Exhibit 99.7
PLEDGE AGREEMENT
PLEDGE AGREEMENT (this "Agreement"), dated as of March 29,
2006, made by each entity listed as a pledgor on the signature pages hereto
(each a "Pledgor" and collectively, the "Pledgors"), in favor of THE BANK OF NEW
YORK, a New York banking corporation, in its capacity as collateral agent for
the Holders (as defined below) (in such capacity and together with its
successors in such capacity, the "Collateral Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, AFG Enterprises USA, Inc., a Nevada corporation (the
"Company") and The Bank of New York, as trustee for the Holders (in such
capacity and together with its successors and assigns in such capacity, the
"Trustee"), are parties to an Indenture dated the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the
"Indenture"), providing, subject to the terms and conditions thereof, for the
issuance by the Company of the "Notes" (as defined in the Indenture) (as such
Notes may be amended, restated, replaced or otherwise modified from time to time
in accordance with the terms thereof, collectively, the "Notes");
WHEREAS, each of the "Holders" (as defined in the Indenture)
(each a "Holder" and collectively the "Holders") has entered into a Securities
Purchase Agreement of even date herewith (as amended, restated or otherwise
modified from time to time, the "Securities Purchase Agreement") with the
Company providing, subject to the terms and conditions thereof, for the purchase
of the Notes and "Warrants" (as defined therein) from the Company;
WHEREAS, it is a condition precedent to the Trustee entering
into the Indenture and the Holders entering into the Securities Purchase
Agreements that the Company shall have executed and delivered to the Collateral
Agent for the benefit of itself and the Holders this Agreement to secure all of
the Company's obligations under the Indenture, the Notes and the "Transaction
Documents" (as defined in the Securities Purchase Agreement) (the "Transaction
Documents");
WHEREAS, each of the Pledgors other than the Company shall
have executed a Guaranty, dated as of the date hereof, in favor of the
Collateral Agent (the "Guaranty"), guaranteeing all present and future
obligations of the Company under the Transaction Documents and shall have
executed, together with the Company, a Security Agreement granting the
Collateral Agent a first priority perfected lien in all their personal property
(the "Security Agreement");
WHEREAS, the Pledgors are mutually dependent on each other in
the conduct of their respective businesses as an integrated operation, with the
credit needed from time to time by each Pledgor often being provided through
financing obtained by the other Pledgors and the ability to obtain such
financing being dependent on the successful operations of all of the Pledgors as
a whole; and
WHEREAS, each Pledgor has determined that the execution,
delivery and performance of this Agreement directly benefits, and is in the best
interest of, such Pledgor.
NOW, THEREFORE, in consideration of the premises and the
agreements herein and in order to induce the Trustee to perform under the
Indenture, each Grantor agrees with the Collateral Agent as follows:
SECTION 1. Definitions and Rules of Interpretation.
(a) Definitions. Reference is made to the Indenture, the
Securities Purchase Agreement and the Notes for a statement of terms thereof.
All terms used in this Agreement which are defined in the Indenture or in
Article 8 or Article 9 of the Uniform Commercial Code (the "Code") as in effect
from time to time in the State of New York and which are not otherwise defined
herein shall have the same meanings herein as set forth therein; provided, that
terms used herein which are defined in the Code as in effect in the State of New
York on the date hereof shall continue to have the same meaning notwithstanding
any replacement or amendment of such statute except as the Collateral Agent may
otherwise determine. In the event that any such term is defined in both the
Indenture and the Code, the definition of such term in the Indenture shall
control.
(b) Rules of Interpretation. Except as otherwise
expressly provided in this Agreement, the following rules of interpretation
apply to this Agreement: (i) the singular includes the plural and the plural
includes the singular; (ii) "or" and "any" are not exclusive and "include" and
"including" are not limiting; (iii) a reference to any agreement or other
contract includes permitted supplements and amendments; (iv) subject to the
provisions hereof, a reference to a law includes any amendment or modification
to such law and any rules or regulations issued thereunder; (v) a reference to a
person includes its permitted successors and assigns; and (vi) a reference in
this Agreement to an Article, Section, Annex, Exhibit or Schedule is to the
Article, Section, Annex, Exhibit or Schedule of this Agreement.
SECTION 2. Pledge and Grant of Security Interest. As
collateral security for all of the Obligations (as defined in Section 3 hereof),
each of the Pledgors hereby pledges and assigns and grants to the Collateral
Agent for the ratable benefit of the Holders, a continuing security interest in,
and Lien on, all of such Pledgor's right, title and interest in and to the
following (collectively, the "Pledged Collateral"):
(a) all present, as set forth in Schedule I, and all
future, issued and outstanding shares of capital stock, or other equity or
investment securities of, or partnership, limited liability company or other
membership, beneficial or joint venture interests in, each Subsidiary, whether
now owned or hereafter acquired by such Pledgor and whether or not evidenced or
represented by any stock certificate, certificated security or other instrument,
together with the certificates representing such equity interests, all options
and other rights, contractual or otherwise, in respect thereof and all
dividends, distributions, cash, instruments, investment property and any other
property (including, but not limited to, any stock dividend and any distribution
in connection with a stock split) from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
foregoing and all cash and noncash proceeds thereof (collectively, the "Pledged
Shares");
2
(b) all present and future increases, profits,
combinations, reclassifications, and substitutes and replacements for all or
part of the foregoing Collateral heretofore described;
(c) all investment property, financial assets,
securities, capital stock, other equity interests, stock options and commodity
contracts of such Pledgor, all notes, debentures, bonds, or other debt
securities, promissory notes or other evidences of indebtedness payable or owing
to such Pledgor, and all other assets now or hereafter received or receivable
with respect to the foregoing;
(d) all securities entitlements of such Pledgor in any
and all of the foregoing; and
(e) all proceeds (including proceeds of proceeds) of any
and all of the foregoing;
in each case, whether now owned or hereafter acquired by such Pledgor and
howsoever its interest therein may arise or appear (whether by ownership,
security interest, Lien, claim or otherwise).
SECTION 3. Security for Obligations. The security interest
created hereby in the Pledged Collateral constitutes continuing collateral
security for all of the following obligations, whether now existing or hereafter
incurred (the "Obligations"):
(a) In the case of the Company, the payment by the
Company, as and when due and payable (by scheduled maturity, required
prepayment, acceleration, demand or otherwise), of all amounts from time to time
owing by it in respect of the Indenture, the Notes and the other Transaction
Documents, and (ii) in the case of the Guarantors, the payment by each of the
Guarantors, as and when due and payable of all "Guaranteed Obligations" (as
defined in the Guaranty) under the Guaranty, including, without limitation, (A)
all principal of and interest on the Notes (including, without limitation, all
interest that accrues after the commencement of any bankruptcy proceeding of the
pledgors, whether or not the payment of such interest is unenforceable or is not
allowable due to the existence of such bankruptcy proceeding), and (B) all fees,
commissions, expense reimbursements, indemnifications and all other amounts due
or to become due under any of the Transaction Documents; and
(b) the due performance and observance by each Pledgor
of all of its other obligations from time to time existing in respect of any of
the Transaction Documents for so long as any of the Notes are outstanding.
SECTION 4. Delivery of the Pledged Collateral.
(a) All certificates currently representing the Pledged
Shares shall be delivered to the Collateral Agent on or prior to the execution
and delivery of this Agreement. All other promissory notes, certificates and
instruments constituting Pledged Collateral from time to time or required to be
pledged to the Collateral Agent pursuant to the terms of this Agreement or the
Indenture (the "Additional Collateral") shall be delivered to the Collateral
Agent promptly upon receipt thereof by or on behalf of any of the Pledgors. All
such promissory notes, certificates and instruments shall be held by the
Collateral Agent pursuant hereto and shall be delivered in suitable form for
transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignment or undated stock powers executed in blank, all in form
and substance reasonably satisfactory to the Collateral Agent. If any Pledged
Collateral consists of uncertificated securities, unless the immediately
following sentence is applicable thereto, the Pledgors shall cause the
Collateral Agent (or its designated custodian, nominee or other designee) to
become the registered holder thereof, or cause each issuer of such securities to
agree that it will comply with instructions originated by the Collateral Agent
(or its designated custodian, nominee or other designee) with respect to such
securities without further consent by the Pledgors. If any Pledged Collateral
consists of securities entitlements, the Pledgors shall transfer such securities
entitlements to the Collateral Agent (or its designated custodian, nominee or
other designee) or cause the applicable securities intermediary to agree that it
will comply with entitlement orders by the Collateral Agent (or its designated
custodian, nominee or other designee) without further consent by the Pledgors.
3
(b) Promptly upon the receipt by any Pledgor of any
Additional Collateral, a Pledge Amendment, duly executed by such Pledgor, in
substantially the form of Annex I hereto (a "Pledge Amendment"), shall be
delivered to the Collateral Agent, in respect of the Additional Collateral which
is or are to be pledged pursuant to this Agreement and the Indenture, which
Pledge Amendment shall from and after delivery thereof constitute part of
Schedule hereto. Each Pledgor hereby authorizes the Collateral Agent to attach
each Pledge Amendment to this Agreement and agrees that all promissory notes,
certificates or instruments listed on any Pledge Amendment shall for all
purposes hereunder constitute Pledged Collateral and such Pledgor shall be
deemed upon delivery thereof to have made the representations and warranties set
forth in Section 5 with respect to such Additional Collateral.
(c) If any Pledgor shall receive, by virtue of such
Pledgor's being or having been an owner of any Pledged Collateral, any (i) stock
certificate (including, without limitation, any certificate representing a stock
dividend or distribution in connection with any increase or reduction of
capital, reclassification, merger, consolidation, sale of assets, combination of
shares, stock split, spin-off or split-off), promissory note or other
instrument, (ii) option or right, whether as an addition to, substitution for,
or in exchange for, any Pledged Collateral, or otherwise, (iii) dividends
payable in cash (except such dividends permitted to be retained by such Pledgor
pursuant to Section 7 hereof) or in securities or other property or (iv)
dividends, distributions, cash, instruments, investment property and other
property in connection with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or paid-in surplus, such
Pledgor shall receive such stock certificate, promissory note, instrument,
option, right, payment or distribution in trust for the benefit of the
Collateral Agent, shall segregate it from such Pledgor's other property and
shall deliver it forthwith to the Collateral Agent in the exact form received,
with any necessary endorsement and/or appropriate stock powers duly executed in
blank, to be held by the Collateral Agent as Pledged Collateral and as further
collateral security for the Obligations.
4
SECTION 5. Representations and Warranties. Each Pledgor
jointly and severally represents and warrants as follows:
(a) Each Pledgor (i) is a corporation, limited liability
company or limited partnership duly organized, validly existing and in good
standing under the laws of the state or jurisdiction of its organization, (ii)
has all requisite power and authority to execute, deliver and perform this
Agreement and (iii) will defend its title or interest thereto or therein against
any and all Liens (other than Liens created by this Agreement), however arising.
(b) The execution, delivery and performance by each
Pledgor of this Agreement (i) have been duly authorized by all necessary action,
(ii) do not and will not contravene its charter or bylaws, its limited liability
company or operating agreement or its certificate of partnership or partnership
agreement, as applicable, or any applicable law or any contractual restriction
binding on or affecting it or any of its properties, and (iii) do not and will
not result in or require the creation of any Lien upon or with respect to any of
its properties other than pursuant to this Agreement.
(c) The issuers of the Pledged Shares set forth in
Schedule I hereto are the Pledgors' only Subsidiaries existing on the date
hereof. The Pledged Shares have been duly authorized and validly issued, are
fully paid and nonassessable and the holders thereof are not entitled to any
preemptive first refusal or other similar rights. Except as noted in Schedule I
hereto, the Pledged Shares constitute 100% of the issued shares of capital
stock, partnership interests or membership or other equity interests, as
applicable, of the Subsidiaries. All other shares of stock constituting Pledged
Collateral will be, when issued, duly authorized and validly issued, fully paid
and nonassessable.
(d) All promissory notes from time to time evidencing
Additional Collateral, when executed and delivered, will have been, duly
authorized, executed and delivered by the respective makers thereof, and all
such promissory notes will be, as the case may be, legal, valid and binding
obligations of such makers, enforceable against such makers in accordance with
their respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws.
(e) The Pledgors are and will be at all times the legal
and beneficial owners of the Pledged Collateral free and clear of any Lien,
security interest, option or other charge or encumbrance except for the security
interest and Lien created by this Agreement or any Permitted Lien.
(f) The exercise by the Collateral Agent of any of its
rights and remedies hereunder will not contravene any law or any contractual
restriction binding on or affecting any Pledgor or any of the properties of any
Pledgor and will not result in or require the creation of any Lien, security
interest or other charge or encumbrance upon or with respect to any of the
properties of any Pledgor other than pursuant to this Agreement and the other
Transaction Documents.
(g) No authorization or approval or other action by, and
no notice to or filing with, any governmental authority is required to be
obtained or made by any Pledgor for (i) the due execution, delivery and
performance by any Pledgor of this Agreement, (ii) the grant by any Pledgor, or
the perfection, of the security interest and Lien purported to be created hereby
in the Pledged Collateral or (iii) the exercise by the Collateral Agent of any
of its rights and remedies hereunder, except as may be required in connection
with any sale of any Pledged Collateral by laws affecting the offering and sale
of securities generally.
5
(h) This Agreement creates a valid security interest and
Lien in favor of the Collateral Agent in the Pledged Collateral, as security for
the Obligations. The Collateral Agent's having possession of the certificates
representing the Pledged Shares and all other certificates, instruments and cash
constituting Pledged Collateral from time to time results in the perfection of
such security interest and Lien. Such security interest and Lien is, or in the
case of Pledged Collateral in which any of the Pledgors obtains rights after the
date hereof, will be, a perfected Lien, subject only to the Permitted Liens. All
action necessary or desirable to perfect and protect such security interest and
Lien has been duly taken, except for the Collateral Agent's having possession of
certificates, instruments and cash constituting Pledged Collateral after the
date hereof.
(i) All information set forth herein relating to the
Pledged Collateral is accurate and complete in all material respects as of the
date hereof.
SECTION 6. Covenants as to the Pledged Collateral. So long as
any Obligations shall remain outstanding and the Indenture and the other
Transaction Documents shall not have been terminated, each Pledgor will:
(a) keep adequate records concerning the Pledged
Collateral and permit the Collateral Agent, ,or any designees or representatives
thereof at any time or from time to time but not more than twice a year in the
absence of an Event of Default, to examine and make copies of and abstracts from
such records;
(b) at the Pledgors' joint and several expense, promptly
deliver to the Collateral Agent a copy of each material notice or other material
communication received by any Pledgor in respect of the Pledged Collateral;
(c) at the Pledgors' joint and several expense, defend
the Collateral Agent's right, title and security interest in and to the Pledged
Collateral against the claims of any Person;
(d) at the Pledgors' joint and several expense, at any
time and from time to time, promptly execute and deliver all further instruments
and documents and take all further action that may be necessary or desirable or
that the Collateral Agent may reasonably request in order to (i) perfect and
protect, or maintain the perfection of, the security interest and Lien purported
to be created hereby, (ii) enable the Collateral Agent to exercise and enforce
its rights and remedies hereunder in respect of the Pledged Collateral or (iii)
otherwise effect the purposes of this Agreement, including, without limitation,
delivering to the Collateral Agent irrevocable proxies in respect of the Pledged
Collateral;
6
(e) not sell, assign (by operation of law or otherwise),
exchange or otherwise dispose of any Pledged Collateral or any interest therein
except as expressly permitted by the Indenture;
(f) not create or suffer to exist any Lien, upon or with
respect to any Pledged Collateral except for the Lien created hereby or for any
Permitted Lien;
(g) not make or consent to any amendment or other
modification or waiver with respect to any Pledged Collateral or enter into any
agreement or permit to exist any restriction with respect to any Pledged
Collateral other than pursuant to the Transaction Documents;
(h) except as expressly permitted by the Indenture, not
permit the issuance of (i) any additional shares of any class of capital stock,
partnership interests, member interests or other equity of any Subsidiary, (ii)
any securities 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 shares of capital stock or (iii) any warrants,
options, contracts or other commitments entitling any Person to purchase or
otherwise acquire any such shares of capital stock;
(i) not issue any stock certificate, certificated
security or other instrument to evidence or represent any shares of capital
stock, any partnership interest or membership interest described in Schedule I
hereto; and
(j) not take or fail to take any action which would in
any manner impair the validity or enforceability of the Collateral Agent's
security interest in and Lien on any Pledged Collateral.
SECTION 7. Voting Rights, Dividends, Etc. in Respect of the
Pledged Collateral.
(a) So long as no Event of Default (as defined in the
Indenture) (an "Event of Default") shall have occurred and be continuing:
(i) each Pledgor may exercise any and all voting and
other consensual rights pertaining to any Pledged Collateral for any purpose not
inconsistent with the terms of this Agreement, the Indenture or the other
Transaction Documents; provided, however, that (A) no Pledgor will exercise or
refrain from exercising any such right, as the case may be, if the Collateral
Agent gives it notice that, in the Collateral Agent's judgment, such action (or
inaction) is reasonably likely to have a Material Adverse Effect (as defined in
the Securities Purchase Agreement) and (B) each Pledgor will give the Collateral
Agent at least five (5) Business Days' notice of the manner in which it intends
to exercise, or the reasons for refraining from exercising, any such right which
is reasonably likely to have a Material Adverse Effect;
(ii) the Pledgors may receive and retain any and all
dividends, interest or other distributions paid in respect of the Pledged
Collateral to the extent permitted by the Indenture; provided, however, that any
and all (A) dividends and interest paid or payable other than in cash in respect
of, and instruments and other property received, receivable or otherwise
distributed in respect of or in exchange for, any Pledged Collateral, (B)
dividends and other distributions paid or payable in cash in respect of any
Pledged Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus, and (C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral, together with any
dividend, distribution, interest or other payment which at the time of such
dividend, distribution, interest or other payment was not permitted by the
Indenture, shall be, and shall forthwith be delivered to the Collateral Agent to
hold as, Pledged Collateral and shall, if received by any of the Pledgors, be
received in trust for the benefit of the Collateral Agent, shall be segregated
from the other property or funds of the Pledgors, and shall be forthwith
delivered to the Collateral Agent in the exact form received with any necessary
indorsement and/or appropriate stock powers duly executed in blank, to be held
by the Collateral Agent as Pledged Collateral and as further collateral security
for the Obligations; and
7
(iii) the Collateral Agent will execute and deliver
(or cause to be executed and delivered) to a Pledgor all such proxies and other
instruments as such Pledgor may reasonably request for the purpose of enabling
such Pledgor to exercise the voting and other rights which it is entitled to
exercise pursuant to paragraph (i) of this Section 7(a) and to receive the
dividends, distributions, interest and other payments which it is authorized to
receive and retain pursuant to paragraph (ii) of this Section 7(a), in each
case, to the extent that the Collateral Agent has possession of such Pledged
Collateral.
(b) Upon the occurrence and during the continuance of an
Event of Default:
(i) all rights of each Pledgor to exercise the
voting and other consensual rights which it would otherwise be entitled to
exercise pursuant to paragraph (i) of subsection (a) of this Section 7, and to
receive the dividends, distributions, interest and other payments which it would
otherwise be authorized to receive and retain pursuant to paragraph (ii) of
subsection (a) of this Section 7, shall cease, and all such rights shall
thereupon become vested in the Collateral Agent which shall thereupon have the
sole right to exercise such voting and other consensual rights and to receive
and hold as Pledged Collateral such dividends, distributions, interest and other
payments;
(ii) without limiting the generality of the
foregoing, the Collateral Agent may at its option exercise any and all rights of
conversion, exchange, subscription or any other rights, privileges or options
pertaining to any of the Pledged Collateral as if it were the absolute owner
thereof, including, without limitation, the right to exchange, in its
discretion, any and all of the Pledged Collateral upon the merger,
consolidation, reorganization, recapitalization or other adjustment of any
issuer of the Pledged Collateral or upon the exercise by any issuer of the
Pledged Collateral of any right, privilege or option pertaining to any Pledged
Collateral, and, in connection therewith, to deposit and deliver any and all of
the Pledged Collateral with any committee, depository, transfer Collateral
Agent, registrar or other designated Collateral Agent upon such terms and
conditions as it may determine; and
(iii) all dividends, distributions, interest and
other payments which are received by any Pledgor contrary to the provisions of
paragraph (i) of this Section 7(b) shall be received in trust for the benefit of
the Collateral Agent, shall be segregated from other funds of such Pledgor, and
shall be forthwith paid over to the Collateral Agent as Pledged Collateral in
the exact form received with any necessary indorsement and/or appropriate stock
powers duly executed in blank, to be held by the Collateral Agent as Pledged
Collateral and as further collateral security for the Obligations.
8
SECTION 8. Additional Provisions Concerning the Pledged
Collateral.
(a) Each Pledgor hereby (i) authorizes the Collateral
Agent to file one or more financing or continuation statements, and amendments
thereto, relating to the Pledged Collateral, without the signature of such
Pledgor where permitted by law, (ii) ratifies such authorization to the extent
that the Collateral Agent has filed any such financing or continuation
statements, or amendments thereto, without the signature of such Pledgor prior
to the date hereof and (iii) authorizes the Collateral Agent to execute any
agreements, instruments or other documents in such Pledgor's name and to file
such agreements, instruments or other documents that are related to the security
interest and Lien of the Collateral Agent in the Pledged Collateral or as
provided under Article 8 or Article 9 of the UCC in any appropriate filing
office.
(b) Each Pledgor hereby irrevocably appoints the
Collateral Agent as its attorney-in-fact and proxy, with full authority in the
place and stead and in its name or otherwise, from time to time in the
Collateral Agent's discretion to take any action and to execute any instrument
which the Collateral Agent may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of such Pledgor under Section
7(a) hereof), including, without limitation, to receive, indorse and collect all
instruments made payable to such Pledgor representing any dividend, interest
payment or other distribution in respect of any Pledged Collateral and to give
full discharge for the same. This power is coupled with an interest and is
irrevocable until the termination of this Agreement in accordance with Section
13(e) hereof.
(c) If any Pledgor fails to perform any agreement or
obligation contained herein, the Collateral Agent itself may perform, or cause
performance of, such agreement or obligation, and the expenses of the Collateral
Agent incurred in connection therewith shall be jointly and severally payable by
the Pledgors pursuant to Section 10 hereof and shall be secured by the Pledged
Collateral.
(d) Other than the exercise of reasonable care to assure
the safe custody of the Pledged Collateral while held hereunder, the Collateral
Agent shall have no duty or liability to preserve rights pertaining thereto and
shall be relieved of all responsibility for the Pledged Collateral upon
surrendering it or tendering surrender of it to any of the Pledgors. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially equal to that which the
Collateral Agent accords its own property, it being understood that the
Collateral Agent shall not have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Pledged Collateral, whether or not the Collateral
Agent has or is deemed to have knowledge of such matters, or (ii) taking any
necessary steps to preserve rights against any parties with respect to any
Pledged Collateral.
9
(e) The powers conferred on the Collateral Agent
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the safe
custody of any Pledged Collateral in its possession and the accounting for
monies actually received by it hereunder, the Collateral Agent shall have no
duty as to any Pledged Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Pledged Collateral.
(f) Upon the occurrence and during the continuation of
any Default or Event of Default, the Collateral Agent may at any time in its
discretion (i) without notice to the Pledgors, transfer or register in the name
of the Collateral Agent or any of its nominees any or all of the Pledged
Collateral, subject only to the revocable rights of the Pledgors under Section
7(a) hereof, and (ii) exchange certificates or instruments constituting Pledged
Collateral for certificates or instruments of smaller or larger denominations.
SECTION 9. Remedies Upon Default. If any Event of Default
shall have occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the
Pledged Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all of the rights and remedies of a secured party
on default under the Code then in effect in the State of New York; and without
limiting the generality of the foregoing and without notice except as specified
below, sell the Pledged Collateral or any part thereof in one or more parcels at
public or private sale, at any exchange or broker's board or elsewhere, at such
price or prices and on such other terms as the Collateral Agent may deem
commercially reasonable. The Pledgors agree that, to the extent notice of sale
shall be required by law, at least ten (10) days' notice to any of the Pledgors
of the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The Collateral
Agent shall not be obligated to make any sale of Pledged Collateral regardless
of notice of sale having been given. The Collateral 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) Each Pledgor recognizes that it may be impracticable
to effect a public sale of all or any part of the Pledged Shares or any other
securities constituting Pledged Collateral and that the Collateral Agent may,
therefore, determine to make one or more private sales of any such securities to
a restricted group of purchasers who may be obligated to agree, among other
things, to acquire such securities for its own account, for investment and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges
that any such private sale may be at prices and on terms less favorable to the
seller than the prices and other terms which might have been obtained at a
public sale and, notwithstanding the foregoing, agrees that such private sales
shall be deemed to have been made in a commercially reasonable manner and that
the Collateral Agent shall have no obligation to delay sale of any such
securities for the period of time necessary to permit the issuer of such
securities to register such securities for public sale under the Securities Act
of 1933, as amended (the "Securities Act"). Each purchaser at any such sale
shall hold the property sold absolutely free from any claim or right on the part
of the Pledgor, and to the extent permitted by applicable law, the Pledgors
hereby waive all rights of redemption, stay, valuation and appraisal any pledgor
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted. Each Pledgor further acknowledges and agrees
that any offer to sell such securities which has been (i) publicly advertised on
a bona fide basis in a newspaper or other publication of general circulation in
the financial community of New York, New York (to the extent that such an offer
may be so advertised without prior registration under the Securities Act) or
(ii) made privately in the manner described above to not less than fifteen (15)
bona fide offerees shall be deemed to involve a "public disposition" for the
purposes of Section 9-610 of the Code (or any successor or similar, applicable
statutory provision) as then in effect in the State of New York, notwithstanding
that such sale may not constitute a "public offering" under the Securities Act,
and that the Collateral Agent may, in such event, bid for the purchase of such
securities.
10
(c) Any cash held by the Collateral Agent as Pledged
Collateral and all cash proceeds received by the Collateral Agent in respect of
any sale of, collection from, or other realization upon, all or any part of the
Pledged Collateral may, in the discretion of the Collateral Agent, be held by
the Collateral Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Agent pursuant
to Section 10 hereof) in whole or in part by the Collateral Agent against, all
or any part of the Obligations in such order as the Collateral Agent shall elect
consistent with the provisions of the Indenture.
(d) In the event that the proceeds of any such sale,
collection or realization are insufficient to pay all amounts to which the
Collateral Agent is legally entitled, the Pledgors shall be jointly and
severally liable for the deficiency, together with interest thereon at the
highest rate specified in the Indenture for interest on overdue principal
thereof or such other rate as shall be fixed by applicable law, together with
the costs of collection and the reasonable fees, costs and expenses of any
attorneys employed by the Collateral Agent to collect such deficiency.
SECTION 10. Indemnity and Expenses.
(a) Each of the Pledgors, jointly and severally, hereby
agrees to indemnify and hold the Collateral Agent (and all of its officers,
directors, employees, attorneys, consultants) harmless from and against any and
all claims, damages, losses, liabilities, obligations, penalties, fees, costs
and expenses (including, without limitation, reasonable legal fees and
disbursements of counsel) to the extent that they arise out of or otherwise
result from this Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities arising or resulting directly
from such Person's gross negligence or willful misconduct as determined by a
court of competent jurisdiction.
(b) Each Pledgor shall be jointly and severally
obligated for, and will upon demand pay to the Collateral Agent the reasonable
amount of any and all out-of-pocket costs and expenses, including the reasonable
fees and disbursements of the Collateral Agent's counsel and of any experts
which the Collateral Agent may incur in connection with (i) the preparation,
negotiation, execution, delivery, recordation, administration, amendment, waiver
or other modification or termination of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any Pledged Collateral, (iii) the exercise or enforcement of
any of the rights of the Collateral Agent hereunder, or (iv) the failure by any
Pledgor to perform or observe any of the provisions hereof.
11
SECTION 11. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing and shall be mailed (by certified
mail, postage prepaid and return receipt requested), sent by Federal Express or
other recognized courier service (return receipt requested), telecopied or
delivered, if to any Pledgor, to it at the address specified for the Company in
the Indenture or if to the Collateral Agent, to it at the address specified in
the Indenture; or as to either such Person at such other address as shall be
designated by such Person in a written notice to such other Person complying as
to delivery with the terms of this Section 11. All such notices and other
communications shall be effective when received.
SECTION 12. Security Interest Absolute. All rights of the
Collateral Agent, all Liens and all obligations of each of the Pledgors
hereunder shall be absolute and unconditional irrespective of: (i) any lack of
validity or enforceability of the Indenture or any other agreement or instrument
relating thereto, (ii) any change in the time, manner or place of payment of, or
in any other term in respect of, all or any of the Obligations, or any other
amendment or waiver of or consent to any departure from the Indenture or any
other Transaction Document, (iii) any exchange or release of, or non-perfection
of any Lien on any Collateral, or any release or amendment or waiver of or
consent to departure from any guaranty, for all or any of the Obligations, or
(iv) any other circumstance which might otherwise constitute a defense available
to, or a discharge of, any of the Pledgors in respect of the Obligations (other
than the payment in full of the Obligations). All authorizations and agencies
contained herein with respect to any of the Pledged Collateral are irrevocable
and powers coupled with an interest.
SECTION 13. Miscellaneous.
(a) No amendment of any provision of this Agreement
shall be effective unless it is in accordance with the Indenture, in writing and
signed by each Pledgor and the Collateral Agent, and no waiver of any provision
of this Agreement, and no consent to any departure by the Pledgors therefrom,
shall be effective unless it is in writing and signed by the Collateral Agent,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
(b) No failure on the part of the Collateral Agent to
exercise, and no delay in exercising, any right hereunder or under any other
Transaction Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The rights and remedies of the
Collateral Agent provided herein and in the other Transaction Documents are
cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by law. The rights of the Collateral Agent under any Transaction
Document against any party thereto are not conditional or contingent on any
attempt by the Collateral Agent to exercise any of its rights under any other
Transaction Document against such party or against any other Person.
(c) Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
12
(d) This Agreement shall create a continuing security
interest in and Lien on the Pledged Collateral and shall (i) remain in full
force and effect until the termination of this Agreement in accordance with
Section 13 (e) hereof and (ii) be binding on the Pledgors and their respective
successors and assigns and shall inure, together with all rights and remedies of
the Collateral Agent, to the benefit of the Collateral Agent and its successors,
transferees and assigns. Without limiting the generality of clause (ii) of the
immediately preceding sentence, the Collateral Agent may assign or otherwise
transfer its rights and obligations under this Agreement and any other
Transaction Document to any other Person pursuant to the terms of the Indenture,
and such other Person shall thereupon become vested with all of the benefits in
respect thereof granted to the Collateral Agent herein or otherwise. Upon any
such assignment or transfer, all references in this Agreement to the Collateral
Agent shall mean the assignee of the Collateral Agent. None of the rights or
obligations of any of the Pledgors hereunder may be assigned or otherwise
transferred without the prior written consent of the Collateral Agent, and any
such assignment or transfer shall be null and void.
(e) Notwithstanding anything to the contrary in this
Agreement, (i) this Agreement (along with all powers of attorney granted
hereunder) and the security interests and Lien created hereby shall terminate
and all rights to the Pledged Collateral shall revert to the Pledgors upon the
repayment in full and /or complete conversion to equity securities of the
Company of all indebtedness obligations owed by the Company to the Collateral
Agent under the Notes (including, without limitation, all principal, interest
and fees related to the Notes), and (ii) the Collateral Agent will, upon each
Pledgor's request and at each such Pledgor's expense, (A) return to such Pledgor
such of the Pledged Collateral (to the extent delivered to the Collateral Agent)
as shall not have been sold or otherwise disposed of or applied pursuant to the
terms hereof, and (B) execute and deliver to such Pledgor, without recourse,
representation or warranty, such documents as such Pledgor shall reasonably
request to evidence such termination.
(f) The internal laws, and not the laws of conflicts, of
New York shall govern the enforceability and validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties of the
parties, except as required by mandatory provisions of law and except to the
extent that the validity and perfection or the perfection and the effect of
perfection or non-perfection of the security interest and Lien created hereby,
or remedies hereunder, in respect of any particular Pledged Collateral are
governed by the law of a jurisdiction other than the State of New York.
(g) Each party to this Agreement hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the united states district court for the southern district of
New York sitting in Manhattan or the commercial division, civil branch of the
supreme court of the State of New York sitting in New York county in connection
with any suit, action or proceeding directly or indirectly arising out of, under
or in connection with the transaction documents, the conversion shares, or the
transactions contemplated thereby. No party to this Agreement may move to (i)
transfer any such suit, action or proceeding brought in such New York court or
federal court to another jurisdiction, (ii) consolidate any such suit, action or
proceeding brought in such New York court or federal court with a suit, action
or proceeding in another jurisdiction or (iii) dismiss any such suit, action or
proceeding brought in such New York court or federal court for the purpose of
bringing the same in another jurisdiction. Each party to this Agreement agrees
that a final judgment in any such suit, action or proceeding shall be conclusive
and may be enforced in any other jurisdiction by suit on the judgment or in any
other manner provided by law. Each party to this Agreement hereby irrevocably
and unconditionally waives, to the fullest extent it may legally and effectively
do so, any objection which it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to the Transaction
Documents, the shares or the conversion shares in any New York court sitting in
the county of New York or any federal court sitting in the southern district of
New York. Each party to this Agreement hereby consents to the service of process
in any such suit, action or proceeding by notice in the manner specified in
Section 11.
13
(h) Each Pledgor irrevocably consents to the service of
process of any of the aforesaid courts in any such action, suit or proceeding by
the mailing of copies thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Pledgor at its
address provided herein, such service to become effective when received or 10
days after such mailing, whichever first occurs.
(i) Nothing contained herein shall affect the right of
the Collateral Agent to serve process in any other manner permitted by law or
commence legal proceedings or otherwise proceed against any Pledgor or any
property of any Pledgor in any other jurisdiction.
(j) Each Pledgor irrevocably and unconditionally waives
any right it may have to claim or recover in any legal action, suit or
proceeding referred to in this Section any special, exemplary, punitive or
consequential damages.
(k) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR OTHER TRANSACTION DOCUMENTS.
(l) The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
(m) This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
(n) All of the obligations of the Pledgors hereunder are
joint and several. The Collateral Agent may, in its sole and absolute
discretion, enforce the provisions hereof against any of the Pledgors and shall
not be required to proceed against all Pledgors jointly or seek payment from the
Pledgors ratably. In addition, the Collateral Agent may, in its sole and
absolute discretion, select the Pledged Collateral of any one or more of the
Pledgors for sale or application to the Obligations, without regard to the
ownership of such Pledged Collateral, and shall not be required to make such
selection ratably from the Pledged Collateral owned by all of the Pledgors. The
release or discharge of any Pledgor by the Collateral Agent shall not release or
discharge any other Pledgor from the obligations of such Person hereunder.
14
[Signature Page Follows]
15
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to
be executed and delivered by its officer thereunto duly authorized, as of the
date first above written.
AFG ENTERPRISES USA, INC.
By: /s/ Xxxxxxx Xxxxx
----------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
FP TECHNOLOGY HOLDINGS, INC.
By: : /s/ Xxxxxxx Xxxxx
--------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
ACCEPTED BY:
-----------
THE BANK OF NEW YORK,
as Collateral Agent
By: /s/ Xxxxxxxx Xxxxxx
---------------------------
Name: Xxxxxxxx Xxxxxx
Title: Vice President
Address 000 Xxxxxxx Xxxxxx, 0X
Xxx Xxxx, XX 00000
SCHEDULE I TO PLEDGE AGREEMENT
Pledged Shares
Number of Certificate
Pledgor Name of Issuer Shares % of Shares Class No.(s)
--------------- -------------- ------------ ------------ ------------- ------------
AFG Enterprises FP Technology
USA, Inc. Holdings, Inc. 100 100% common 7
ANNEX I
TO
PLEDGE AGREEMENT
PLEDGE AMENDMENT
This Pledge Amendment, dated ?, 20?, is delivered pursuant to
Section 4 of the Pledge Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Pledge Agreement, dated
as of ?, 2002, made by [Pledgor] and certain of its affiliates in favor of The
Bank of New York, as Collateral Agent for the Holders, (the "Collateral Agent")
as it may heretofore have been or hereafter may be amended or otherwise modified
or supplemented from time to time and that the promissory notes [and/or] shares
or other equity interests listed on this Pledge Amendment shall be hereby
pledged and assigned to the Collateral Agent and become part of the Pledged
Collateral referred to in such Pledge Agreement and shall secure all of the
obligations referred to in such Pledge Agreement.
Pledged Shares
Number of Certificate
Pledgor Name of Issuer Shares % of Shares Class No.(s)
or Other
Equity
Interests
--------------- -------------- ------------ ------------ ------------- ------------
[PLEDGOR]
By:
-------------------------------
Name:
Title:
