EXHIBIT 10. 6
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "AGREEMENT") is made as of the 15th day of
June, 1998, by Xxxxx X'Xxxxxxx ("X'Xxxxxxx") and Xxxx Xxxxxxxx, Trustee (the
"TRUSTEE") of the trust (the "TRUST") established under the Voting Trust
Agreement of Nationwide Transportation Products, Inc. (subsequently known as
USCommunication Services, Inc.) dated May 1, 1997 and amended on December 1,
1997 and January 30, 1998 (collectively, X'Xxxxxxx and Trustee are referred to
as PLEDGOR"), in favor of Canmax Telecom, Inc., a Texas corporation ("PLEDGEE").
Pledgor, jointly and severally, hereby agrees with Pledgee as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings indicated below:
(a) The term "BORROWER" shall mean either Pledgor or the Company.
(b) The term "COMPANY " shall mean USCommunication Services, Inc., a
Delaware corporation.
(c) The term "CODE" shall mean the Uniform Commercial Code as in
effect in the State of Arizona on the date of this Agreement or as it may
hereafter be amended from time to time.
(d) The term "COLLATERAL" shall mean all shares of capital stock or
other equity interests now owned or hereafter acquired by Pledgor in the
Company, together with certificates representing all of such shares or
other interests, including without limitation all property specifically
described on SCHEDULE "A" attached hereto and made a part hereof (the
"PLEDGED SHARES"), and all dividends, cash, options, warrants, rights,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any of
the Pledged Shares. The term Collateral, as used herein, shall also include
(A) all certificates, instruments and/or other documents evidencing the
foregoing, (B) all renewals, replacements and substitutions of all of the
foregoing, (C) all Additional Property (as hereinafter defined), and (D)
all PRODUCTS and PROCEEDS of all of the foregoing. The designation of
proceeds does not authorize Pledgor to sell, transfer or otherwise convey
any of the foregoing property. The delivery at any time by Pledgor to
Pledgee of any property as a pledge to secure payment or performance of any
indebtedness or obligation whatsoever shall also constitute a pledge of
such property as Collateral hereunder.
(e) The term "GUARANTIES" shall mean the separate Guaranty agreements
executed by X'Xxxxxxx and the Trustee for the benefit of Pledgee
guaranteeing the payment of the indebtedness outstanding under the Note and
other obligations of the Company and each Pledgor arising under the Loan
Documents.
(f) The term "INDEBTEDNESS" shall mean (i) all indebtedness,
obligations and liabilities of Borrower to Pledgee arising under any of the
Loan Documents, whether joint, several or joint and several, (ii) all
accrued but unpaid interest on any of the indebtedness described in (i)
above, (iii) all obligations of Pledgor to Pledgee under any documents
evidencing, securing, governing and/or pertaining to all or any part of the
indebtedness described in (i) and (ii) above, (iv) all costs and expenses
incurred by Pledgee in connection with the collection and administration of
all or any part of the indebtedness and obligations described in (i), (ii)
and (iii) above or the protection or preservation of, or realization upon,
the collateral securing all or any part of such indebtedness and
obligations, including without limitation all reasonable attorneys' fees,
and (v) all renewals, extensions, modifications and rearrangements of the
indebtedness and obligations described in (i), (ii), (iii) and (iv) above.
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PLEDGE AGREEMENT - PAGE 1
(g) The term "LOAN DOCUMENTS" shall mean all instruments and
documents evidencing, securing, governing, guaranteeing and/or pertaining
to the Indebtedness, including without limitation this Agreement, the
Rescission Agreement, the Guaranties, the Note and the Security Agreement.
(h) The term "NOTE" shall mean that certain promissory note executed
by the Company payable to the Pledgee of even date herewith in the original
principal amount of $724,660, bearing interest and payable as set forth
therein.
(i) The term "OBLIGATED PARTY" shall mean any party other than
Borrower who secures, guarantees and/or is otherwise obligated to pay all
or any portion of the Indebtedness.
(j) The term "RESCISSION AGREEMENT" shall mean the Rescission
Agreement of even date herewith executed by the Company, Canmax Inc.,
Pledgee, Pledgor, and Xxxxx X. Xxxxxx.
(k) The term "SECURITY AGREEMENT" shall mean that certain Security
Agreement of even date herewith between the Company and Pledgee securing
the repayment of the Note.
All words and phrases used herein which are expressly defined in Section 1.201,
Chapter 8 or Chapter 9 of the Code shall have the meaning provided for therein.
Other words and phrases defined elsewhere in the Code shall have the meaning
specified therein except to the extent such meaning is inconsistent with a
definition in Section 1-201, Chapter 8 or Chapter 9 of the Code.
2. SECURITY INTEREST. As security for the Indebtedness, Pledgor, for
value received, hereby grants to Pledgee a continuing security interest in the
Collateral.
3. ADDITIONAL PROPERTY. Collateral shall also include the following
property (collectively, the "ADDITIONAL PROPERTY") which Pledgor becomes
entitled to receive or shall receive in connection with any other Collateral:
(a) any stock certificate, including without limitation, any certificate
representing a stock dividend or any certificate in connection with any
recapitalization, reclassification, merger, consolidation, conversion, sale of
assets, combination of shares, stock split or spin-off; (b) any option, warrant,
subscription or right, whether as an addition to or in substitution of any other
Collateral; (c) any dividends or distributions of any kind whatsoever, whether
distributable in cash, stock or other property; (d) any interest, premium or
principal payments; and (e) any conversion or redemption proceeds. All
Additional Property and all certificates or other written instruments or
documents evidencing and/or representing the Additional Property, together with
such instruments of transfer as Pledgee may request, shall immediately be
delivered to or deposited with Pledgee and held by Pledgee as Collateral under
the terms of this Agreement. If the Additional Property received by Pledgor
shall be shares of stock or other securities, such shares of stock or other
securities shall be duly endorsed in blank or accompanied by proper instruments
of transfer and assignment duly executed in blank with, if requested by Pledgee,
signatures guaranteed by a member or member organization in good standing of an
authorized Securities Transfer Agents Medallion Program, all in form and
substance satisfactory to Pledgee. Pledgee shall be deemed to have possession of
any Collateral in transit to it or its agent.
4. VOTING RIGHTS. As long as no Event of Default shall have occurred
hereunder, any voting rights incident to any stock or other securities pledged
as Collateral may be exercised by Pledgor; provided, however, that Pledgor will
not exercise, or cause to be exercised, any such voting rights, without the
prior written consent of Pledgee, if the direct or indirect effect of such vote
will result in an Event of Default hereunder.
5. MAINTENANCE OF COLLATERAL. Other than the exercise of reasonable care
to assure the safe custody of any Collateral in Pledgee's possession from time
to time, Pledgee does not have any obligation, duty or responsibility with
respect to the Collateral. Without limiting the generality of the foregoing,
Pledgee shall not have any obligation, duty or responsibility to do any of the
following: (a) ascertain any maturities, calls, conversions, exchanges,
offers, tenders or similar matters relating to the Collateral or informing
Pledgor with respect to any such matters; (b) fix, preserve or exercise any
right, privilege or option (whether conversion, redemption or otherwise) with
respect to the Collateral unless (i) Pledgor makes written demand to Pledgee to
do so, (ii) such written demand
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PLEDGE AGREEMENT - PAGE 2
is received by Pledgee in sufficient time to permit Pledgee to take the action
demanded in the ordinary course of its business, and (iii) Pledgor provides
additional collateral, acceptable to Pledgee in its sole discretion; (c)
collect any amounts payable in respect of the Collateral (Pledgee being liable
to account to Pledgor only for what Pledgee may actually receive or collect
thereon); (d) sell all or any portion of the Collateral to avoid market loss;
(e) sell all or any portion of the Collateral unless and until (i) Pledgor
makes written demand upon Pledgee to sell the Collateral, and (ii) Pledgor
provides additional collateral, acceptable to Pledgee in its sole discretion;
or (f) hold the Collateral for or on behalf of any party other than Pledgor.
6. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and
warrants the following to Pledgee:
(a) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and all of the other Loan Documents by Pledgor have been duly
authorized by each Pledgor.
(b) ENFORCEABILITY. This Agreement and the other Loan Documents
constitute legal, valid and binding obligations of Pledgor, enforceable in
accordance with their respective terms, except as limited by bankruptcy,
insolvency or similar laws of general application relating to the enforcement of
creditors' rights and except to the extent specific remedies may generally be
limited by equitable principles.
(c) OWNERSHIP AND LIENS. Pledgor has good and marketable title to
the Collateral free and clear of all liens, security interests, encumbrances or
adverse claims, except for the security interest created by this Agreement. No
dispute, right of setoff, counterclaim or defense exists with respect to all or
any part of the Collateral. Pledgor has not executed any other security
agreement currently affecting the Collateral and no financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any recording office except as may have been executed or filed in favor
of Pledgee. The capital stock described on SCHEDULE "A" hereto constitutes 100%
of the issued and outstanding capital stock of the Company.
(d) NO CONFLICTS OR CONSENTS. Neither the ownership, the intended
use of the Collateral by Pledgor, the grant of the security interest by Pledgor
to Pledgee herein nor the exercise by Pledgee of its rights or remedies
hereunder, will (i) conflict with any provision of (A) any domestic or foreign
law, statute, rule or regulation, (B) any documents governing the organization
of the Trust or (C) any agreement, judgment, license, order or permit applicable
to or binding upon Pledgor or otherwise affecting the Collateral, or (ii) result
in or require the creation of any lien, charge or encumbrance upon any assets or
properties of Pledgor or of any person except as may be expressly contemplated
in the Loan Documents. No consent, approval, authorization or order of, and no
notice to or filing with, any court, governmental authority or third party is
required in connection with the grant by Pledgor of the security interest herein
or the exercise by Pledgee of its rights and remedies hereunder.
(e) SECURITY INTEREST. Pledgor has and will have at all times full
right, power and authority to grant a security interest in the Collateral to
Pledgee in the manner provided herein, free and clear of any lien, security
interest or other charge or encumbrance. This Agreement creates a legal, valid
and binding security interest in favor of Pledgee in the Collateral.
(f) LOCATION. Pledgor's residence or chief executive office, as the
case may be, and the office where the records concerning the Collateral are kept
is located at its address set forth on the signature page hereof.
(g) SOLVENCY OF PLEDGOR. As of the date hereof, and after giving
effect to this Agreement and the completion of all other transactions
contemplated by Pledgor at the time of the execution of this Agreement, (i)
Pledgor is and will be solvent, (ii) the fair saleable value of Pledgor's assets
exceeds and will continue to exceed Pledgor's liabilities (both fixed and
contingent), (iii) Pledgor is paying and will continue to be able to pay its
debts as they mature, and (iv) if Pledgor is not an individual, Pledgor has and
will have sufficient capital to carry on Pledgor's businesses and all businesses
in which Pledgor is about to engage.
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PLEDGE AGREEMENT - PAGE 3
7. AFFIRMATIVE COVENANTS. Pledgor will comply with the covenants
contained in this Section at all times during the period of time this Agreement
is effective unless Pledgee shall otherwise consent in writing.
(a) OWNERSHIP AND LIENS. Pledgor will maintain good and marketable
title to all Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except for the security interest created by this
Agreement and the security interests and other encumbrances expressly permitted
by the other Loan Documents. Pledgor will not permit any dispute, right of
setoff, counterclaim or defense to exist with respect to all or any part of the
Collateral. Pledgor will cause any financing statement or other security
instrument with respect to the Collateral to be terminated, except as may exist
or as may have been filed in favor of Pledgee. Pledgor will defend at its
expense Pledgee's right, title and security interest in and to the Collateral
against the claims of any third party.
(b) INSPECTION OF BOOKS AND RECORDS. Pledgor will keep adequate
records concerning the Collateral and will permit Pledgee and all
representatives and agents appointed by Pledgee to inspect Pledgor's books and
records of or relating to the Collateral at any time during normal business
hours, to make and take away photocopies, photographs and printouts thereof and
to write down and record any such information.
(c) ADVERSE CLAIM. Pledgor covenants and agrees to promptly notify
Pledgee of any claim, action or proceeding affecting title to the Collateral, or
any part thereof, or the security interest created hereunder and, at Pledgor's
expense, defend Pledgee's security interest in the Collateral against the claims
of any third party. Pledgor also covenants and agrees to promptly deliver to
Pledgee a copy of all written notices received by Pledgor with respect to the
Collateral, including without limitation, notices received from the issuer of
any securities pledged hereunder as Collateral.
(d) DELIVERY OF INSTRUMENTS AND/OR CERTIFICATES. Contemporaneously
herewith, Pledgor covenants and agrees to deliver to Pledgee any certificates,
documents or instruments representing or evidencing the Collateral, with
Pledgor's endorsement thereon and/or accompanied by proper instruments of
transfer and assignment duly executed in blank with, if requested by Pledgee,
signatures guaranteed by a member or member organization in good standing of an
authorized Securities Transfer Agents Medallion Program, all in form and
substance satisfactory to Pledgee.
(e) ACTIONS OF THE COMPANY. Pledgor shall cause the Company to (i)
not sell, transfer, move, assign, pledge, grant any security interest in or
otherwise hypothecate any of the Company's assets other than in the ordinary
course of business, (ii) not issue any equity securities of the Company other
than the Collateral, (iii) not liquidate, dissolve, merge or consolidate with
any other entity and (iv) comply with all covenants set forth in the Security
Agreement.
(f) FURTHER ASSURANCES. Pledgor will contemporaneously with the
execution hereof and from time to time thereafter at its expense promptly
execute and deliver all further instruments and documents and take all further
action necessary or appropriate or that Pledgee may request in order (i) to
perfect and protect the security interest created or purported to be created
hereby and the first priority of such security interest, (ii) to enable Pledgee
to exercise and enforce its rights and remedies hereunder in respect of the
Collateral, and (iii) to otherwise effect the purposes of this Agreement,
including without limitation: (A) executing and filing any financing or
continuation statements, or any amendments thereto; (B) obtaining written
confirmation from the issuer of any securities pledged as Collateral of the
pledge of such securities, in form and substance satisfactory to Pledgee; (C)
cooperating with Pledgee in registering the pledge of any securities pledged as
Collateral with the issuer of such securities; (D) delivering notice of
Pledgee's security interest in any securities pledged as Collateral to any
securities or financial intermediary, clearing corporation or other party
required by Pledgee, in form and substance satisfactory to Pledgee; and (E)
obtaining written confirmation of the pledge of any securities constituting
Collateral from any securities or financial intermediary, clearing corporation
or other party required by Pledgee, in form and substance satisfactory to
Pledgee. When applicable law provides more than one method of perfection of
Pledgee's security interest in the Collateral, Pledgee may choose the method(s)
to be used.
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PLEDGE AGREEMENT - PAGE 4
8. NEGATIVE COVENANTS. Pledgor will comply with the covenants contained
in this Section at all times during the period of time this Agreement is
effective, unless Pledgee shall otherwise consent in writing.
(a) TRANSFER OR ENCUMBRANCE. Pledgor will not (i) sell, assign (by
operation of law or otherwise) or transfer Pledgor's rights in any of the
Collateral, (ii) xxxxx x xxxx or security interest in or execute, file or record
any financing statement or other security instrument with respect to the
Collateral to any party other than Pledgee, or (iii) deliver actual or
constructive possession of any certificate, instrument or document evidencing
and/or representing any of the Collateral to any party other than Pledgee.
(b) IMPAIRMENT OF SECURITY INTEREST. Pledgor will not take or fail
to take any action which would in any manner impair the value or enforceability
of Pledgee's security interest in any Collateral.
(c) DILUTION OF OWNERSHIP. As to any securities pledged as
Collateral (other than securities of a class which are publicly traded), Pledgor
will not consent to or approve of the issuance of (i) any additional shares of
any class of securities of such issuer (unless immediately upon issuance
additional securities are pledged and delivered to Pledgee pursuant to the terms
hereof to the extent necessary to give Pledgee a security interest after such
issuance in at least the same percentage of such issuer's outstanding securities
as Pledgee had before such issuance), (ii) any instrument convertible
voluntarily by the holder thereof or automatically upon the occurrence or
non-occurrence of any event or condition into, or exchangeable for, any such
securities, or (iii) any warrants, options, contracts or other commitments
entitling any third party to purchase or otherwise acquire any such securities.
(d) RESTRICTIONS ON SECURITIES. Pledgor will not enter into any
agreement creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any securities pledged as Collateral,
except as consented to in writing by Pledgee.
(e) COMPLIANCE WITH COVENANTS. Pledgor will not take any action that
would cause a violation of any of the covenants set forth in Section 7 hereof,
and shall not cause or permit the Company to violate any of the covenants set
forth in the Security Agreement.
9. RIGHTS OF PLEDGEE. Pledgee shall have the rights contained in this
Section at all times during the period of time this Agreement is effective.
(a) POWER OF ATTORNEY. Pledgor hereby irrevocably appoints Pledgee
as Pledgor's attorney-in-fact, such power of attorney being coupled with an
interest, with full authority in the place and stead of Pledgor and in the name
of Pledgor or otherwise, to take any action and to execute any instrument which
Pledgee may from time to time in Pledgee's discretion deem necessary or
appropriate to accomplish the purposes of this Agreement, including without
limitation, the following action: (i) transfer any securities, instruments,
documents or certificates pledged as Collateral in the name of Pledgee or its
nominee; (ii) use any interest, premium or principal payments, conversion or
redemption proceeds or other cash proceeds received in connection with any
Collateral to reduce any of the Indebtedness; (iii) exchange any of the
securities pledged as Collateral for any other property upon any merger,
consolidation, reorganization, recapitalization or other readjustment of the
issuer thereof, and, in connection therewith, to deposit and deliver any and all
of such securities with any committee, depository, transfer agent, registrar or
other designated agent upon such terms and conditions as Pledgee may deem
necessary or appropriate; (iv) exercise or comply with any conversion, exchange,
redemption, subscription or any other right, privilege or option pertaining to
any securities pledged as Collateral; provided, however, except as provided
herein, Pledgee shall not have a duty to exercise or comply with any such right,
privilege or option (whether conversion, redemption or otherwise) and shall not
be responsible for any delay or failure to do so; and (v) file any claims or
take any action or institute any proceedings which Pledgee may deem necessary or
appropriate for the collection and/or preservation of the Collateral or
otherwise to enforce the rights of Pledgee with respect to the Collateral.
(b) PERFORMANCE BY PLEDGEE. If Pledgor fails to perform any
agreement or obligation provided herein, Pledgee may itself perform, or cause
performance of, such agreement or obligation, and the
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PLEDGE AGREEMENT - PAGE 5
expenses of Pledgee incurred in connection therewith shall be a part of the
Indebtedness, secured by the Collateral and payable by Pledgor on demand.
Notwithstanding any other provision herein to the contrary, Pledgee does not
have any duty to exercise or continue to exercise any of the foregoing rights
and shall not be responsible for any failure to do so or for any delay in doing
so.
10. EVENTS OF DEFAULT. Each of the following constitutes an "Event of
Default" under this Agreement:
(a) DEFAULT UNDER LOAN DOCUMENTS. The occurrence of any event of
default under the Note the Guaranties, the Security Agreement any other Loan
Document (other than attributable to the insolvency or bankruptcy of Xxxxx X.
Xxxxxx); or
(b) BANKRUPTCY OR INSOLVENCY. If Pledgor: (i) becomes insolvent, or
makes a transfer in fraud of creditors, or makes an assignment for the benefit
of creditors, or admits in writing its inability to pay its debts as they become
due; (ii) generally is not paying its debts as such debts become due; (iii) has
a receiver, trustee or custodian appointed for, or take possession of, all or
substantially all of the assets of such party or any of the Collateral, either
in a proceeding brought by such party or in a proceeding brought against such
party and such appointment is not discharged or such possession is not
terminated within sixty (60) days after the effective date thereof or such party
consents to or acquiesces in such appointment or possession; (iv) files a
petition for relief under the United States Bankruptcy Code or any other present
or future federal or state insolvency, bankruptcy or similar laws (all of the
foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an
involuntary petition for relief is filed against such party under any Applicable
Bankruptcy Law and such involuntary petition is not dismissed within sixty (60)
days after the filing thereof, or an order for relief naming such party is
entered under any Applicable Bankruptcy Law, or any composition, rearrangement,
extension, reorganization or other relief of debtors now or hereafter existing
is requested or consented to by such party; (v) fails to have discharged within
a period of sixty (60) days any attachment, sequestration or similar writ levied
upon any property of such party; or (vi) fails to pay within thirty (30) days
any final money judgment against such party; or
(c) EXECUTION ON COLLATERAL. The Collateral or any portion thereof
is taken on execution or other process of law in any action against Pledgor or
any person or entity other than Pledgee; or
(d) ABANDONMENT. Pledgor abandons the Collateral or any portion
thereof; or
(e) ACTION BY OTHER LIENHOLDER. The holder of any lien or security
interest on any of the assets of Pledgor, including without limitation, the
Collateral (without hereby implying the consent of Pledgee to the existence or
creation of any such lien or security interest on the Collateral), declares a
default thereunder or institutes foreclosure or other proceedings for the
enforcement of its remedies thereunder; or
(f) DILUTION OF OWNERSHIP. The issuer of any securities (other than
securities of a class which are publicly traded) constituting Collateral
hereafter issues any shares of any class of capital stock (unless immediately
upon issuance, additional securities are pledged and delivered to Pledgee
pursuant to the terms hereof to the extent necessary to give Pledgee a security
interest after such issuance in at least the same percentage of such issuer's
outstanding securities as Pledgee had before such issuance) or any options,
warrants or other rights to purchase any such capital stock; or
(g) BANKRUPTCY OF ISSUER. (i) The issuer of any securities
constituting Collateral files a petition for relief under any Applicable
Bankruptcy Law, (ii) an involuntary petition for relief is filed against any
such issuer under any Applicable Bankruptcy Law and such involuntary petition is
not dismissed within thirty (30) days after the filing thereof, or (iii) an
order for relief naming any such issuer is entered under any Applicable
Bankruptcy Law; or
(h) LIQUIDATION OR DISSOLUTION. The liquidation, dissolution, merger
or consolidation of Borrower.
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11. REMEDIES AND RELATED RIGHTS. If an Event of Default shall have
occurred, and without limiting any other rights and remedies provided herein,
under any of the other Loan Documents or otherwise available to Pledgee, then
Pledgee may exercise one or more of the rights and remedies provided in this
Section.
(a) REMEDIES. Pledgee may from time to time at its discretion,
without limitation and without notice except as expressly provided in any of the
Loan Documents:
(i) exercise in respect of the Collateral all the rights and
remedies of a Pledgee under the Code (whether or not the Code applies to the
affected Collateral);
(ii) reduce its claim to judgment or foreclose or otherwise
enforce, in whole or in part, the security interest granted hereunder by any
available judicial procedure;
(iii) sell or otherwise dispose of, at its office, on the premises
of Pledgor or elsewhere, the Collateral, as a unit or in parcels, by public or
private proceedings, and by way of one or more contracts (it being agreed that
the sale or other disposition of any part of the Collateral shall not exhaust
Pledgee's power of sale, but sales or other dispositions may be made from time
to time until all of the Collateral has been sold or disposed of or until the
Indebtedness has been paid and performed in full), and at any such sale or other
disposition it shall not be necessary to exhibit any of the Collateral;
(iv) buy the Collateral, or any portion thereof, at any public
sale;
(v) buy the Collateral, or any portion thereof, at any private
sale if the Collateral is of a type customarily sold in a recognized market or
is of a type which is the subject of widely distributed standard price
quotations;
(vi) apply for the appointment of a receiver for the Collateral,
and Pledgor hereby consents to any such appointment; and
(vii) at its option, retain the Collateral in satisfaction of the
Indebtedness whenever the circumstances are such that Pledgee is entitled to do
so under the Code or otherwise.
Pledgor agrees that in the event Pledgor is entitled to receive any notice
under the Uniform Commercial Code, as it exists in the state governing any such
notice, of the sale or other disposition of any Collateral, reasonable notice
shall be deemed given when such notice is deposited in a depository receptacle
under the care and custody of the United States Postal Service, postage prepaid,
at Pledgor's address set forth on the signature page hereof, five (5) days prior
to the date of any public sale, or after which a private sale, of any of such
Collateral is to be held. Pledgee shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Pledgee 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. Pledgor further acknowledges and
agrees that the redemption by Pledgee of any certificate of deposit pledged as
Collateral shall be deemed to be a commercially reasonable disposition under
Section 9-504(3) of the Code.
(b) PRIVATE SALE OF SECURITIES. Pledgor recognizes that Pledgee may
be unable to effect a public sale of all or any part of the securities pledged
as Collateral because of restrictions in applicable federal and state securities
laws and that Pledgee may, therefore, determine to make one or more private
sales of any such securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such securities for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that each any such private sale may be at prices
and other terms less favorable then what might have been obtained at a public
sale and, notwithstanding the foregoing, agrees that each such private sale
shall be deemed to have been made in a commercially reasonable manner and that
Pledgee shall have no obligation to delay the sale of any such securities for
the period of time necessary to permit the issuer to register such securities
for public sale under any federal or state securities laws. Pledgor further
acknowledges and agrees that any offer to sell such
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PLEDGE AGREEMENT - PAGE 7
securities which has been made privately in the manner described above to not
less than five (5) bona fide offerees shall be deemed to involve a "public
sale" for the purposes of Section 9-504(3) of the Code, notwithstanding that
such sale may not constitute a "public offering" under any federal or state
securities laws and that Pledgee may, in such event, bid for the purchase of
such securities.
(c) APPLICATION OF PROCEEDS. If any Event of Default shall have
occurred, Pledgee may at its discretion apply or use any cash held by Pledgee as
Collateral, and any cash proceeds received by Pledgee in respect of any sale or
other disposition of, collection from, or other realization upon, all or any
part of the Collateral as follows in such order and manner as Pledgee may elect:
(i) to the repayment or reimbursement of the reasonable costs
and expenses (including, without limitation, reasonable attorneys' fees and
expenses) incurred by Pledgee in connection with (A) the administration of the
Loan Documents, (B) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, the Collateral, and (C) the
exercise or enforcement of any of the rights and remedies of Pledgee hereunder;
(ii) to the payment or other satisfaction of any liens and other
encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as Collateral;
(v) to the payment of any other amounts required by applicable
law (including without limitation, Section 9-504(1)(c) of the Code or any other
applicable statutory provision); and
(vi) by delivery to Pledgor or any other party lawfully entitled
to receive such cash or proceeds whether by direction of a court of competent
jurisdiction or otherwise.
(d) DEFICIENCY. In the event that the proceeds of any sale of,
collection from, or other realization upon, all or any part of the Collateral by
Pledgee are insufficient to pay all amounts to which Pledgee is legally
entitled, Borrower and any party who guaranteed or is otherwise obligated to pay
all or any portion of the Indebtedness shall be liable for the deficiency,
together with interest thereon as provided in the Loan Documents.
(e) NON-JUDICIAL REMEDIES. In granting to Pledgee the power to
enforce its rights hereunder without prior judicial process or judicial hearing,
Pledgor expressly waives, renounces and knowingly relinquishes any legal right
which might otherwise require Pledgee to enforce its rights by judicial process.
Pledgor recognizes and concedes that non-judicial remedies are consistent with
the usage of trade, are responsive to commercial necessity and are the result of
a bargain at arm's length. Nothing herein is intended to prevent Pledgee or
Pledgor from resorting to judicial process at either party's option.
(f) OTHER RECOURSE. Pledgor waives any right to require Pledgee to
proceed against any third party, exhaust any Collateral or other security for
the Indebtedness, or to have any third party joined with Pledgor in any suit
arising out of the Indebtedness or any of the Loan Documents, or pursue any
other remedy available to Pledgee. Pledgor further waives any and all notice of
acceptance of this Agreement and of the creation, modification, rearrangement,
renewal or extension of the Indebtedness. Pledgor further waives any defense
arising by reason of any disability or other defense of any third party or by
reason of the cessation from any cause whatsoever of the liability of any third
party. Until all of the Indebtedness shall have been paid in full, Pledgor
shall have no right of subrogation and Pledgor waives the right to enforce any
remedy which Pledgee has or may hereafter have against any third party, and
waives any benefit of and any right to participate in any other security
whatsoever now or hereafter held by Pledgee. Pledgor authorizes Pledgee, and
without notice or demand and without any reservation of rights against Pledgor
and without affecting Pledgor's liability hereunder or on the Indebtedness, to
(i) take or hold any other property of any type from any third party as security
for the Indebtedness, and exchange, enforce, waive and release any or all of
such other property, (ii) apply such other property and direct
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PLEDGE AGREEMENT - PAGE 8
the order or manner of sale thereof as Pledgee may in its discretion
determine, (iii) renew, extend, accelerate, modify, compromise, settle or
release any of the Indebtedness or other security for the Indebtedness, (iv)
waive, enforce or modify any of the provisions of any of the Loan Documents
executed by any third party, and (v) release or substitute any third party.
(g) VOTING RIGHTS. Upon the occurrence of an Event of Default,
Pledgor will not exercise any voting rights with respect to securities pledged
as Collateral. Pledgor hereby irrevocably appoints Pledgee as Pledgor's
attorney-in-fact (such power of attorney being coupled with an interest) and
proxy to exercise any voting rights with respect to Pledgor's securities pledged
as Collateral upon the occurrence of an Event of Default.
12. INDEMNITY. Pledgor hereby indemnifies and agrees to hold harmless
Pledgee, and its officers, directors, employees, agents and representatives
(each an "Indemnified Person") from and against any and all liabilities,
obligations, claims, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature made by or through
Borrower or any Obligated Party (collectively, the "Claims") which may be
imposed on, incurred by, or asserted against, any Indemnified Person arising in
connection with the Loan Documents, the Indebtedness or the Collateral
(including without limitation, the enforcement of the Loan Documents and the
defense of any Indemnified Person's actions and/or inactions in connection with
the Loan Documents). WITHOUT LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY
TO EACH INDEMNIFIED PERSON WITH RESPECT TO ANY CLAIMS WHICH IN WHOLE OR IN PART
ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH AND/OR ANY OTHER
INDEMNIFIED PERSON, except to the limited extent the Claims against an
Indemnified Person are proximately caused by such Indemnified Person's gross
negligence or willful misconduct. If Pledgor or any third party ever alleges
such gross negligence or willful misconduct by any Indemnified Person, the
indemnification provided for in this Section shall nonetheless be paid upon
demand, subject to later adjustment or reimbursement, until such time as a court
of competent jurisdiction enters a final judgment as to the extent and effect of
the alleged gross negligence or willful misconduct. The indemnification
provided for in this Section shall survive the termination of this Agreement and
shall extend and continue to benefit each individual or entity who is or has at
any time been an Indemnified Person hereunder.
13. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement contains the entire agreement
of Pledgee and Pledgor with respect to the Collateral. If the parties hereto
are parties to any prior agreement, either written or oral, relating to the
Collateral, the terms of this Agreement shall amend and supersede the terms of
such prior agreements as to transactions on or after the effective date of
this Agreement, but all security agreements, financing statements, guaranties,
other contracts and notices for the benefit of Pledgee shall continue in full
force and effect to secure the Indebtedness unless Pledgee specifically releases
its rights thereunder by separate release.
(b) AMENDMENT. No modification, consent or amendment of any
provision of this Agreement or any of the other Loan Documents shall be valid or
effective unless the same is in writing and signed by the party against whom it
is sought to be enforced.
(c) ACTIONS BY PLEDGEE. The lien, security interest and other
security rights of Pledgee hereunder shall not be impaired by (i) any renewal,
extension, increase or modification with respect to the Indebtedness, (ii) any
surrender, compromise, release, renewal, extension, exchange or substitution
which Pledgee may grant with respect to the Collateral, or (iii) any release or
indulgence granted to any endorser, guarantor or surety of the Indebtedness.
The taking of additional security by Pledgee shall not release or impair the
lien, security interest or other security rights of Pledgee hereunder or affect
the obligations of Pledgor hereunder.
(d) WAIVER BY PLEDGEE. Pledgee may waive any Event of Default
without waiving any other prior or subsequent Event of Default. Pledgee may
remedy any default without waiving the Event of Default remedied. Neither the
failure by Pledgee to exercise, nor the delay by Pledgee in exercising, any
right or remedy upon any Event of Default shall be construed as a waiver of such
Event of Default or as a waiver of the right to exercise any such right or
remedy at a later date. No single or partial exercise by Pledgee of any right
or remedy
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PLEDGE AGREEMENT - PAGE 9
hereunder shall exhaust the same or shall preclude any other or further
exercise thereof, and every such right or remedy hereunder may be exercised at
any time. No waiver of any provision hereof or consent to any departure by
Pledgor therefrom shall be effective unless the same shall be in writing and
signed by Pledgee and then such waiver or consent shall be effective only in
the specific instances, for the purpose for which given and to the extent
therein specified. No notice to or demand on Pledgor in any case shall of
itself entitle Pledgor to any other or further notice or demand in similar or
other circumstances.
(e) COSTS AND EXPENSES. Pledgor will upon demand pay to Pledgee the
amount of any and all costs and expenses (including without limitation,
attorneys' fees and expenses), which Pledgee may incur in connection with
(i) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, the Collateral, (ii) the exercise or
enforcement of any of the rights of Pledgee under the Loan Documents, or
(iii) the failure by Pledgor to perform or observe any of the provisions hereof.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE TEXAS AND APPLICABLE FEDERAL LAWS,
EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION
OF THE SECURITY INTEREST GRANTED HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
TEXAS.
(g) APPOINTMENT OF PLEDGEE AS AGENT. Pledgee has been appointed to
act as Pledgee hereunder by and for the benefit of the Secured Parties.
(h) SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable, shall not
impair or invalidate the remainder of this Agreement and the effect thereof
shall be confined to the provision held to be illegal, invalid or unenforceable.
(i) NO OBLIGATION. Nothing contained herein shall be construed as an
obligation on the part of Pledgee to extend or continue to extend credit to
Borrower.
(j) NOTICES. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and given by (i) personal delivery, (ii) expedited delivery service with proof
of delivery, or (iii) United States mail, postage prepaid, registered or
certified mail, return receipt requested, sent to the intended addressee at the
address set forth on the signature page hereof or to such different address as
the addressee shall have designated by written notice sent pursuant to the terms
hereof and shall be deemed to have been received either, in the case of personal
delivery, at the time of personal delivery, in the case of expedited delivery
service, as of the date of first attempted delivery at the address and in the
manner provided herein, or in the case of mail, upon deposit in a depository
receptacle under the care and custody of the United States Postal Service.
Either party shall have the right to change its address for notice hereunder to
any other location within the continental United States by notice to the other
party of such new address at least thirty (30) days prior to the effective date
of such new address.
(k) BINDING EFFECT AND ASSIGNMENT. This Agreement (i) creates a
continuing security interest in the Collateral, (ii) shall be binding on Pledgor
and the heirs, executors, administrators, personal representatives, successors
and assigns of Pledgor, and (iii) shall inure to the benefit of Pledgee and its
successors and assigns. Without limiting the generality of the foregoing,
Pledgee may pledge, assign or otherwise transfer the Indebtedness and its rights
under this Agreement and any of the other Loan Documents to any other party.
Pledgor's rights and obligations hereunder may not be assigned or otherwise
transferred without the prior written consent of Pledgee.
(l) TERMINATION. It is contemplated by the parties hereto that from
time to time there may be no outstanding Indebtedness, but notwithstanding such
occurrences, this Agreement shall remain valid and shall be in full force and
effect as to subsequent outstanding Indebtedness. Upon (i) the satisfaction in
full of the Indebtedness, (ii) the termination or expiration of any commitment
of Pledgee to extend credit to Borrower, (iii)
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PLEDGE AGREEMENT - PAGE 10
written request for the termination hereof delivered by Pledgor to Pledgee,
and (iv) written release delivered by Pledgee to Pledgor, this Agreement and
the security interests created hereby shall terminate. Upon termination of
this Agreement and Pledgor's written request, Pledgee will, at Pledgor's sole
cost and expense, return to Pledgor such of the Collateral as shall not have
been sold or otherwise disposed of or applied pursuant to the terms hereof and
execute and deliver to Pledgor such documents as Pledgor shall reasonably
request to evidence such termination.
(m) CUMULATIVE RIGHTS. All rights and remedies of Pledgee hereunder
are cumulative of each other and of every other right or remedy which Pledgee
may otherwise have at law or in equity or under any of the other Loan Documents,
and the exercise of one or more of such rights or remedies shall not prejudice
or impair the concurrent or subsequent exercise of any other rights or remedies.
(n) GENDER AND NUMBER. Within this Agreement, words of any gender
shall be held and construed to include the other gender, and words in the
singular number shall be held and construed to include the plural and words in
the plural number shall be held and construed to include the singular, unless in
each instance the context requires otherwise.
(o) DESCRIPTIVE HEADINGS. The headings in this Agreement are for
convenience only and shall in no way enlarge, limit or define the scope or
meaning of the various and several provisions hereof.
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PLEDGE AGREEMENT - PAGE 11
EXECUTED as of the date first written above.
PLEDGOR:
/s/ Xxxxx X'Xxxxxxx
--------------------------------------
Xxxxx X'Xxxxxxx
Address: X.X. Xxx 000000
Xxx Xxxxx, Xxxxxxxxxx 00000
/s/ Xxxx Xxxxxxxx
---------------------------------------
Xxxx Xxxxxxxx, Trustee
Address: 00 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000
Pledgee's Address:
c/o Canmax Inc.
000 X. Xxxxxxxxx Xxxx.
Xxxxxx, XX 00000
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PLEDGE AGREEMENT - PAGE 12
SCHEDULE "A"
TO
PLEDGE AGREEMENT
DATED June 15, 1998
The following property is a part of the Collateral as defined in Subsection
1(c):
1,000 shares of common stock of USCommunication Services, Inc., a Delaware
corporation and formerly known as CNMX MergerSub, Inc., as evidenced by
certificate nos. 002 and 003 issued in the name of Pledgor.
SCHEDULE "A" - Solo Page
