XXXXXXXX PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of January 16,
1998, is made by XXXXXXXX INDUSTRIES, a corporation organized under the laws
of California (the "Pledgor"), in favor of FIRST UNION NATIONAL BANK, a
national banking association, as Administrative Agent (the "Administrative
Agent") for the ratable benefit of itself and the financial institutions (the
"Lenders") that are, or may from time to time become, parties to the Credit
Agreement (as hereinafter defined).
STATEMENT OF PURPOSE
Pursuant to the terms of the Credit Agreement of even date among
Pledgor, subject to and in accordance with Addendum A to the Credit
Agreement, Sterling Electronics Corporation, the Lenders, and the
Administrative Agent (as amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), the Lenders extended
certain credit facilities to the Borrower as more particularly described
therein.
The Pledgor is the legal and beneficial owner of (a) the shares of
Pledged Stock (as hereinafter defined) issued by the issuers (the "Issuers")
listed on SCHEDULE I hereto, and (b) as applicable, the Partnership Interests
(as hereinafter defined) in the partnerships and limited liability companies
(the "Partnerships") listed on SCHEDULE I hereto.
In connection with the transactions contemplated by the Credit Agreement
and as a condition precedent to the extensions of credit thereunder, the
Lenders have requested, and the Pledgor has agreed to execute and deliver,
this Pledge Agreement together with the Pledged Stock.
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to execute the Credit Agreement and
accept the security contemplated hereby and the Lenders to make Extensions of
Credit under the Credit Agreement, the Pledgor hereby agrees with the
Administrative Agent for the ratable benefit of the Administrative Agent and
Lenders as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms which are
defined in the Credit Agreement and used herein (including the preamble and
statement of purpose) are so used as so defined, and the following terms
shall have the following meanings:
"CODE" means the Uniform Commercial Code from time to time in
effect in the State of North Carolina.
"COLLATERAL" means the Stock Collateral and the Partnership
Collateral.
"PARTNERSHIP COLLATERAL" means all of the Partnership Interests
of the Pledgor in the Partnerships and all Proceeds therefrom.
"PARTNERSHIP INTERESTS" means the entire partnership or
membership interest of the Pledgor in each Partnership listed on
SCHEDULE I hereto, including without limitation, Pledgor's capital
account, its interest as a partner or member in the net cash flow,
net profit and net loss, and items of income, gain, loss, deduction
and credit of the Partnerships, its interest in all distributions
made or to be made by the Partnerships to the Pledgor and all of the
other economic rights, titles and interests of the Pledgor as a
partner or member of the Partnerships, whether set forth in the
partnership agreement or membership agreement of the Partnerships, by
separate agreement or otherwise.
"PERMITTED LIENS" means all such Liens respecting the Collateral
permitted pursuant to SECTION 11.3 (a) - (e) of the Credit Agreement.
"PLEDGE AGREEMENT" means this Pledge Agreement, as amended or
modified.
"PLEDGED STOCK" means the shares of capital stock of each Issuer
listed on SCHEDULE I hereto, together with all stock certificates,
options or rights of any nature whatsoever that may be issued or
granted by any Issuer to the Pledgor while this Pledge Agreement is
in effect.
"PROCEEDS" means all "proceeds" as such term is defined in
Section 9-306(1) of the Code on the date hereof and, in any event,
shall include, without limitation, all dividends or other income from
the Pledged Stock and the Partnership Interests, collections thereon,
proceeds of sale thereof or distributions with respect thereto.
"SECURED OBLIGATIONS" means the Obligations under the Credit
Agreement.
"STOCK COLLATERAL" means the Pledged Stock and all Proceeds
therefrom.
2. PLEDGE AND GRANT OF SECURITY INTEREST. The Pledgor hereby delivers
to the Administrative Agent, for the ratable benefit of the Administrative
Agent and Lenders, all the Pledged Stock and hereby grants to the
Administrative Agent, for the ratable benefit of the Administrative Agent and
Lenders, a first priority security interest in the Collateral, as collateral
security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the Secured
Obligations.
3. STOCK POWERS. Concurrently with the delivery to the Administrative
Agent of each certificate representing one or more shares of Pledged Stock,
the Pledgor shall deliver an undated stock power covering such certificate,
duly executed in blank by the Pledgor.
4. PLEDGOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Pledgor shall remain liable to perform all of its
duties and obligations as a partner of the Partnerships to the same extent as
if this Pledge Agreement had not been executed, (b) the exercise by the
Administrative Agent or any Lender of any of its rights hereunder shall not
release Pledgor
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from any of its duties or obligations as a partner of the Partnerships, and
(c) neither the Administrative Agent nor any Lender shall have any obligation
or liability as a partner of the Partnerships by reason of this Pledge
Agreement.
5. REPRESENTATIONS AND WARRANTIES. To induce the Administrative Agent
and Lenders to execute the Credit Agreement and to accept the security
contemplated hereby and the Lenders to make Extensions of Credit, the Pledgor
hereby represents and warrants to the Administrative Agent and the Lenders
that as of the Closing Date:
(a) the Pledgor has the corporate power, authority and legal right
to execute and deliver, to perform its obligations under, and to grant the
Lien on the Collateral pursuant to, this Pledge Agreement and has taken
all necessary corporate action to authorize its execution, delivery and
performance of, and grant of the Lien on the Collateral pursuant to, this
Pledge Agreement;
(b) this Pledge Agreement constitutes a legal, valid and binding
obligation of the Pledgor enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies;
(c) the execution, delivery and performance of this Pledge Agreement
by Pledgor will not violate, in any material respect, any provision of any
Applicable Law relating to the Pledgor or any Material Contract to which
the Pledgor is a party and will not result in the creation or imposition
of any Lien on any of the properties of the Pledgor pursuant to any
Applicable Law or Material Contract, except as contemplated hereby;
(d) no consent or authorization of, filing with, or other act by or
in respect of, any arbitrator or Governmental Authority and no consent of
any other Person (including, without limitation, any stockholder or
creditor of the Pledgor or any Issuer or any general or limited partner of
any Partnership), is required in connection with the execution, delivery,
performance, validity or enforceability of this Pledge Agreement except
(i) those which have been obtained, (ii) those which could not reasonably
be expected to have a Material Adverse Effect, (iii) as may be required in
connection with the disposition of the Pledged Stock and the Partnership
Interests by laws affecting the offering and sale of securities generally,
and (iv) filings under the Uniform Commercial Code;
(e) to the knowledge of such Pledgor, except for the matters set
forth on Schedule 7.1(u) to the Credit Agreement, no material litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or threatened by or against or in any other way
relates adversely to or affect the Pledgor or any of its properties;
(f) the shares of Pledged Stock listed on SCHEDULE I constitute all
the issued and outstanding shares of all classes of the capital stock of
each domestic Issuer and constitute 65% of all of the issued and
outstanding shares of all classes of the capital stock of each foreign
Issuer;
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(g) all the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable;
(h) the Pledgor has delivered to the Administrative Agent true and
complete copies of the partnership agreements for each of the
Partnerships, if any, which partnership agreements are currently in full
force and effect and have not been amended or modified except as disclosed
to the Administrative Agent in writing;
(i) the Pledgor is the record and beneficial owner of, and has valid
and legal title to, the Collateral listed on SCHEDULE I, free of any and
all Liens or options in favor of, or claims of, any other Person, except
the Lien created by this Pledge Agreement or Permitted Liens;
(j) unless it shall have given the Administrative Agent thirty (30)
days prior written notice thereof and executed and delivered to the
Administrative Agent all financing statements and financing statement
amendments, which the Administrative Agent may reasonably request in
connection therewith, the jurisdiction in which Pledgor is located for
purposes of Section 9-103 of the UCC is the address set forth on SCHEDULE
II; and
(k) upon delivery to the Administrative Agent of the stock
certificates evidencing the Pledged Stock and the filing of properly
completed financing or other statements in all necessary jurisdictions,
the Lien on the Collateral granted pursuant to this Pledge Agreement will
constitute, subject to the Permitted Liens, a valid, perfected first
priority Lien on the Collateral, enforceable as such against all creditors
of the Pledgor.
6. CERTAIN COVENANTS. The Pledgor covenants and agrees with the
Administrative Agent for the ratable benefit of the Administrative Agent and
Lenders that, from and after the date of this Pledge Agreement until the
Obligations are paid in full and the Commitments are terminated:
(a) On or before the date of execution of this Pledge Agreement, the
Pledgor shall cause each of the partners of each of the Partnerships, if
any, to execute a consent in the form attached hereto evidencing the
consent of the partners to the pledge of the Partnership Interests
pursuant to this Pledge Agreement.
(b) The Pledgor will not change its name, identity or corporate
structure so as to make any financing or other statement filed as provided
herein become seriously misleading, unless it provides the Administrative
Agent written notice within ten (10) Business Days thereafter and executes
and delivers to the Administrative Agent all financing statements and all
financing statements amendments which the Administrative Agent may
reasonably request in connection therewith. The Pledgor will, upon the
reasonable request of the Administrative Agent, execute such financing
statements, notices of lien, notices of assignment and continuations or
amendments to any of the foregoing, and other documents (and pay the costs
of filing or recording the same in all public offices
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reasonably deemed necessary by the Administrative Agent) and do such
other acts and things, all as the Administrative Agent may from time to
time reasonably request to establish and maintain a valid perfected
pledge and security interest in the Collateral. Upon the occurrence and
during the continuance of an Event of Default or upon the failure of
Pledgor to execute and deliver all documents necessary to perfect and
keep perfected the security interests created hereby within five (5)
Business Days after receipt of notice from the Administrative Agent,
Pledgor hereby constitutes and appoints the Administrative Agent (and
any of its officers) as its attorney-in-fact with full power and
authority to do so. This power of attorney hereby granted is a special
power of attorney coupled with an interest and shall be irrevocable by
Pledgor.
(c) The Pledgor agrees that as a partner in the Partnerships, if
any, it will abide by, perform and discharge each and every obligation,
covenant and agreement to be abided by, performed or discharged by Pledgor
under the terms of the partnership agreements of the Partnerships, at no
cost or expense to the Administrative Agent and the Lender, except as
could not reasonably be expected to have a Material Adverse Effect.
(d) If the Pledgor shall, as a result of its ownership of the
Collateral, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any of the
Collateral, or otherwise in respect thereof, the Pledgor shall accept the
same as the agent of the Administrative Agent, hold the same in trust for
the Administrative Agent and deliver the same within ten (10) Business
Days after receipt thereof by the Pledgor to the Administrative Agent in
the exact form received, together with an undated stock power covering
such certificate duly executed in blank by the Pledgor, to be held by the
Administrative Agent, subject to the terms hereof, as additional
collateral security for the Secured Obligations. In addition, any sums
paid upon or in respect of any Collateral upon the liquidation or
dissolution of any Issuer or Partnership shall be paid over to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Secured Obligations, and in case any distribution of
capital shall be made on or in respect of any Collateral or any property
shall be distributed upon or with respect to any Collateral pursuant to
the recapitalization or reclassification of the capital of any Issuer or
Partnership or pursuant to the reorganization thereof, the property so
distributed shall be delivered to the Administrative Agent to be held by
it hereunder as additional collateral security for the Secured
Obligations. The preceding sentence shall not apply to asset transfers
from the Issuer to the Pledgor or any other Wholly-Owned Subsidiary of the
Pledgor. If any sums of money or property so paid or distributed in
respect of any Collateral shall be received by the Pledgor, the Pledgor
shall, until such money or property is paid or delivered to the
Administrative Agent, hold such money or property in trust for the
Administrative Agent, segregated from other funds of the Pledgor, as
additional collateral security for the Secured Obligations.
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(e) Without the prior written consent of the Administrative Agent,
which consent shall not be unreasonably withheld or delayed, the Pledgor
will not (i) vote to enable, or take any other action to permit, any
Issuer to issue any stock or other equity securities of any nature (except
as expressly permitted by the Credit Agreement and the immediate pledge of
any such stock or equity securities to the Administrative Agent) or to
issue any other securities convertible into or granting the right to
purchase or exchange for any stock or other equity securities of any
nature of such Issuer, (ii) consent to any material modification,
extension or alteration of the terms of any partnership agreement of the
Partnerships, (iii) accept a surrender of any partnership agreement of any
of the Partnerships or waive any material breach of or material default
under any partnership agreement of any of the Partnerships by any other
party thereto, (iv) sell, assign, transfer, exchange, or otherwise dispose
of, or grant any option with respect to, the Collateral (except as
expressly permitted under the Credit Agreement); PROVIDED, that upon any
sale, assignment, transfer, exchange or other disposition permitted under
the Credit Agreement the obligations of the Pledgor under this Pledge
Agreement with respect to such transferred Collateral shall terminate, or
(v) create, incur or permit to exist any Lien or option in favor of, or
any claim of any Person with respect to, any of the Collateral, or any
interest therein, except for the Lien provided for by this Pledge
Agreement or Permitted Liens. The Pledgor will defend the right, title
and interest of the Administrative Agent in and to the Collateral against
the claims and demands of all Persons whomsoever.
(f) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purposes of obtaining
or preserving the full benefits of this Pledge Agreement and of the rights
and powers herein granted. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory
note, other instrument or chattel paper, such note, instrument or chattel
paper shall be delivered within ten (10) Business Days to the
Administrative Agent, duly endorsed in a manner reasonably satisfactory to
the Administrative Agent, to be held as Collateral pursuant to this Pledge
Agreement.
(g) The Pledgor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect
to any of the Collateral.
7. CASH DIVIDENDS AND DISTRIBUTIONS; VOTING RIGHTS. Unless an Event of
Default shall have occurred and be continuing and the Administrative Agent
shall have given notice to the Pledgor of the Administrative Agent's intent
to exercise its rights pursuant to Section 8 below, the Pledgor shall be
permitted to receive all cash dividends and shareholder and partnership
distributions paid in accordance with the terms of the Credit Agreement in
respect of the Collateral and to exercise all voting and corporate or
partnership rights, as applicable, with respect to the Collateral; PROVIDED,
that no vote shall be cast or corporate or partnership right exercised or
other action taken which, in the Administrative Agent's reasonable judgment,
would impair the
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Collateral in any material respect or which would be inconsistent with or
result in any violation of any provision of the Credit Agreement, the Notes,
the Letters of Credit, any other Loan Documents or this Pledge Agreement.
8. RIGHTS OF THE ADMINISTRATIVE AGENT.
(a) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights
to the Pledgor, (i) the Administrative Agent shall have the right to receive
any and all cash dividends and distributions paid in respect of the
Collateral and make application thereof to the Secured Obligations in the
order set forth in the Credit Agreement and (ii) all shares of the Pledged
Stock shall be registered in the name of the Administrative Agent or its
nominee, and the Administrative Agent or its nominee may thereafter exercise
(A) all voting, corporate and other rights pertaining to such shares of the
Pledged Stock at any meeting of shareholders of each Issuer or otherwise and
(B) any and all rights of conversion, exchange and subscription and any other
rights, privileges or options pertaining to such shares of the Pledged Stock
as if it were the absolute owner thereof (including, without limitation, the
right to exchange at its discretion any and all of the Pledged Stock upon the
merger, consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of any Issuer, or upon the exercise by the
Pledgor or the Administrative Agent of any right, privilege or option
pertaining to such shares of the Pledged Stock, and in connection therewith,
the right to deposit and deliver any and all of the Pledged Stock with any
committee, depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as it may determine), all without liability
except to account for property actually received by it; PROVIDED, that the
Administrative Agent shall have no duty to the Pledgor to exercise any such
right, privilege or option and shall not be responsible for any failure to do
so or delay in so doing.
(b) The rights of the Administrative Agent and the Lenders
hereunder shall not be conditioned or contingent upon the pursuit by the
Administrative Agent or any Lender of any right or remedy against the
Borrower, any Guarantor or against any other Person which may be or become
liable in respect of all or any part of the Secured Obligations or against
any collateral security therefor, guarantee therefor or right of offset with
respect thereto. Neither the Administrative Agent nor any Lender shall be
liable for any failure to demand, collect or realize upon all or any part of
the Collateral or for any delay in doing so, nor shall the Administrative
Agent be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Pledgor or any other Person or to take any other
action whatsoever with regard to the Collateral or any part thereof.
9. REMEDIES.
(a) If an Event of Default shall occur and be continuing, with the
consent of the Required Lenders, the Administrative Agent may, and upon the
request of the Required Lenders, the Administrative Agent shall, exercise on
behalf of itself and the Lenders, all rights and remedies granted in this
Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Secured Obligations, and in addition thereto,
all rights and remedies of a secured party under the Code. Without limiting
the generality of the foregoing with regard to the scope of
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the Administrative Agent's remedies, the Administrative Agent, without demand
of performance or other demand, presentment, protest, advertisement or notice
of any kind (except any notice required by law referred to below or required
by the Loan Documents) to or upon the Pledgor, any Issuer, any Partnership or
any other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, assign, give option or options to purchase or
otherwise dispose of and deliver the Collateral or any part thereof (or
contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, in the over-the-counter market, at any exchange,
broker's board or office of the Administrative Agent or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Administrative Agent or any
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in the Pledgor, which right or equity is hereby waived or
released. The Administrative Agent shall apply any Proceeds from time to time
held by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred in respect thereof or incidental to the care
or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Administrative Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel thereto, to the payment in whole or in part of the
Secured Obligations, in the order set forth in the Credit Agreement, and only
after such application and after the payment by the Administrative Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Administrative Agent
account for the surplus, if any, to the Pledgor. To the extent permitted by
applicable law, the Pledgor waives all claims, damages and demands it may
acquire against the Administrative Agent or any Lender arising out of the
exercise by them in good faith of any rights hereunder, except claims,
damages and demands arising out of the gross negligence or willful misconduct
of the Administrative Agent or any Lender. Notice of a proposed sale or other
disposition of Collateral shall be deemed given to the Pledgor and reasonable
and proper if given at least 10 Business Days before such sale or other
disposition. The Pledgor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of Collateral are insufficient to
pay the Secured Obligations and the reasonable fees and disbursements of any
attorneys employed by the Administrative Agent or any Lender to collect such
deficiency.
(b) The Pledgor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be
obliged 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. The Pledgor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that the fact
that such sale was a private sale shall not, in and of itself, cause such
sale to be deemed to not have been made in a commercially reasonable manner.
The Administrative Agent shall be under no obligation to delay a sale of any
of the Pledged Stock for the period of time necessary to permit such Issuer
thereof to register such
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securities for public sale under the Securities Act of 1933, as amended, or
under applicable state securities laws, even if such Issuer would agree to do
so.
(c) The Pledgor further agrees to use its reasonable efforts to do
or cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Pledged Stock pursuant to this Section
9 valid and binding and in compliance with any and all other Applicable Laws.
The Pledgor further agrees that a breach of any of the covenants contained in
this Section 9 will cause irreparable injury to the Administrative Agent and
the Lenders not compensable in damages, that the Administrative Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 9 shall
be specifically enforceable against the Pledgor, and the Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default
has occurred under the Credit Agreement.
10. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. The Pledgor
shall remain obligated hereunder, and the Collateral shall remain subject to
the Lien granted hereby, notwithstanding that, without any reservation of
rights against the Pledgor, and without notice to or further assent by the
Pledgor, any demand for payment of any of the Obligations made by the
Administrative Agent or any Lender may be rescinded by the Administrative
Agent or such Lender, and any of the Obligations continued, and the
Obligations, or the liability of the Pledgor or any other Person upon or for
any part thereof, or any collateral security or guarantee therefor or right
of offset with respect thereto, may, from time to time, in whole or in part,
be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered, or released by the Administrative Agent or any Lender, and the
Credit Agreement, the Notes, any other Loan Documents and any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or part, as the Lenders (or the Required
Lenders, as the case may be) may deem advisable from time to time, and any
guarantee, right of offset or other collateral security at any time held by
the Administrative Agent or any Lender for the payment of the Obligations may
be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any other Lien at any time held by it as security
for the Obligations or any property subject thereto. The Pledgor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon this Pledge Agreement; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred in
reliance upon this Pledge Agreement; and all dealings between the Pledgor, on
the one hand, and the Administrative Agent and the Lenders, on the other,
shall likewise be conclusively presumed to have been had or consummated in
reliance upon this Pledge Agreement. The Pledgor waives diligence,
presentment, protest, demand for payment and notice (except as required by
the Loan Documents or applicable law) of default or nonpayment to or upon the
Pledgor with respect to the Obligations.
11. LIMITATION ON DUTIES REGARDING COLLATERAL. The Administrative
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same reasonable manner as
the Administrative Agent deals with similar securities and property for its
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own account. Neither the Administrative Agent, any Lender nor any of their
respective directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral, except for
such failure which results from the Administrative Agent's gross negligence
or willful misconduct, or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Pledgor or otherwise.
12. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO ISSUERS. The Pledgor
hereby authorizes and instructs each Issuer and Partnership, if any, to
comply with any instruction received by it from the Administrative Agent in
writing that (a) states that an Event of Default has occurred and is
continuing provided that such instruction is given in good faith by an
authorized officer of Administrative Agent, and (b) is otherwise in
accordance with the terms of this Pledge Agreement and the other Loan
Documents, without any other or further instructions from the Pledgor, and
the Pledgor agrees that each Issuer and Partnership, if any, shall be fully
protected in so complying.
13. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
herein contained with respect to the Collateral constitute irrevocable powers
coupled with an interest.
14. SEVERABILITY. Any provision of this Pledge 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 provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
15. PARAGRAPH HEADINGS. The paragraph headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
16. NO WAIVER; CUMULATIVE REMEDIES. Neither the Administrative Agent
nor any Lender shall by any act (except by a written instrument pursuant to
Section 17 hereof) be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any breach of any
of the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Administrative Agent or any Lender of any
right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which the Administrative Agent or such Lender would
otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
17. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS. None of the terms
or provisions of this Pledge Agreement may be amended, supplemented or
otherwise modified except by a written instrument executed by the Pledgor and
Administrative Agent; PROVIDED that (a) any provision of this Pledge
Agreement may be waived by the Administrative Agent and the Required Lenders
in a letter or agreement executed by the Administrative Agent or by telex or
facsimile
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transmission from the Administrative Agent and (b) any consent by the
Administrative Agent to any amendment, supplement or modification hereto
shall be subject to approval thereof by the Lenders or Required Lenders, as
applicable, in accordance with Section 14.11 of the Credit Agreement. This
Pledge Agreement shall be binding upon and inure to the benefits of the
successors and permitted assigns of the Pledgor, the Administrative Agent and
the Lenders.
18. GOVERNING LAW, ETC.
(a) This Pledge Agreement, unless otherwise expressly set forth
herein, shall be governed by, construed and enforced in accordance with the
laws of the State of North Carolina, without reference to the conflicts or
choice of law principles thereof.
(b) The Pledgor hereby irrevocably consents to the personal
jurisdiction of the state and federal courts located in Mecklenburg County,
North Carolina, in any action, claim or other proceeding arising out of any
dispute in connection with this Pledge Agreement, any rights or obligations
hereunder, or the performance of such rights and obligations. The Pledgor
hereby irrevocably consents to the service of a summons and complaint and
other process in any action, claim or proceeding brought by the
Administrative Agent in connection with this Pledge Agreement or any rights
or obligations hereunder, or the performance of such rights and obligations,
on behalf of itself or its property, in the manner specified in Section 20.
Nothing in this Section 18 shall affect the right of the Administrative Agent
to serve legal process in any other manner permitted by Applicable Law or
affect the right of the Administrative Agent to bring any action or
proceeding against the Pledgor or its properties in the courts of any other
jurisdictions.
(c) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE ADMINISTRATIVE
AGENT AND EACH LENDER BY THEIR ACCEPTANCE OF THIS PLEDGE AGREEMENT OR THE
BENEFITS HEREOF AND THE PLEDGOR HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF OR ANY DISPUTE IN CONNECTION WITH THIS PLEDGE AGREEMENT, ANY
RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.
19. ARBITRATION.
(a) BINDING ARBITRATION. Upon demand of any party, whether made
before or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to this Pledge
Agreement ("Disputes"), between or among parties to this Pledge Agreement
shall be resolved by binding arbitration as provided herein. Institution of
a judicial proceeding by a party does not waive the right of that party to
demand arbitration hereunder. Disputes may include, without limitation, tort
claims, counterclaims, claims brought as class actions or claims concerning
any aspect of the past, present or future relationships arising out or
connected with this Pledge Agreement. Arbitration shall be conducted under
and governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and
Title 9 of the U.S. Code. All arbitration hearings shall be
11
conducted in Charlotte, North Carolina. The expedited procedures set forth
in Rule 51, ET SEQ. of the Arbitration Rules shall be applicable to claims of
less than $1,000,000. All applicable statutes of limitation shall apply to
any Dispute. A judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall be
comprised of licensed attorneys. The single arbitrator selected for
expedited procedure shall be a retired judge from the highest court of
general jurisdiction, state or federal, of the state where the hearing will
be conducted. The arbitrators shall be appointed as provided in the
Arbitration Rules.
(b) PRESERVATION OF CERTAIN REMEDIES. Notwithstanding the
preceding binding arbitration provisions, the Administrative Agent and the
Lenders preserve, without diminution, certain remedies that the
Administrative Agent and the Lenders may employ or exercise freely, either
alone, in conjunction with or during a Dispute. The Administrative Agent and
the Lenders shall have and hereby reserve the right to proceed in any court
of proper jurisdiction or by self help to exercise or prosecute the following
remedies: (i) all rights to foreclose against any real or personal property
or other security by exercising a power of sale granted in the Loan Documents
or under applicable law or by judicial foreclosure and sale, (ii) all rights
of self help, including peaceful occupation of property and collection of
rents, set off, and peaceful possession of property and (iii) obtaining
provisional or ancillary remedies, including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding. Preservation of these remedies does not
limit the power of an arbitrator to grant similar remedies that may be
requested by a party in a Dispute.
20. NOTICES. All notices and communications hereunder shall be given
to the addresses and otherwise in accordance with Section 14.1 of the Credit
Agreement.
21. AUTHORITY OF ADMINISTRATIVE AGENT. The Pledgor acknowledges that
the rights and responsibilities of the Administrative Agent under this Pledge
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Pledge Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit Agreement and
by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Administrative Agent and the Pledgor, the
Administrative Agent shall be conclusively presumed to be acting as
Administrative Agent for itself and the Lenders with full and valid authority
so to act or refrain from acting, and neither the Pledgor nor any Issuer or
Partnership shall be under any obligation, or entitlement, to make any
inquiry respecting such authority.
22. EFFECTIVENESS OF STERLING AS AN ISSUER. The rights and obligations
of Sterling as an Issuer hereunder, subject to the terms and provisions of
this Agreement, shall not be effective until the Administrative Agent has
received evidence, in form and substance acceptable to the Administrative
Agent, of the Acquisition Filing in the manner set forth in Section 6.3(d) of
the Credit Agreement; PROVIDED that Sterling shall execute and deliver to the
Administrative Agent a fully executed Acknowledgement and Consent signed by
Sterling in conjunction with the delivery by the other parties hereto of
their respective signature pages to this Agreement, the Credit Agreement and
the other Loan Documents.
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IN WITNESS WHEREOF, the undersigned has caused this Pledge Agreement to
be duly executed under seal and delivered as of the date first above written.
[CORPORATE SEAL] XXXXXXXX INDUSTRIES
By: /s/ XXXXXX XXXXX
-------------------------------------
Xxxxxx Xxxxx
President and Chief Executive Officer
ACKNOWLEDGEMENT AND CONSENT
The undersigned Issuer referred to in the foregoing Pledge Agreement
hereby acknowledges receipt of a copy thereof and hereby acknowledges and
consents to the pledge of the Pledgor's interest in the Pledged Stock
pursuant to the Pledge Agreement. The Issuer agrees to notify the
Administrative Agent promptly in writing of the occurrence of any of the
events described in Section 6(d) of the Pledge Agreement.
[CORPORATE SEAL] XXXXXXXX INDUSTRIES TECHNOLOGY PRODUCTS
By: /s/ XXXXXX XXXXX
-------------------------------------
Xxxxxx Xxxxx
President and Chief Executive Officer
ACKNOWLEDGEMENT AND CONSENT
The undersigned Issuer referred to in the foregoing Pledge Agreement
hereby acknowledges receipt of a copy thereof and hereby acknowledges and
consents to the pledge of the Pledgor's interest in the Pledged Stock
pursuant to the Pledge Agreement. The Issuer agrees to notify the
Administrative Agent promptly in writing of the occurrence of any of the
events described in Section 6(d) of the Pledge Agreement.
[CORPORATE SEAL] STERLING ELECRONICS CORPORATION
By: /s/ XXXXXX XXXXX
-------------------------------------
Xxxxxx Xxxxx
President and Chief Executive Officer
