EXHIBIT 10.24
PLEDGE AGREEMENT
This PLEDGE AGREEMENT ("Pledge Agreement") is made as of this 28th day
of October, 1997 between XXXX/USA, INC., a Delaware corporation (the "Pledgor"),
and SANWA BUSINESS CREDIT CORPORATION, as agent, for its benefit and the benefit
of the Lenders (in such capacity, "Agent").
WHEREAS, Pledgor is the legal and beneficial owner of all of the
issued and outstanding capital Stock described on EXHIBIT 1 hereto issued by the
corporations named therein; and
WHEREAS, Agent and the Persons from time to time designated as lenders
thereunder ("Lenders") have entered into that certain Loan and Security
Agreement dated as of the date hereof (as amended, supplemented, restated or
otherwise modified from time to time, the "Loan Agreement") with XXXX/USA West,
Inc., XXXX/USA Chicago, Inc. and XXXX/USA New York, Inc.; and
WHEREAS, Pledgor has executed the Parent Guaranty in favor of Agent,
for its benefit and the ratable benefit of Lenders, whereby Pledgor guarantees
all Obligations of the Borrowers under the Loan Agreement (the "Guaranty"); and
WHEREAS, in connection with the making of the loans and other
extensions of credit under the Loan Agreement and as security for the
obligations of Pledgor under the Guaranty, Lenders and Agent are requiring that
Pledgor shall have executed and delivered this Pledge Agreement and granted the
security interests contemplated hereby.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Pledgor hereby agrees with Agent as follows:
1. DEFINED TERMS. As used in this Pledge Agreement,
"Lien" shall mean, with respect to the property or assets of any
Person, any statutory or contractual lien, security interest, mortgage, pledge,
claim, encumbrance, charge, hypothecation, assignment, deposit arrangement,
filing of, or agreement to give, any financing statement, encumbrance or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever, whether voluntary or involuntary (including,
without limitation, the interest of a vendor or lessor under any conditional
sale, capitalized lease or other title retention agreement), in, of or on any of
the property or assets of such Person in favor of any other Person.
"Pledged Collateral" means the Pledged Stock and the Stock Rights,
including the proceeds of each.
"Pledged Stock" means the respective shares of capital stock of the
Borrowers described on EXHIBIT 1 hereto, together with the certificates or other
instruments or securities representing such shares.
"Secured Obligations" shall have the meaning assigned to such term in
SECTION 2 hereof.
"Stock Rights" means any stock, any dividend or other distribution and
any other right or property which the Pledgor shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any shares of the Pledged Stock and any stock, any right
to receive stock and any right to receive earnings, in which the Pledgor now has
or hereafter acquires any right, issued by the issuer of the Pledged Stock.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. Unless otherwise defined herein,
all terms used herein and defined in the Code shall have the meanings ascribed
thereto in the Code. In addition, unless otherwise defined herein, all defined
terms herein shall have the respective meanings ascribed thereto in the Loan
Agreement as in effect on the date hereof.
2. PLEDGE. To secure all indebtedness, liabilities and obligations of
Pledgor now or hereafter existing under this Pledge Agreement and under the
Guaranty (collectively, the "Secured Obligations") the Pledgor hereby delivers
to Collateral Agent and hereby pledges, assigns, transfers and grants to Agent a
first Lien on the Pledged Collateral. All of the Pledged Stock, together with
undated stock powers duly executed in blank by the Pledgor, are being delivered
to Agent simultaneously herewith.
3. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. Pledgor represents
and warrants to Agent that:
3.1 EXISTENCE AND STANDING. Pledgor is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and has all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
3.2 AUTHORIZATION, VALIDITY AND ENFORCEABILITY. Pledgor has full
power, authority and legal right to execute this Pledge Agreement and to pledge
the Pledged Collateral to Agent. The execution and delivery by Pledgor of this
Pledge Agreement have been duly authorized by all necessary action and this
Pledge Agreement constitutes a legal, valid and binding obligation of Pledgor
enforceable against Pledgor in accordance with its terms, creates a security
interest which is enforceable against Pledgor in the Pledged Collateral and will
create a security interest enforceable against Pledgor in the Stock Rights and
the proceeds of the Pledged Stock and the Stock Rights at the time Pledgor
acquires any right therein, in each such case subject to bankruptcy, insolvency,
liquidation, reorganization and other laws of general application affecting the
rights and remedies of creditors.
3.3 CONFLICTING LAWS AND CONTRACTS. Neither the execution and delivery
by the Pledgor of this Pledge Agreement, the creation and perfection of the Lien
on the Pledged Collateral granted hereunder, nor compliance with the terms and
provisions hereof violate or will violate any law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on Pledgor or Pledgor's
Certificate of Incorporation or Bylaws or, except as disclosed on EXHIBIT 3.3
hereto, the provisions of any indenture, instrument or agreement to which
Pledgor is a party or is subject, or by which it, or its property, is bound, or
conflict with or constitute a default thereunder, or result in the creation or
imposition of any Lien pursuant to the terms of any such indenture, instrument
or agreement.
3.4 OWNERSHIP OF PLEDGED STOCK. Pledgor is the direct legal and
beneficial owner of each share of each Borrower and such Pledged Stock
represents 100% of the issued and outstanding stock of its issuer. The Pledged
Stock represents all of the issued and outstanding shares of stock of such
issuer owned by Pledgor.
3.5 OTHER AGREEMENTS. Except as disclosed on EXHIBIT 3.3 hereto,
Pledgor has not performed any act or executed any instrument, agreement or other
document that might prevent or hinder Agent from obtaining and enjoying fully
and completely all of the benefits, rights and powers conferred, or sought to be
conferred, upon Agent by this Pledge Agreement.
3.6 ISSUANCE OF PLEDGED STOCK. Each share of the Pledged Stock has
been duly and validly issued, is fully paid and non-assessable and is owned by
the Pledgor free and clear of any Lien other than the Lien created by this
Pledge Agreement.
3.7 CONSENTS. No consent, approval or authorization of, notice to,
designation or filing with, or other action by, any Person is required in
connection with the execution, delivery and performance of the pledge and Lien
granted under this Pledge Agreement by the Pledgor, or in connection with the
exercise of remedies with respect to the Pledged Collateral pursuant to this
Pledge Agreement.
3.8 PRIORITY. The pledge, assignment and delivery of the Pledged
Collateral pursuant to this Pledge Agreement creates a valid first perfected
Lien on Pledgor's interest in such Pledged Collateral and the proceeds thereof
in favor of Agent, subject to no prior Lien of any other Person.
4. COVENANTS AND REPRESENTATIONS. From the date of this Pledge
Agreement until the Pledge Agreement is terminated pursuant to SECTION 7.13:
4.1 Pledgor shall:
4.1.1 DELIVERY OF CERTAIN ITEMS. Except as otherwise permitted by the
Loan Agreement, hold in trust for Agent and deliver forthwith (and without
any necessity for any request or demand by Agent) to Agent, in the exact
form received, with the endorsement of Pledgor when necessary and/or
appropriate instruments of transfer, assignment or endorsement as
applicable, duly executed in blank, any additional stock certificates,
cash, checks, draft, remittances, documents, promissory notes, instruments,
debt securities or other proceeds evidencing or constituting Pledged
Collateral, whether as an addition to, in substitution for, or in exchange
for any of the Pledged Collateral, or otherwise. In case any property shall
be distributed upon or with respect to any Pledged Collateral pursuant to
the recapitalization or reclassification of the capital of the issuer
thereof or pursuant to the reorganization thereof, except as otherwise
permitted by the Loan Agreement, the property so distributed shall be
delivered to Agent to be held by it as additional collateral security for
the Secured Obligations. All sums of money and property so paid or
distributed in respect of any Pledged Collateral which are received by
Pledgor shall, until paid or delivered to Agent in accordance with the
terms hereof, be held by Pledgor in trust as additional collateral security
for the Secured Obligations.
4.1.2 TAXES. Pay when due all taxes, assessments and governmental
charges and levies upon the Pledged Collateral, except those being
contested in good faith by appropriate proceedings and with respect to
which no Lien exists.
4.1.3 NOTICE OF DEFAULT. In accordance with the provisions of the Loan
Agreement, give prompt notice in writing to Agent of the occurrence of any
Default or Event of Default and of any other development, financial or
otherwise, which might materially adversely affect the value of the Pledged
Collateral or the ability of Pledgor to perform the Secured Obligations.
4.1.4 STOCK POWERS AND OTHER ACTIONS. Execute and deliver to Agent all
stock powers, assignments, financing statements, indorsements, instruments
and other documents and take all further action, at the expense of Pledgor,
from time to time requested by Agent in order to perfect or maintain a
first perfected Lien on the Pledged Collateral in favor of Agent or to
enable Agent to exercise and enforce its rights and remedies hereunder with
respect to the Pledged Collateral or to effect a transfer of the Pledged
Collateral, or any part thereof. All instruments representing or evidencing
the Pledged Collateral shall be delivered to and held by Agent pursuant
hereto and shall be in suitable form for transfer or assignment in blank,
all in form and substance satisfactory to Agent.
4.1.5 REPORTS. Furnish to Agent such reports relating to the Pledged
Collateral as Agent shall from time to time request.
4.1.6 DEFENSE OF COLLATERAL. Defend for the benefit of Agent, Agent's
right, title and Lien acquired by this Pledge Agreement in and to the
Pledged Collateral and the proceeds thereof against the claims and demands
of all other Persons.
4.2 Pledgor shall not:
4.2.1 LIENS. Create, incur, or suffer to exist any Lien on the Pledged
Collateral except the Lien created by this Pledge Agreement or waive or
forgive any indebtedness evidenced by any of the Pledged Collateral, or
amend the terms thereof or extend the maturity thereof, or perform any act
or execute any instrument that might prevent or hinder Agent from obtaining
and enjoying, fully and completely, all of the benefits, rights and
privileges conferred or sought to be conferred upon Agent by this Pledge
Agreement.
4.2.2 DISPOSITION OF COLLATERAL. Sell or otherwise dispose of all or
any part of the Pledged Collateral.
4.2.3 CHANGES IN CAPITAL STRUCTURE OF ISSUER. (a) Permit or suffer any
issuer of the Pledged Stock to dissolve, liquidate, retire any of its
capital stock, reduce its capital or merge or consolidate with any other
Person, or (b) vote any of the Pledged Stock or Stock Rights in favor of
any of the foregoing.
4.2.4 ISSUANCE OF ADDITIONAL STOCK. Permit or suffer the issuer of the
Pledged Stock to issue any stock, any right to receive stock or any right
to receive earnings, except to Pledgor.
5. REMEDIES.
5.1 ACCELERATION AND REMEDIES. If any Event of Default has occurred
and is continuing, then, upon the election of Agent, the Secured Obligations
shall immediately become due and payable without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, and Agent may (a)
exercise all rights set forth in SECTION 7.3 and (b) exercise any or all of the
rights and remedies provided (i) in this Pledge Agreement, (ii) in the Code to a
secured party when a debtor is in default under a security agreement and (iii)
by any other applicable law or agreement.
5.2 FORECLOSURE SALES. (a) Without limiting the provisions of SECTION
5.1, Agent may, following the occurrence and during the continuance of an Event
of Default, without notice except as specified below, and to the extent
permitted under applicable law, sell the Pledged Collateral or any part thereof
in one or more transactions at public or private sale, for cash or property and
at such price or prices and upon such other terms as Agent may deem commercially
reasonable, irrespective of the impact of any of such sales on the value of any
of the Pledged Collateral. To the extent permitted under applicable law, Agent
may be the purchaser of any or all of the Pledged Collateral at any such sale.
Each purchaser at any such sale shall hold the property sold absolutely free
from any claim or right on the part of Pledgor, and Pledgor hereby waives (to
the extent permitted by law) all rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Agent shall not be obligated to make
any sale with respect to the Pledged Collateral regardless of a notice of sale
having been given. Agent 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) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws, Agent may be unable to effect a public sale or
disposition of any or all of the securities included within the Pledged
Collateral but may be compelled to resort to one or more private sales or
dispositions thereof to a restricted group of purchasers who will agree, among
other things, to acquire the Pledged Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. Pledgor
acknowledges that any sales under such restrictions may be at prices and on
terms less favorable than those obtainable through a sale without such
restrictions (including, without limitation, a public offering made pursuant to
a registration statement under the Securities Act), and notwithstanding such
circumstances, agrees that any sale under such restrictions shall be deemed to
have been made in a commercially reasonable manner and that Agent shall have no
obligation to engage in sales without such restrictions and no obligation to
delay the sale of any securities included within the Pledged Collateral for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if Pledgor would agree to do so.
6. WAIVERS, AMENDMENTS AND REMEDIES. No course of dealing between
Agent and Pledgor and no delay or omission of Agent to exercise any right,
power, privilege or remedy granted under this Pledge Agreement, the Loan
Agreement or any other Financing Agreement or any collateral document or
guaranty related thereto shall impair such right or remedy or be construed to be
a waiver of any Event of Default or an acquiescence therein, and any single or
partial exercise of any such right or remedy shall not preclude other or further
exercise thereof or the exercise of any other right, power, privilege or remedy,
and no waiver, amendment or other variation of the terms, conditions or
provisions of this Pledge Agreement whatsoever shall be valid unless in writing
signed by Agent, and then only to the extent in such writing specifically set
forth. All rights, power, privilege and remedies contained in this Pledge
Agreement shall be cumulative, are in addition to such other rights, power,
privileges and remedies Agent may have by law or otherwise and shall be
available to Agent until the Secured Obligations have been paid in full.
7. GENERAL PROVISIONS.
7.1 SPECIAL COLLATERAL ACCOUNT. All cash received by Agent with
respect to the Pledged Collateral pursuant to SECTION 4.1.1 or upon the exercise
of the remedies provided for in SECTION 5.1, shall be deposited into a special
collateral account with Agent and shall be held by Agent as security for the
Secured Obligations. Pledgor shall have no control whatsoever over said special
collateral account. Agent shall apply any part of the credit balance in said
special collateral account to the payment of the Secured Obligations, whether or
not any of them shall be then due.
7.2 APPLICATION OF PROCEEDS. All cash, property or other proceeds
received by Agent pursuant to the enforcement of this Pledge Agreement, the Loan
Agreement or any other Financing Agreement or any collateral document or
guaranty related to any of the foregoing after acceleration of the Secured
Obligations shall be distributed in the manner set forth in the Loan Agreement.
7.3 EXERCISE OF RIGHTS IN PLEDGED COLLATERAL. After the occurrence and
during the continuance of an Event of Default, Agent or its nominee may, but
shall not be obligated to, at any time and from time to time, without notice to
the Pledgor, exercise all voting and corporate rights relating to the Pledged
Collateral including, without limitation, exchange, subscription or any other
rights, privileges, or options pertaining to any shares of the Pledged Stock and
the Stock Rights, as if it were the absolute owner thereof. Upon the occurrence
and during the continuance of an Event of Default, in the event that Pledgor, as
record and beneficial owner of the Pledged Stock, shall receive or shall become
entitled to receive, any cash dividends or other distributions, Pledgor shall
deliver to Agent, and Agent shall be entitled to receive and retain, all such
cash or other distributions. At all times when no Event of Default has occurred
and is continuing, Pledgor shall be entitled to vote its Pledged Stock and
otherwise exercise the incidents of ownership of the Pledged Stock.
7.4 NOTICE OF DISPOSITION OF COLLATERAL. Notice of the time and place
of any public sale or the time after which any private sale or other disposition
of all or any part of the Pledged Collateral may be made shall be reasonable if
sent to the Pledgor, addressed as set forth in SECTION 8, at least ten days
prior to any such public sale or the time after which any such private sale or
other disposition may be made.
7.5 POSSESSION OF COLLATERAL. Beyond the exercise of reasonable care
to assure the safe custody of the Pledged Collateral in the physical possession
of Agent pursuant hereto, neither Agent nor any nominee of Agent, shall have any
duty or liability to collect any sums due in respect thereof or to protect,
preserve or exercise any rights pertaining thereto, and shall be relieved of all
responsibility for the Pledged Collateral upon surrendering it to the Pledgor.
7.6 SPECIFIC PERFORMANCE OF CERTAIN COVENANTS. The Pledgor
acknowledges and agrees that a breach of any of the covenants contained in
SECTIONS 4.1.1, 4.1.4, 4.1.6, 4.2.2, 4.2.3 or 4.2.4 will cause irreparable
injury to Agent and that Agent has no adequate remedy at law in respect of such
breaches and therefore agrees, without limiting the right of Agent to seek and
obtain specific performance of other obligations of the Pledgor contained in
this Pledge Agreement, that the covenants of the Pledgor contained in the
Sections referred to in this SECTION 7.6 shall be specifically enforceable
against the Pledgor.
7.7 DEFINITION OF CERTAIN TERMS. Terms defined in the Code which are
not otherwise defined in this Pledge Agreement are used in this Pledge Agreement
as defined in the Code as in effect on the date hereof.
7.8 BENEFIT OF AGREEMENT. The terms and provisions of this Pledge
Agreement shall be binding upon and inure to the benefit of Agent and the
Pledgor and their respective successors and assigns, except that the Pledgor
shall not have the right to assign its rights or obligations under this Pledge
Agreement or any interest herein.
7.9 SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Pledgor contained in this Pledge Agreement shall survive the execution and
delivery of this Pledge Agreement.
7.10 TAXES AND EXPENSES. The Pledgor will upon demand pay to Agent (a)
any taxes (excluding income taxes, franchise taxes or other taxes levied on
gross earnings, profits or the like) payable or ruled payable by any Federal or
State authority in respect of this Pledge Agreement, together with interest and
penalties, if any, and (b) all reasonable expenses, including the reasonable
fees and expenses of counsel for Agent and of any experts and agents that Agent
may incur in connection with (i) the administration of this Pledge Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Agent hereunder, or (iv) the failure of the Pledgor to
perform or observe any of the provisions hereof.
7.11 CHOICE OF LAW. THIS PLEDGE AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS PROVISIONS)
OF THE STATE OF ILLINOIS.
7.12 HEADINGS. The title of and section headings in this Pledge
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Pledge Agreement.
7.13 TERMINATION. This Pledge Agreement shall continue in effect until
no Secured Obligations shall be outstanding.
7.14 SEVERABILITY. The provisions of this Pledge Agreement are
severable and if any clause or provision thereof shall be held invalid or
unenforceable in whole or in part, then such invalidity or unenforceability
shall attach only to such clause or provision, or part thereof, and shall not in
any manner affect such clause or provision in any other jurisdiction or any
other clause or provision in this Pledge Agreement or any jurisdiction.
7.15 ATTORNEY-IN-FACT. Pledgor hereby irrevocably appoints Agent as
Pledgor's attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to time in Collateral
Agent's discretion reasonably exercised, to take any action and to execute any
instrument that Agent deems reasonably necessary or advisable to accomplish the
purposes of this Pledge Agreement, including, without limitation, to receive,
endorse and collect all instruments made payable to Pledgor representing any
dividend, principal, interest payment or other proceeds or distribution in
respect of the Pledged Collateral or any part thereof and to give full discharge
for the same, when and to the extent permitted by this Pledge Agreement.
7.16 INCORPORATION BY REFERENCE. The security interests granted
hereunder are granted in conjunction with the security interests granted to
Agent, for the benefit of Lenders, pursuant to the Loan Agreement. Pledgor
hereby acknowledges and affirms that the rights and remedies of Agent with
respect to the Pledged Collateral made and granted hereunder are more fully set
forth in the Loan Agreement, the terms and provisions of which are incorporated
by reference herein as if fully set forth herein.
8. NOTICES. Except as otherwise expressly provided herein, any notice
required or desired to be served, given or delivered hereunder shall be in
writing, and shall be deemed to have been validly served, given or delivered
three (3) days after deposit in the United States mails (by certified mail,
return receipt requested), with proper postage prepaid, or upon delivery by
courier or upon transmission by telex, telecopy or similar electronic medium to
the following addresses:
(i) If to Agent, at:
Sanwa Business Credit Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Commercial Finance Division
Telecopy No.: (000) 000-0000
With a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
(ii) If to Pledgor at:
XXXX/USA, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chief Financial Officer
Telecopy No.: (000) 000-0000
With a copy to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
or to such other address as each Person designates to the other in the manner
herein prescribed.
9. WAIVERS. The Pledgor waives presentment and demand for payment of
any of the Secured Obligations, protest and notice of dishonor or default with
respect to any of the Secured Obligations, and all other notices to which the
Pledgor might otherwise be entitled, except as otherwise expressly provided
herein.
10. COUNTERPARTS. This Pledge Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Pledge Agreement by
signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered by their duly authorized officers on
the date first above written.
XXXX/USA, INC.
By: /S/ XXXXXX X. XXXXXXX
Name:Xxxxxx X. Xxxxxxx
Title:EVP / CFO
ACCEPTED AS OF THE DATE
FIRST SET FORTH ABOVE:
SANWA BUSINESS CREDIT CORPORATION,
as Agent
By: /S/ XXXXXXX XXXXXXXX
Name:Xxxxxxx Xxxxxxxx
Title: Vice President
