EXHIBIT 10.4
SECURITY AND STOCK PLEDGE AGREEMENT
This Security and Stock Pledge Agreement entered into effective June 25,
2001 between Xxxxxxx X. Xxxx (the "Pledgor") and Syntroleum Company, a Delaware
Company (the "Company").
WHEREAS, the Company may extend loans or other credit facilities or
financial accommodations (collectively, the "Loans") to or on behalf of the
Pledgor from time to time.
NOW, THEREFORE, to induce the Company to extend the Loans and to secure the
Pledgor's obligations (collectively, the "Secured Obligations") with regard
thereto and hereunder, and for other good consideration, the receipt and
adequacy of which are hereby acknowledged, the Pledgor and the Company agree as
follows.
1. As collateral security for the performance of the Secured Obligations,
the Pledgor hereby pledges and assigns to the Company, and grants to the Company
a valid first-priority security interest in that number of shares of common
stock of the Company owned by Pledgor having an aggregate market value equal to
or greater than two times Pleadgor's indebtedness, including accrued interest,
to the Company under the Loans together with all proceeds and products thereof
and dividends and other distributions thereon (whether in cash, additional
securities or otherwise), all security entitlements in respect thereof and all
proceeds and products thereof and dividends and distributions thereon (whether
in cash, additional securities or otherwise) (collectively, the "Collateral").
For the purposes of this Section 1, the aggregate market value of the Collateral
shall be determined, on any given day, by reference to the per share closing
price of the common stock of Secured Party as reported by the National Market
System of the National Association of Securities Dealers. The Pledgor hereby
authorizes the Company to enter on the schedule, attached hereto as Exhibit A,
appropriate entries evidencing the number of shares of Company Common Stock
pledged to the Company from time to time by Pledgor pursuant to this Agreement.
The Company shall have full control of the Collateral and any transfer affecting
the Collateral is subject to its approval. The Pledgor may substitute Collateral
upon the consent of the Company.
2. The Pledgor represents and warrants to the Company that: (i) this
Agreement has been duly authorized, executed and delivered by the Pledgor and
constitutes a valid and legally binding obligation of the Pledgor enforceable in
accordance with its terms, (iii this Agreement creates a valid first priority
lien on and first priority perfected security interest in the Collateral
securing the payment of the Secured Obligations, (iii) Pledgor has, and will
have upon delivery of any additional Collateral to the Company, title to all of
the Collateral, free and clear of all claims, mortgages, pledges, liens,
encumbrances and security interests of every nature whatsoever ("Liens"), other
than Liens created hereunder, and no consent or approval of any person, entity
or governmental or regulatory authority, or of any securities exchange, was or
is necessary to create or perfect this pledge, (iv) the execution and delivery
of this Agreement by the Pledgor and the performance by the Pledgor of its
obligations hereunder do not violate or conflict with any law applicable to
Pledgor, any provision of its constitutional documents,
any order or judgment of any court or other agency of government applicable to
Pledgor or any of Pledgor's assets or any contractual restriction binding on or
affecting it or any of Pledgor's assets, (v) the information set forth in
Exhibit A is true and correct, (vi) no Liens other than in favor of the Company
exist upon any of the Collateral, (vii) no Liens against any stock of the
Company (as defined in Exhibit A) other than as described in Exhibit A or in
favor of the Company are in existence, and (viii) the Pledgor has complied and
will comply with all securities laws in connection with its ownership and
pledging of the Collateral, including without limitation, Sections 13 and 16 of
the Securities Exchange Act of 1934, as amended.
3. The Pledgor will faithfully preserve and protect the Company's
security interest in the Collateral, will defend the Company's right, title,
lien and security interest in and to the Collateral against the claims and
demands of all persons whomsoever, and will do all such acts and things and
execute and deliver all such documents and instruments, including without
limitation further pledges, assignments, financing statements and continuation
statements, as the Company in its sole discretion may reasonably deem necessary
or advisable from time to time in order to preserve, protect and perfect such
security interest or to enable the Company to exercise or enforce its rights
under this Agreement with respect to any Collateral. The Pledgor hereby
authorizes the Company to sign and file financing and continuation statements
and Securities and Exchange Commission Form 144's (or similar or replacement
forms), without the signature of the Pledgor.
4. The Pledgor will not permit any Liens other than the Lien created
hereby in favor of the Company to exist upon any of the Collateral and will not,
without the prior express written consent of the Company, pledge any-shares-of
the Company, or any securities or other instruments convertible into or
exercisable or exchangeable for shares of the Company, to any person or entity
other than the Company.
5. The Pledgor will not take any action that could in any way limit or
adversely affect the ability of the Company to realize upon its rights in the
Collateral. In the event the Secured Obligations shall be in default, the
Company shall be entitled to exercise all voting powers with respect to the
Collateral.
6. The Pledgor will not, without the prior written consent of the
Company, sell or donate any securities of the same class as the securities of
the Company included in the Collateral (or convertible into) shares of the
Company, or commit any other act which might render the Collateral not readily
saleable pursuant to Rule 144 or Rule 145 under the Securities Act of 1933, as
amended (the "Securities Act").
7. The Pledgor agrees to notify the Company immediately of any
development or occurrence which to its knowledge would render any of the
Collateral not readily saleable under (i) Rules 144 or 145 under the Securities
Act, or (ii) any other provisions of the Securities Act.
8. At any time and from time to time the Company may cause all or any of
the Collateral to be transferred to or registered in its name or the name of its
nominee or
2
nominees or to have security entitlements in respect thereof credited to its or
its nominee's securities account with any securities intermediary.
9. If any of the Secured Obligations shall not be performed when due in
accordance with their terms, the Company, without obligation to resort to other
security, shall have the right at any time and from time to time to sell,
resell, assign and deliver, in its discretion, all or any of the Collateral, in
one or more parcels at the same or different times, and all right, title and
interest, claim and demand therein and right of redemption thereof, on any
securities exchange on which the Collateral or any of it may be listed, or at
public or private sale, for cash, upon credit or for future delivery, and in
connection therewith the Company may grant options, the Pledgor hereby waiving
and releasing any and all equity or right of redemption to the fullest extent
permitted by law.
If any of the Collateral is sold by the Company upon credit or for future
delivery, the Company shall not be liable for the failure of the purchaser to
purchase or pay for the same and, in the event of any such failure, the Company
may resell such Collateral. In no event shall the Pledgor be credited with any
part of the proceeds of sale of any Collateral until cash payment thereof has
actually been received by the Company.
10. The Pledgor acknowledges and agrees that the securities forming a part
of the Collateral may decline speedily in value and are of a type customarily
sold on a recognized market, and, accordingly, no demand, advertisement or
notice, all of which are hereby expressly waived, shall be required in
connection with any sale or other disposition of any such securities, or any
other part of the Collateral which may decline speedily in value or which is of
a type customarily sold on a recognized market, except any notice that is
required under applicable law and cannot be waived. With respect to any other
type of Collateral, the Company shall give the Pledgor at least five business
days' prior notice of the time and place of any public sale and of the time
after which any private sale or other disposition is to be made, which notice
the Pledgor agrees is reasonable, all other demands, advertisements and notices
being hereby waived. The Company shall not be obligated to make any sale of
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale may have been given. The Company may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In the case of all sales of Collateral,
public or private, the Pledgor shall pay all costs and expenses of every kind
for sale or delivery, including brokers' and attorneys' fees and all liabilities
and advances made or incurred by the Company in connection with each sale or
delivery, and after deducting such costs and expenses from the proceeds of sale,
the Company shall apply any residue, first, to the payment of the costs and
expenses, including legal fees, incurred by the Company in connection with the
administration and enforcement of the Secured Obligations and this Agreement and
any amounts due to the Company in respect of the Secured Obligations other than
principal or interest, second, to the payment of interest owed with regard to
the Secured Obligations, and third, to the payment of principal owed with regard
to the Secured Obligations. The balance, if any, remaining after payment in full
of all such amounts shall be paid to or on the order of the Pledgor, subject to
any duty of the Company imposed by law to the holder of any subordinate security
interest in the Collateral known to the Company.
3
11. The Pledgor recognizes that the Company may be unable to effect a
public sale of all or a part of the Collateral by reason of certain prohibitions
contained in the Securities Act, as amended, as now or hereafter in effect, or
in applicable Blue Sky or other state securities laws, as now or hereafter in
effect, but may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire such Collateral for their own account, for investment and not with a
view to the distribution or resale thereof. The Pledgor agrees that private
sales so made may be at prices and other terms less favorable to the seller than
if such Collateral were sold at public sales, and that the Company has no
obligation to delay sale of any such Collateral for the period of time necessary
to permit the issuer of such Collateral, even if such issuer would agree, to
register such Collateral for public sale under such applicable securities laws.
The Pledgor agrees that private sales made under the foregoing circumstances
shall be deemed to have been made in a commercially reasonable manner.
12. The Company shall have the right, for and in the name, place and stead
of the Pledgor, to execute endorsements, assignments or other instruments of
conveyance or transfer with respect to all or any of the Collateral.
13. The Company shall have no duty as to the collection or protection of
the Collateral or any income thereon or as to the preservation of any rights
pertaining thereto, beyond the safe custody of any thereof actually in its
possession. With respect to any maturities, calls, conversions, exchanges,
redemptions, offers, tenders or similar matters relating to any of the
Collateral (herein called "events") occurring prior to a default by the Pledgor
in respect of any of the Secured Obligations, the Company's duty shall be fully
satisfied if (i) the Company exercises reasonable care to ascertain the
occurrence, and to give reasonable notice to the Pledgor, of any events
applicable to any such securities included in the Collateral which are
registered and held in the name of the Company or its nominee or any security
entitlements included in the Collateral as to which the Company is the
entitlement holder, (ii) the Company gives the Pledgor reasonable notice of the
occurrence of any events, of which the Company has received actual knowledge, as
to any such securities which are in bearer form or are not registered and held
in the name of the Company or its nominee (the Pledgor agreeing to give the
Company reasonable notice of the occurrence of any events applicable to any
securities in the possession of the Company of which the Pledgor has received
knowledge), and (iii) subject to the exercise of its sole discretion (a) the
Company endeavors to take such action with respect to any of the events as the
Pledgor may reasonably and specifically request in writing in sufficient time
for such action to be evaluated and taken or (b) if the Company determines that
the action requested might adversely affect the value of the Collateral as
collateral, the collection of the Secured Obligations, or otherwise prejudice
the interests of the Company, the Company gives reasonable notice to the Pledgor
that any such requested action will not be taken, and if the Company makes such
determination or if the Pledgor fails to make such timely request, the Company
takes such other action as it deems advisable in the circumstances. Except as
hereinabove specifically set forth, and at any time following a default by the
Pledgor in respect of any of the Secured Obligations, the Company shall have no
further obligation to ascertain the occurrence of, or to notify the Pledgor with
respect to, any events and shall not be deemed to assume any such further
4
obligation as a result of the establishment by the Company of any internal
procedures with respect to any securities in its possession or any security
entitlements as to which it is the entitlement holder. The Pledgor releases the
Company from any claims, causes of action and demands at any time arising out of
or with respect to this Agreement or the Collateral and/or any actions, taken or
omitted to be taken by the Company with respect thereto, and the Pledgor hereby
agrees to hold the Company harmless from and with respect to any and all such
claims, causes of action and demands.
14. The Pledgor hereby irrevocably appoints the Company as the Pledgor's
attorney-in-fact for the purpose of carrying out the provisions of this
Agreement and taking any action and executing any instrument which either may
deem necessary or advisable to accomplish the purposes hereof. Without limiting
the generality of the foregoing, the Company shall have the right and power to
receive, endorse and collect all checks and other orders for the payment of
money made payable to the Pledgor representing any interest or dividend or other
distribution payable in respect of the Collateral or any part thereof and to
give full discharge for the same. This power of attorney shall be coupled with
an interest and shall survive the death or disability of the Pledgor.
15. The remedies provided herein in favor of the Company shall not be
deemed exclusive, but shall be cumulative, and shall be in addition to all other
remedies in favor of the Company existing at law or in equity. No delay on the
part of the Company in exercising any of its options, powers or rights, or
partial or single exercise thereof, shall constitute a waiver thereof. The
pledge of the Collateral hereby shall not in any way preclude or restrict any
recourse by the Company against the Pledgor or any other person or entity liable
with regard to the Secured Obligations or any other collateral therefor.
16. Upon the repayment in full of all principal, interest and other
amounts that may be payable with regard to the Secured Obligations, the Pledgor
shall be entitled to the return of all of the Collateral and of all other
property and cash which have not been used or applied toward the payment of such
principal, interest and other amounts free and clear of all Liens in favor of
the Company or any encumbrances imposed by the Company. Except as aforesaid, the
assignment by the Company to the Pledgor of such Collateral and other property
shall be without representation or warranty of any nature whatsoever and wholly
without recourse.
17. Any waiver, permit, consent or approval of any kind or character on
the part of the Company of any breach or default under this Agreement or any
such waiver of any provision or condition of this Agreement must be in writing
and shall be effective only to the extent specifically set forth in such
writing.
18. This Agreement may not be assigned by the Pledgor without the prior
written consent of the Company, and any purported assignment without such
consent shall be void, This Agreement cannot be changed orally and shall bind
and inure to the benefit of the Pledgor, and the Company and their permitted
successors, assigns, heirs and legal representatives, and all subsequent holders
of the Secured Obligations.
5
19. Any communication, demand or notice to be given under this Agreement
shall be (i) delivered in person, (ii) sent via a courier service guaranteeing
overnight delivery, (iii) sent via electronic facsimile or (iv) mailed by
registered or certified mail (postage prepaid, return receipt requested) to any
party to this Agreement at the address specified below, or to any such party at
such other address as such party may theretofore have designated in writing and
given in like manner to the other party hereto. Any notice delivered to a
recipient in person as provided in this paragraph shall be deemed to have been
duly given when received by the recipient. Any notice sent via electronic
facsimile as provided in this paragraph shall be deemed to have been duly given
upon acknowledgment of receipt at the electronic facsimile number specified
pursuant to this paragraph for the applicable party. Any notice sent by
registered or certified mail or by a guaranteed overnight delivery service as
provided in this paragraph shall be deemed to have been duly given when upon
receipt of written acknowledgment of delivery to the address specified pursuant
to this paragraph for the applicable party.
20. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which taken together shall
constitute but one and the same instrument.
21. The Pledgor agrees to pay the Company on demand all costs and
expenses, including legal fees, incurred by the Company in connection with the
administration and enforcement of this Agreement, all of which costs and
expenses shall form part of the Secured Obligations as provided above. The
Pledgor shall reimburse the Company on demand for any transfer taxes,
documentary taxes, assessments or charges that are imposed at any time on or in
connection with this Agreement and shall indemnify the Company against liability
for any such tax (including any interest and penalties).
22. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF OKLAHOMA. THE PLEDGOR HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
OKLAHOLMA AND OF ANY OKLAHOMA STATE COURT SITTING IN TULSA, OKLAHOMA FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY AGREEMENT RECEIVED BY THE COMPANY IN CONNECTION HEREWITH. THE PLEDGOR
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
THE PLEDGOR MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE PLEDGOR
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY AGREEMENT
RECEIVED BY THE COMPANY IN CONNECTION HEREWITH. THE UNDERSIGNED, IF MORE THAN
ONE, SHALL BE JOINTLY AND SEVERALLY LIABLE HEREUNDER.
6
IN WITNESS WHEREOF, the Pledgor and the Company have caused this Agreement
to be duly executed as of the day and year first above written.
/s/ Xxxxxxx X. Xxxx
-------------------------------------------
Xxxxxxx X. Xxxx
00000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
SYNTROLEUM CORPORATION
0000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxxx 00000
By: /s/ Xxxx X. Xxxx
---------------------------------------
Title: Xxxxxxx X. Xxxxxxxx
Vice President and Chief Financial
Officer
7
