsequent successors and assigns,
collectively, the "Other Creditors", and together with the Bank Creditors,
the "Secured Creditors");
WHEREAS, pursuant to a Guaranty, each Subsidiary Guarantor will have,
after execution and delivery thereof, jointly and severally guaranteed the
payment when due of all obligations and liabilities of the Borrower under
or with respect to the Credit Documents and each Interest Rate Protection
Agreement or Other Hedging Agreement with one or more Other Creditors;
WHEREAS, it is a condition precedent to the making of Loans to the
Borrower and the issuance of, and participation in, Letters of Credit for
the account of the Borrower under the Credit Agreement and to the Other
Creditors entering into Interest Rate Protection Agreements or Other
Hedging Agreements that each Pledgor shall have executed and delivered to
the Pledgee this Agreement; and
WHEREAS, each Pledgor desires to execute this Agreement to satisfy the
conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the 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 and hereby covenants and agrees with the Pledgee as follows:
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
liabilities (including, without limitation, indemnities, fees and
interest thereon) of such Pledgor owing to the Bank Creditors, now
existing or hereafter incurred under, arising out of or in connection
with any Credit Document to which such Pledgor is a party (including
all such obligations and indebtedness under any Guaranty to which
such Pledgor is a party) and the due performance and compliance by
such Pledgor with the terms, conditions and agreements contained in
each such Credit Document (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 (including, without limitation, indemnities, fees and
interest thereon) of such Pledgor owing to the Other Creditors, now
existing or hereafter incurred under, arising out of or in connection
with 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,
including, in the case of each Subsidiary Guarantor, all obligations
under its respective Guaranty, in each case, in respect of Interest
Rate Protection Agreements or Other Hedging Agreements, and the due
performance and compliance by such Pledgor with all of the terms,
conditions and agreements contained in each such Interest Rate
Protection Agreement or Other Hedging Agreement (all such obligations
and indebtedness under 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 (as hereinafter defined);
(iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities referred
to in clauses (i), (ii) and (iii) above, after an Event of Default
(such term, as used in this Agreement, shall mean any Event of
Default under, and as defined in, the Credit Agreement or any payment
default under any Interest Rate Protection Agreement or Other Hedging
Agreement and shall in any event include, without limitation, any
payment default (after the expiration of any applicable grace period)
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
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 Indemnitee to which such Indemnitee
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
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, ETC. As used herein: (i)
the term "Stock" shall mean (x) with respect to corporations incorporated
under the law of the United States or any State or territory thereof (each,
a "Domestic Corporation"), all of the issued and outstanding shares of
stock of any corporation at any time owned by each Pledgor of any Domestic
Corporation and all certificates and instruments evidencing the same and
(y) with respect to corporations not Domestic Corporations (each, a
"Foreign Corporation"), all of the issued and outstanding shares of stock
at any time owned by each Pledgor of any Foreign Corporation and all
certificates and instruments evidencing the same, provided that, except as
provided in the last sentence of this Section 2, such Pledgor shall not be
required to pledge hereunder more than 65% of the total combined voting
power of all classes of capital stock of any Foreign Corporation entitled
to vote; (ii) the term "Notes" shall mean (x) all Intercompany Notes at any
time issued to each Pledgor and (y) all other promissory notes from time to
time issued to, or held by, each Pledgor; provided that, except as provided
in the last sentence of this Section 2, such Pledgor shall not be required
to pledge hereunder (and the term "Notes" shall not include) any promissory
notes issued to such Pledgor by any Subsidiary of such Pledgor which is a
Foreign Corporation; and (iii) the term "Securities" shall mean all of the
Stock and Notes. Each Pledgor represents and warrants that on the date
hereof (i) each Subsidiary of such Pledgor, and the direct ownership
thereof, is listed on Annex A hereto; (ii) the Stock held by such Pledgor
consists of the number and type of shares of the stock of the corporations
as described in Annex B hereto; (iii) such Stock constitutes that
percentage of the issued and outstanding capital stock of the issuing
corporation as is set forth in Annex B hereto; (iv) the Notes held by such
Pledgor consist of the promissory notes described in Annex C hereto where
such Pledgor is listed as the lender; (v) such Pledgor is the holder of
record and sole beneficial owner of the Stock and Notes held by such
Pledgor and there exist no options or preemptive rights in respect of any
such Stock; and (vi) on the date hereof, such Pledgor owns no other
Securities. From time to time, to the extent provided in Section 8.16 of
the Credit Agreement, (a) the 65% limitation set forth in clause (i)(y) and
the limitation in the proviso of clause (ii), in each case of the first
sentence of this Section 2 and in Section 3.2 hereof, shall no longer be
applicable and (b) such Pledgor shall duly pledge and deliver to the
Pledgee such additional Securities not theretofore required to be pledged
hereunder and (c) the Pledgee shall release Securities pledged hereunder.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations and for the purposes set
forth in Section 1, each Pledgor hereby: (i) grants to the Pledgee a
security interest in all of the Collateral (as hereinafter defined) owned
by the 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 in the
case of Notes and accompanied by undated stock powers duly executed in
blank by such Pledgor in the case of Stock, or such other instruments of
transfer as are acceptable to the Pledgee; and (iii) assigns, transfers,
hypothecates, mortgages, charges and sets over to the Pledgee all of such
Pledgor's right, title and interest in and to such Securities (and in and
to all certificates or instruments evidencing such Securities), to be held
by the Pledgee, upon the terms and conditions set forth in this Agreement.
3.2. Subsequently Acquired Securities. 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, the Pledgor will forthwith
pledge and deposit such Securities (or certificates or instruments
representing such Securities) as security with the Pledgee and deliver to
the Pledgee certificates therefor or instruments thereof, duly endorsed in
blank in the case of Notes and accompanied by undated stock powers duly
executed in blank in the case of Stock, or such other instruments of
transfer as are acceptable to the Pledgee, and will promptly thereafter
deliver to the Pledgee a certificate executed by any of the Chairman of the
Board, the Chief Financial Officer, the President, a Vice Chairman, any
Vice President or the Treasurer of such Pledgor describing such Securities
and certifying that the same have 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 (x) any Stock which is
more than 65% of the total combined voting power of all classes of capital
stock of any Foreign Corporation entitled to vote or (y) any promissory
notes issued to such Pledgor by any Subsidiary of such Pledgor which is a
Foreign Corporation.
3.3. Uncertificated Securities. Notwithstanding anything to the
contrary contained in Sections 3.1 and 3.2, if any Securities (whether or
not now owned or hereafter acquired) are uncertificated securities, the
respective Pledgor shall promptly notify the Pledgee thereof, and shall
promptly take all actions required to perfect the security interest of the
Pledgee under applicable law (including, in any event, under Sections 8-313
and 8-321 of the New York UCC, if applicable). Each Pledgor further agrees
to take such actions as the Pledgee deems necessary or desirable to effect
the foregoing and to permit the Pledgee to exercise any of its rights and
remedies hereunder, and agrees to provide an opinion of counsel reasonably
satisfactory to the Pledgee with respect to any such pledge of
uncertificated Securities promptly upon request of the Pledgee.
3.4. Definition of Pledged Stock, Pledged Notes, Pledged Securities
and Collateral. 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 of the Pledged Stock and Pledged Notes together are
hereinafter called the "Pledged Securities", which together with all
proceeds thereof, including any securities and moneys received and at the
time held by the Pledgee hereunder, is hereinafter called the "Collateral".
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Pledged Securities, which may be held
(in the discretion of the Pledgee) in the name of the 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 an
Event of Default shall have occurred and be continuing, each Pledgor shall
be entitled to exercise any and all voting and other consensual rights
pertaining to the Pledged Securities and to give consents, waivers or
ratifications in respect thereof; provided, that no vote shall be cast or
any consent, waiver or ratification given or any action taken which would
violate or be inconsistent with any of the terms of this 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 position or interests of the Pledgee
or any Secured Creditor. All such rights of such Pledgor to vote and to
give consents, waivers and ratifications shall cease in case an Event of
Default shall occur and be continuing, and Section 7 hereof shall become
applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default
shall have occurred and be continuing, all cash dividends payable in
respect of the Pledged Stock and all payments in respect of the Pledged
Notes shall be paid to the respective Pledgor; provided, that all cash
dividends payable in respect of the Pledged Stock which are determined by
the Pledgee to represent in whole or in part an extraordinary, liquidating
or other distribution in return of capital shall be paid, to the extent so
determined to represent an extraordinary, liquidating or other distribution
in return of capital, to the Pledgee and retained by it as part of the
Collateral. The Pledgee shall also be entitled to receive directly, and to
retain as part of the Collateral:
(i) all other or additional stock or other securities or
property (other than cash) paid or distributed by way of dividend or
otherwise in respect of the Pledged Stock;
(ii) all other or additional stock or other securities or
property (including cash) paid or distributed in respect of the
Pledged Stock by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement; and
(iii) all other or additional stock or other securities or
property (including cash) which may be paid in respect of the
Collateral by reason of any consolidation, merger, exchange of stock,
conveyance of assets, liquidation or similar corporate
reorganization.
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. All dividends, distributions
or other payments which are received by any Pledgor contrary to the
provisions of this Section 6 and Section 7 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 EVENT OF DEFAULT. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall be
entitled to exercise all of the rights, powers and remedies (whether vested
in it by this Agreement or by 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, without limitation, to
exercise the following rights, which each Pledgor hereby agrees to be
commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral
payable to such Pledgor under Section 6;
(ii) to transfer all or any part of the Pledged Securities into
the Pledgee's name or the name of its nominee or nominees;
(iii) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other action to collect upon
any Pledged Note (including, without limitation, to make any demand
for payment thereon);
(iv) to vote all or any part of the Pledged Stock (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
(v) at any time or 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 (except as set forth in the proviso below) 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' notice of the time and place of any
such sale shall be given to such Pledgor.
Each purchaser at any such sale shall hold the property so sold absolutely
free from any claim or right on the part of each Pledgor, and 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 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. Notwithstanding anything to the contrary contained herein,
Pledgee shall give to the respective Pledgors three Business Days' prior
notice of any foreclosure effected on any Pledged Securities of such
Pledgor pursuant to the terms of this Agreement.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt 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 Secured Creditor of any one or more of the rights, powers or
remedies provided for in this Agreement or 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
Secured Creditor of all such other rights, powers or remedies, and no
failure or delay on the part of the Pledgee or any 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 such
Pledgor to any other or further notice or demand in similar other
circumstances or constitute a waiver of any of the rights of the Pledgee or
any Secured Creditor to any other or further action in any circumstances
without demand or notice.
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 to the payment of the Obligations in
the manner provided in Section 7.4 of the Security Agreement.
(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, each Secured Creditor and their
respective successors, assigns, employees and agents (hereunder referred to
individually as, an "Indemnitee" and, collectively, as "Indemnities") from
and against any and all claims, demands, losses, judgments and liabilities
of whatsoever kind or nature, and (ii) to reimburse each Indemnitee for all
costs and expenses, including attorneys' fees, 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
except, with respect to clauses (i) and (ii) above, for those arising from
such Indemnitee's gross negligence or willful misconduct. In no event
shall any Indemnitee hereunder be liable, in the absence of gross
negligence or willful misconduct on its part, for any matter or thing in
connection with this Agreement other than to account for moneys actually
received by it in accordance with the terms hereof. If and to the extent
that the obligations of the Pledgors under this Section 11 are
unenforceable for any reason, each Pledgor hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law. The indemnity obligations of
each Pledgor contained in this Section 11 shall continue in full force and
effect notwithstanding the full payment of all the Notes issued under the
Credit Agreement, the termination of all Interest Rate Protection
Agreements or Other Hedging Agreements and Letters of Credit and the
payment of all other Obligations and notwithstanding the discharge thereof.
12. 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 UCC such financing statements,
continuation statements and other documents in such offices as the Pledgee
may deem necessary or appropriate and wherever required or permitted 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 advisable 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, from time to time
after the occurrence and during the continuance of an Event of Default, in
the Pledgee's discretion to take such actions and to execute any instrument
which the Pledgee may deem necessary or advisable to accomplish the
purposes of this Agreement.
13. THE PLEDGEE AS COLLATERAL 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 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.
14. TRANSFER BY PLEDGORS. Except for sales of Collateral permitted
(i) prior to the date all Credit Document Obligations have been paid in
full and all Commitments under the Credit Agreement have been terminated,
pursuant to the Credit Agreement, and (ii) thereafter, pursuant to the
other Secured Debt Agreements, 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 in
accordance with the terms of this Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGORS. (a) Each
Pledgor represents, warrants and covenants that:
(i) it is the legal, record and beneficial owner of, and has
good and marketable title to, all Securities pledged by it hereunder,
subject to no pledge, lien, mortgage, hypothecation, security
interest, charge, option or other encumbrance whatsoever, except the
liens and security interests created by this Agreement;
(ii) it has full power, authority and legal right to pledge all
the Securities 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;
(iv) no consent of any other party (including, without
limitation, any stockholder, member, limited or general partner or
creditor of such Pledgor or any of its Subsidiaries) 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 (a) the execution, delivery or performance of this
Agreement, (b) the validity or enforceability of this Agreement, (c)
the perfection or enforceability of the Pledgee's security interest
in the Collateral or (d) except for compliance with or as may be
required by applicable securities laws, the exercise by the Pledgee
of any of its rights or remedies provided herein;
(v) the execution, delivery and performance of this Agreement
does not violate any provision of any applicable law or regulation or
of any order, judgment, writ, award or decree of any court,
arbitrator or domestic or foreign governmental authority, or of the
certificate of incorporation, certificate of formation or by-laws, as
the case may be, of such Pledgor or of any securities issued by such
Pledgor or any of its Subsidiaries, or of any indenture, mortgage,
lease, deed of trust, credit agreement, loan agreement, agreement or
other instrument 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 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 nonassessable and are subject to no options to
purchase or similar rights;
(vii) each of the Pledged Notes constitute, or, when executed by
the obligor thereof, will constitute, the legal, valid and binding
obligation of such obligor, enforceable in accordance with its terms;
and
(viii) the pledge, assignment and delivery to the Pledgee of the
Securities pursuant to this Agreement, creates a valid and perfected
first security interest in such Securities 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
Securities.
(b) Each Pledgor covenants and agrees that it will defend the
Pledgee's right, title and security interest in and to the Securities and
the proceeds thereof 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 Secured
Creditors.
(c) Each Pledgor covenants and agrees that it will take no action
which would violate any of the terms of any Secured Debt Agreement.
16. 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 (subject to the provisions of Section 18
hereof) without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, 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 or 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 such Pledgor or any Subsidiary of such 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.
17. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and any Pledgor shall have received from the
Pledgee 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, such Pledgor as soon as practicable and at its expense
will use its best efforts to cause such registration to be effected (and be
kept effective) and will use its best efforts to cause such qualification
and compliance to be 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 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 reasonably 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 and all others
participating in the distribution of the 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
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 pursuant to Section
7, and such Pledged Securities 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 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 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
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 at a price which the Pledgee, in its sole and absolute
discretion, may in good xxxxx xxxx 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.
18. TERMINATION, RELEASE. (a) After the Termination Date (as
defined below), this Agreement 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 the respective Pledgor, will promptly 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 may be in the
possession of the Pledgee and as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement. As used in this Agreement,
"Termination Date" shall mean the date upon which the Total Commitment and
all Interest Rate Protection Agreements or Other Hedging Agreements have
been terminated, no Note is outstanding (and all Loans have been paid in
full), all Letters of Credit have been terminated, and all other
Obligations then owing have been paid in full.
(b) In the event that any part of the Collateral is sold (x) at any
time prior to the time at which all Credit Document Obligations have been
paid in full and all Commitments under the Credit Agreement have been
terminated, in connection with a sale permitted by Section 9.02 of the
Credit Agreement or is otherwise released at the direction of the Required
Banks (or all the Banks if required by Section 13.12 of the Credit
Agreement) or (y) at any time thereafter, to the extent permitted by the
other Secured Debt Agreements, and in the case of clause (x) and (y), and
the proceeds of such sale or sales or from such release are applied in
accordance with the terms of the Credit Agreement or such other Secured
Debt Agreement, as the case may be, to the extent required to be so
applied, the Pledgee, at the request and expense of such Pledgor will duly
assign, transfer and deliver to such Pledgor (without recourse and without
any representation or warranty) such of the Collateral as is then being (or
has been) so sold or released and as may be in possession of the Pledgee
and has not theretofore been released pursuant to this Agreement.
(c) At any time that a Pledgor desires that Collateral be released
as provided in the foregoing Section 18(a) or (b), it shall deliver to the
Pledgee a certificate signed by its chief financial officer or another
Authorized Officer stating that the release of the respective Collateral is
permitted pursuant to Section 18(a) or (b). If requested by the Pledgee
(although the Pledgee shall have no obligation to make any such request),
the relevant Pledgor shall furnish appropriate legal opinions (from
counsel, which may be in-house counsel, reasonably acceptable to the
Pledgee) to the effect set forth in the immediately preceding sentence.
The Pledgee shall have no liability whatsoever to any Secured Creditor as
the result of any release of Collateral by it as permitted by this Section
18.
19. NOTICES, ETC. All notices and other communications hereunder
shall be in writing and shall be delivered or mailed by first class mail,
postage prepaid, addressed:
(a) if to any Pledgor, at its address set forth opposite its
signature below;
(b) if to the Pledgee, at:
Bankers Trust Company
Xxx Xxxxxxx Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxx Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(c) if to any Bank (other than the Pledgee), at such address as such
Bank shall have specified in the Credit Agreement; and
(d) if to any Other Creditor, at such address as such Other Creditor
shall have specified in writing to each Pledgor 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.
20. 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 and
adversely affected thereby and the Pledgee (with the written consent of (x)
the Required Banks (or all the Banks if required by Section 13.12 of the
Credit Agreement) at all times prior to the time at which all Credit
Document Obligations have been paid in full and all Commitments under the
Credit Agreement have been terminated, and (y) the holders of at least a
majority of the outstanding Other Obligations at all times after the time
on which all Credit Document Obligations have been paid in full and all
Commitments under the Credit Agreement have been terminated; 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 require the
written consent of the Requisite Creditors (as defined below) of such
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 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 of all
obligations outstanding from time to time under the Interest Rate
Protection Agreements or Other Hedging Agreements.
21. MISCELLANEOUS. This Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and
effect, subject to release and/or termination as set forth in Section 18,
(ii) be binding upon each Pledgor, its successors and assigns; provided,
however, that no Pledgor shall assign any of its rights or obligations
hereunder without the prior written consent of the Pledgee (and the prior
written consent of the Required Banks or, to the extent required by Section
13.12 of the Credit Agreement, each of the Banks), and (iii) inure,
together with the rights and remedies of the Pledgee hereunder, to the
benefit of the Pledgee, the Secured Creditors and their respective
successors, transferees and assigns. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. The
headings of the several sections and subsections 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 together 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.
22. 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.
23. ADDITIONAL 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.
24. LIMITED OBLIGATIONS. It is the desire and intent of each
Pledgor and the Secured Creditors that this Agreement shall be enforced
against each Pledgor to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is
sought. Notwithstanding anything to the contrary contained herein, in
furtherance of the foregoing, it is noted that the obligations of each
Pledgor constituting a Subsidiary Guarantor have been limited as provided
in its respective Guaranty.
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:
0000 Xxxx Xxxx Xxxx, Xxxxx 000 MOTORS AND GEARS INDUSTRIES, INC., as a
Xxxxxxxxx, Xxxxxxxx 00000 Pledgor
Attention: Xxxxxx X. Xxxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 By /s/ Xxxxxxxx X. Xxxxxxx
Title: Vice President
with copies to:
Xxxxxxxx X. Xxxxxxx
The Jordan Company
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
and
Xxxxx X. Xxxxxxx
Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
0000 Xxxxxxxx Xxxxx XXXXXX-XXXXX INDUSTRIES, INC.
Xxx Xxxxxxx, XX 00000
By /s/ Xxxxxxxx X. Xxxxxxx
Title: Vice President
0000 Xxxxxxxx Xxxxx BCM HOLDINGS, INC.
Xxx Xxxxxxx, XX 00000
By /s/ Xxxxxxxx X. Xxxxxxx
Title: Vice President
00 Xxx Xxxxxx THE NEW IMPERIAL ELECTRIC COMPANY
Xxxxx, XX 00000
By /s/ Xxxxxxxx X. Xxxxxxx
Title: Vice President
0000 XxXxxxx Xxxx THE NEW XXXXX MOTORS COMPANY
Xxxxxxxxxx, XX 00000
By /s/ Xxxxxxxx X. Xxxxxxx
Title: Vice President
0000 Xxxxxxx Xxxxxx, X.X. NEW GEAR RESEARCH, INC.,
Xxxxx Xxxxxx, XX 00000
By /s/ Xxxxxxxx X. Xxxxxxx
Title: Vice President
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Agent for the Banks
By /s/ Xxxxxxxx Xxxxx
Title: Vice President
