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Exhibit 10.7
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Pledge Agreement") is entered
into as of December 18, 2000, by and between Daisytek, Incorporated, a Delaware
corporation (the "Borrower"), Steadi-Systems, Ltd., a California corporation
(the "Co-Pledgor"; and together with the Borrower, the "Pledgors") and Bank One,
Texas, NA, a national banking association having its principal office in
Chicago, Illinois, in its capacity as administrative agent (the "Agent") for the
LC Issuer and the Lenders party to the Credit Agreement referred to below.
PRELIMINARY STATEMENT
The Borrower, the Agent, the Documentation Agent, Co-Lead Arrangers,
the LC Issuer and the Lenders party thereto are entering into a Credit Agreement
dated the date hereof (as the same may be amended, restated or modified from
time to time, the "Credit Agreement"). The Pledgors are entering into this
Pledge and Security Agreement (as it may be amended, restated or modified from
time to time, the "Pledge Agreement") in order to induce the Lenders and the LC
Issuer to enter into and extend credit to the Borrower under the Credit
Agreement.
ACCORDINGLY, the Pledgors and the Agent, on behalf of the LC Issuer and
the Lenders, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Terms Defined in Credit Agreement. All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement.
1.2. Terms Defined in Texas Uniform Commercial Code. Terms defined in
the Texas Uniform Commercial Code which are not otherwise defined in this Pledge
Agreement are used herein as defined in the Texas Uniform Commercial Code as in
effect from time to time.
1.3. Definitions of Certain Terms Used Herein. As used in this Pledge
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:
"Article" means a numbered article of this Pledge Agreement, unless
another document is specifically referenced.
"Capital Stock" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital stock
in any Person that is a corporation, each class of partnership interest
(including, without limitation, general, limited and preference units) in
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any Person that is a partnership, and each class of member interest in any
Person that is a limited liability company and any and all warrants to purchase
any of the foregoing.
"Collateral" means all of the following, whether now owned or existing
or hereafter arising or acquired 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:
(a) the Pledged Stock and the certificates representing the Pledged
Stock and any interest of the Pledgors or the Co-Pledgor in the entries on the
books of any financial intermediary pertaining to the Pledged Stock, and all
dividends, cash, warrants, rights, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Pledged Stock;
(b) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock or
other equity securities of any issuer of the Pledged Stock from time to time
acquired by the Pledgors in any manner (which shares and other securities shall
be deemed to be part of the Pledged Stock), the certificates or other
instruments representing such additional shares, securities, warrants, options
or other rights and any interest of the Pledgors in the entries on the books of
any financial intermediary pertaining to such additional shares, and all
dividends, cash, warrants, rights, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such additional shares, securities, warrants,
options or other rights;
(c) to the extent not covered by clauses (a) and (b) above, all
Proceeds of any or all of the foregoing Collateral.
"Control" shall have the meaning set forth in Article 8 of the Texas
Uniform Commercial Code as in effect from time to time.
"Domestic Subsidiaries" means all Subsidiaries of the Pledgors and the
Co-Pledgor organized under the laws of the United States of America or a State
thereof and shall include those Subsidiaries set forth on Schedule 1 attached
hereto, as the same may be amended or supplemented from time to time.
"Investment Property" shall have the meaning set forth in the Texas
Uniform Commercial Code as in effect from time to time.
"Pledged Stock" means all Capital Stock in the Borrower's or the
Co-Pledgor's Domestic Subsidiaries and 65% of the Borrower's Capital Stock in
Daisytek (Canada) Inc., an Ontario company, and shall include the shares of
Capital Stock listed on Schedule 1 together with all stock certificates, options
or rights of any nature whatsoever that may be issued or granted by any issuer
of the Pledged Stock to the Borrower or the Co-Pledgor in respect of the Pledged
Stock while this Pledge Agreement is in effect.
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"Proceeds" shall have the meaning set forth in the Texas Uniform
Commercial Code as in effect from time to time and, in any event, shall include,
without limitation, all dividends or other income from the Collateral and all
collections thereon and all distributions with respect thereto.
"Section" means a numbered section of this Pledge Agreement, unless
another document is specifically referenced.
"Secured Obligations" is defined in the Credit Agreement.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
GRANT OF SECURITY INTEREST
Each of the Borrower and the Co-Pledgor hereby pledges, assigns and
grants to the Agent, on behalf of and for the ratable benefit of the LC Issuer
and the Lenders and (to the extent specifically provided herein) their
Affiliates, a security interest in all of their right, title and interest in and
to the Collateral (whether now owned or hereafter acquired) to secure the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Secured Obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of the Borrower and the Co-Pledgor represents and warrants to the
Agent, the LC Issuer and the Lenders that as of the date hereof and on the date
of each Extension of Credit under the Credit Agreement:
3.1. Title, Authorization, Validity and Enforceability. Each has good
and valid rights in and title to the Collateral with respect to which it has
purported to grant a security interest hereunder, free and clear of all Liens
(except Liens permitted under Section 6.15 of the Credit Agreement), and has
full power and authority to grant to the Agent the security interest in such
Collateral pursuant hereto. The execution and delivery of this Pledge Agreement
has been duly authorized by proper proceedings, and this Pledge Agreement
constitutes a legal, valid and binding obligation of such party and creates a
first priority security interest which is enforceable against the Borrower and
the Co-Pledgor, as applicable, in all now owned and hereafter acquired
Collateral.
3.2. Conflicting Laws and Contracts. Neither the execution and delivery
by the Pledgors of this Pledge Agreement, the creation and perfection of the
security interest in the Collateral granted hereunder, nor compliance with the
terms and provisions hereof will violate any law, rule, regulation,
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order, writ, judgment, injunction, decree or award binding on it, the provisions
of any indenture, instrument or agreement to which it is a party or is subject,
or by which it, or its property, is bound, or conflict with or constitute a
default thereunder, or result in the creation or imposition of any Lien pursuant
to the terms of any such indenture, instrument or agreement (other than any Lien
of the Agent on behalf of the LC Issuer and Lenders).
3.3. No Financing Statements. No financing statement describing all or
any portion of the Collateral which has not lapsed or been terminated naming it
as debtor has been filed in any jurisdiction.
3.4. Pledged Stock and Other Investment Property. Schedule 1 sets forth
a complete and accurate list of the Pledged Stock delivered to the Agent on the
date hereof. From time to time upon the Agent's request, stock powers shall be
executed in blank for each security certificate representing the Capital Stock
so delivered. The Pledged Stock listed on Schedule 1 constitutes all of the
issued and outstanding shares of all classes of the Capital Stock of the
Domestic Subsidiaries of the Borrower and the Co-Pledgor on the date hereof and
constitutes 65% of the Capital Stock of Daisytek (Canada) Inc. The remaining 35%
of the Capital Stock of Daisytek (Canada) Inc. is owned by the Borrower.
ARTICLE IV
COVENANTS
From the date of this Pledge Agreement, and thereafter until this
Pledge Agreement is terminated (except as otherwise permitted by the Credit
Agreement):
4.1. General.
4.1.1. Taxes. The Pledgors will pay when due all taxes,
assessments and governmental charges and levies upon the Collateral,
except those which are being contested in good faith by appropriate
proceedings and with respect to which no Lien exists.
4.1.2. Notification of Default. The Pledgors will give prompt
notice in writing to the Agent and the Lenders of the occurrence of any
Default or Unmatured Default and of any other development, financial or
otherwise, which might materially and adversely affect the Collateral.
4.1.3. Financing Statements and Other Actions; Defense of
Title. The Pledgors will execute and deliver to the Agent all financing
statements and other documents and take such other actions as may from
time to time be requested by the Agent in order to maintain a first
perfected security interest in and, in the case of Investment Property
constituting Collateral, Control of, the Collateral. The Pledgors will
take any and all actions necessary to defend title
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to the Collateral against all persons and to defend the security
interest of the Agent in the Collateral and the priority thereof
against any Lien not expressly permitted hereunder.
4.1.4. Disposition of Collateral. The Pledgors shall not sell,
lease or otherwise dispose of the Collateral.
4.1.5. Liens. The Pledgors will not create, incur, or suffer
to exist any Lien on the Collateral except the security interest
created by this Pledge Agreement.
4.1.6. Other Financing Statements. The Pledgors authorize the
Agent and any Lender to file financing statements covering the
Collateral. The Pledgors will not sign or authorize the signing on its
behalf of any financing statement naming it as debtor covering all or
any portion of the Collateral.
4.2. Delivery of Collateral. All certificates or instruments
representing or evidencing Collateral shall from time to time be delivered to
and held by or on behalf of the Agent pursuant hereto and shall be in suitable
form for transfer by delivery or, as applicable, shall be accompanied by the
Borrower's or the Co-Pledgor's endorsement, where necessary, or duly executed
stock powers or other appropriate instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Agent.
4.3. Stock and Other Ownership Interests.
4.3.1. Changes in Capital Structure of Issuers. Neither the
Borrower nor the Co-Pledgor will (i) permit or suffer any of its
Subsidiaries to dissolve, or liquidate, retire or issue any Capital
Stock, or reduce its capital or merge or consolidate with any other
entity, or (ii) vote any of the Collateral in favor of any of the
foregoing.
4.3.2. Issuance of Additional Securities. Neither the Borrower
nor the Co-Pledgor will issue any Capital Stock or other ownership
interests, any right to receive the same or any right to receive
earnings.
4.3.3. Registration of Pledged Stock and other Investment
Property. After the occurrence of a Default or Unmatured Default, the
Pledgors will permit any registrable Collateral to be registered in the
name of the Agent or its nominee at any time at the option of the Agent
or the Required Lenders.
4.3.4. Exercise of Rights in Pledged Stock and other
Investment Property. The Pledgors will permit the Agent or its nominee
at any time after the occurrence of a Default, without notice, to
exercise all voting and corporate rights relating to the Collateral,
including, without limitation, exchange, subscription or any other
rights, privileges, or options pertaining to any Capital Stock or other
ownership interests or Investment Property in or of a
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corporation, partnership, joint venture or limited liability company
constituting Collateral as if it were the absolute owner thereof.
ARTICLE V
DEFAULT
5.1. Acceleration and Remedies. Upon the occurrence and during the
continuation of a Default under the Credit Agreement, the Agent may exercise any
or all of the following rights and remedies:
5.1.1. Those rights and remedies provided in this Pledge
Agreement, the Credit Agreement, or any other Loan Document, provided
that this Section 5.1.1 shall not be understood to limit any rights or
remedies available to the Agent and the Lenders prior to a Default.
5.1.2. Those rights and remedies available to a secured party
under the Texas Uniform Commercial Code (whether or not the Texas
Uniform Commercial Code applies to the affected Collateral) as in
effect from time to time or under any other applicable law (including,
without limitation, any law governing the exercise of a bank's right of
setoff or bankers' lien) when a debtor is in default under a security
agreement.
5.1.3. Without notice, except as specifically provided in
Section 8.1 of this Pledge Agreement or elsewhere herein, sell, lease,
assign, grant an option or options to purchase or otherwise dispose of
the Collateral or any part thereof in one or more parcels at public or
private sale, for cash, on credit or for future delivery, and upon such
other terms as the Agent may deem commercially reasonable.
5.1.4. The Agent may cause any or all of the Collateral held
by it to be transferred into the name of the Agent or the name or names
of the Agent's nominee or nominees.
5.1.5. The Agent may exercise or cause to be exercised all
voting rights and corporate powers in respect of the Collateral.
5.1.6. The Pledgors hereby acknowledge and confirm that the
Agent may be unable to effect a public sale of any or all of the
Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, and applicable state securities
laws and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire any shares of the Collateral for
their own respective accounts for investment and not with a view to
distribution or resale thereof. The Pledgors further acknowledge and
confirm that any such private sale may result in prices or other terms
less favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agree that any such private sale
shall be deemed to have
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been made in a commercially reasonable manner, and the Agent shall be
under no obligation to take any steps in order to permit the Collateral
to be sold at a public sale. Agent shall be under no obligation to
delay a sale of any of the Collateral for any period of time necessary
to permit any issuer thereof to register such Collateral for public
sale under the Securities Act of 1933, as amended, or under applicable
state securities laws.
5.1.7. On any sale of the Collateral, the Agent is hereby
authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of the Agent's counsel, in order
to avoid any violation of applicable law or in order to obtain any
required approval of the purchaser or purchasers by any applicable
governmental authority.
5.2. Obligations Upon Default. Upon the request of the Agent after the
occurrence of a Default, the Pledgors will:
5.2.1. Assembly of Collateral. Assemble and make available to
the Agent the Collateral and all records relating thereto at any place
or places specified by the Agent.
5.2.2. Secured Party Access. Permit the Agent, by the Agent's
representatives and agents, to enter any premises where all or any part
of the Collateral, or the books and records relating thereto, or both,
are located, to take possession of all or any part of the Collateral
and to remove all or any part of the Collateral.
ARTICLE VI
WAIVERS, AMENDMENTS AND REMEDIES
6.1. Waivers, Remedies. No delay or omission of the Agent, the LC
Issuer or any Lender to exercise any right or remedy granted under this Pledge
Agreement shall impair such right or remedy or be construed to be a waiver of
any Default or an acquiescence therein, and any single or partial exercise of
any such right or remedy shall not preclude any other or further exercise
thereof or the exercise of any other right or remedy. No waiver, amendment or
other variation of the terms, conditions or provisions of this Pledge Agreement
whatsoever shall be valid unless in writing signed by the Agent with the
concurrence or at the direction of the Lenders required under Section 8.2 of the
Credit Agreement and then only to the extent in such writing specifically set
forth. All rights and remedies contained in this Pledge Agreement or by law
afforded shall be cumulative and all shall be available to the Agent and the
Lenders until the Secured Obligations have been paid in full.
6.2. Power of Attorney. The Pledgors hereby irrevocably constitute and
appoint the Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the name of the Pledgors or in its own name, when a
Default exists, to take any and all action and to execute any and all documents
and instruments which the Agent at any time and from time to time deems
necessary or desirable to accomplish the purposes of this Pledge Agreement and,
without limiting the generality of the foregoing, the Pledgors hereby
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give the Agent the power and right on their behalf and in their own name to do
any of the following, without notice to or the consent of either of them:
6.2.1. to demand, xxx for, collect, or receive in the name of the
Pledgors, or in its own name, any money or property at any time payable
or receivable on account of or in exchange for any of the Collateral
and, in connection therewith, endorse checks, notes, drafts,
acceptances, money orders, documents of title, or any other instruments
for the payment of money under the Collateral or any policy of
insurance;
6.2.2. to pay or discharge taxes, liens, security interests,
or other encumbrances levied or placed on or threatened against the
Collateral;
6.2.3. (A) to receive payment of and receipt for any and all
monies, claims, and other amounts due and to become due at any time in
respect of or arising out of any Collateral; (B) to sign and endorse
any assignments, proxies, stock powers, verifications, notices and
other documents relating to the Collateral; (C) to commence and
prosecute any suit, action, or proceeding at law or in equity in any
court of competent jurisdiction to collect the Collateral or any part
thereof and to enforce any other right in respect of any Collateral;
(D) to defend any suit, action, or proceeding brought against the
Pledgors or either of them with respect to any Collateral; (E) to
settle, compromise, or adjust any suit, action, or proceeding described
above and, in connection therewith, to give such discharges or releases
as the Agent may deem appropriate; (F) to exchange any of the
Collateral for other property upon any merger, consolidation,
reorganization, recapitalization, or other readjustment of the issuer
thereof and, in connection therewith, deposit any of the Collateral
with any committee, depositary, transfer agent, registrar, or other
designated agency upon such terms as the Agent may determine; (G) to
add or release any guarantor, endorser, surety, or other party to any
of the Collateral or the Secured Obligations; (H) to insure, and to
make, settle, compromise, or adjust claims under any insurance policy
covering, any of the Collateral; and (I) to sell, transfer, pledge,
make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and to do, at the Agent's
option and Borrower's or the Co-Pledgor's expense, at any time, or from
time to time, all acts and things which the Agent deems necessary to
protect, preserve, or realize upon the Collateral and the Agent's
security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to the Agent in this Pledge Agreement, and shall not be
liable for any failure to do so or any delay in doing so. THE AGENT SHALL NOT BE
LIABLE FOR ANY ACT OR OMISSION OR FOR ANY ERROR OF JUDGMENT OR ANY MISTAKE OF
FACT OR LAW IN ITS INDIVIDUAL CAPACITY OR IN ITS CAPACITY AS ATTORNEY-IN-FACT
EXCEPT ACTS OR OMISSIONS RESULTING FROM ITS WILLFUL MISCONDUCT. This power of
attorney is conferred on the Agent solely to protect, preserve, and realize upon
its security interest in the Collateral. The Agent shall not be responsible
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for any decline in the value of the Collateral and shall not be required to take
any steps to preserve rights against prior parties or to protect, preserve, or
maintain any security interest or lien given to secure the Collateral.
6.3. Setoff; Property Held by Secured Party. Following the occurrence
and during the continuation of a Default, the Agent shall have the right to set
off and apply against the Secured Obligations, at any time and without notice to
the Pledgors, any and all deposits (general or special, time or demand,
provisional or final) or other sums at any time credited by or owing from the
Agent to Borrower or any Loan Party. As additional security for the Secured
Obligations, Borrower hereby grants the Agent a security interest in all money,
instruments, and other property of Borrower now or hereafter held by the Agent,
including, without limitation, property held in safekeeping. In addition to the
Agent's right of setoff and as further security for the Secured Obligations,
Borrower hereby grants the Agent a security interest in all deposits (general or
special, time or demand, provisional or final) and other accounts of Borrower
now or hereafter deposited with or held by the Agent and all other sums at any
time credited by or owing from the Agent to Borrower. The rights and remedies of
the Agent hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which the Agent may have.
6.4. Assignment by Secured Party. The Agent may from time to time
assign the Secured Obligations and any portion thereof and/or the Collateral and
any portion thereof, and the assignee shall be entitled to all of the rights and
remedies of the Agent under this Pledge Agreement in relation thereto.
ARTICLE VII
PROCEEDS
7.1. Application of Proceeds. The proceeds of the Collateral shall be
applied by the Agent to payment of the Secured Obligations in the following
order unless a court of competent jurisdiction shall otherwise direct:
(a) FIRST, to payment of all costs and expenses of the Agent
(including reasonable attorneys fees) incurred in connection with the
collection and enforcement of the Secured Obligations or of the
security interest granted to the Agent pursuant to this Pledge
Agreement;
(b) SECOND, to payment of that portion of the Secured
Obligations constituting accrued and unpaid interest and fees, pro rata
among the Agent, LC Issuer, Lenders and their Affiliates in accordance
with the amount of such accrued and unpaid interest and fees owing to
each of them;
(c) THIRD, to payment of the principal of the Secured
Obligations and the net early termination payments and any other Rate
Management Obligations then due and unpaid
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from the Borrower to any of the Lenders or their Affiliates, pro rata
among the Lenders and their Affiliates in accordance with the amount of
such principal and such net early termination payments and other Rate
Management Obligations then due and unpaid owing to each of them;
(d) FOURTH, to payment of any Secured Obligations (other than
those listed above) pro rata among those parties to whom such Secured
Obligations are due in accordance with the amounts owing to each of
them; and
(e) FIFTH, the balance, if any, after all of the Secured
Obligations have been satisfied, shall be deposited by the Agent into
the Borrower's general deposit account with the Agent.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Notice of Disposition of Collateral. The Pledgors hereby waive
notice of the time and place of any public sale or the time after which any
private sale or other disposition of all or any part of the Collateral may be
made. To the extent such notice may not be waived under applicable law, any
notice made shall be deemed reasonable if sent to the Borrower or the
Co-Pledgor, addressed as set forth in Article IX hereof, at least ten days prior
to (i) the date of any such public sale or (ii) the time after which any such
private sale or other disposition may be made.
8.2. Secured Party Performance of Debtor Obligations. Without having
any obligation to do so, the Agent may perform or pay any obligation which the
Borrower or the Co-Pledgor has agreed to perform or pay in this Pledge Agreement
and the Borrower or the Co-Pledgor shall reimburse the Agent for any amounts
paid by the Agent pursuant to this Section 8.2. The Borrower's and Co-Pledgor's
obligation to reimburse the Agent pursuant to the preceding sentence shall be
payable on demand.
8.3. Authorization for Secured Party to Take Certain Action. The
Pledgors irrevocably authorize the Agent at any time and from time to time in
the sole discretion of the Agent and appoints the Agent as its attorney-in-fact
(i) to execute on behalf of the Borrower and the Co-Pledgor as debtor and to
file financing statements necessary or desirable in the Agent's sole discretion
to perfect and to maintain the perfection and priority of the Agent's security
interest in the Collateral, (ii) to indorse and collect any cash proceeds of the
Collateral following the occurrence of a Default, (iii) to file a carbon,
photographic or other reproduction of this Pledge Agreement or any financing
statement with respect to the Collateral as a financing statement in such
offices as the Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the Agent's security
interest in the Collateral, (iv) to apply the proceeds of any Collateral
received by the Agent to the Secured Obligations as provided in Article VII, and
(v) to discharge past due taxes, assessments, charges, fees or Liens on the
Collateral (except for such Liens as are specifically
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permitted hereunder), and the Borrower and the Co-Pledgor agree to reimburse the
Agent on demand for any payment made or any expense incurred by the Agent in
connection therewith, provided that this authorization shall not relieve the
Borrower or the Co-Pledgor of any of its obligations under this Pledge Agreement
or under the Credit Agreement.
8.4. Specific Performance of Certain Covenants. The Pledgors
acknowledge and agree that a breach of any of the covenants contained in Section
4.1 will cause irreparable injury to the Agent and the Lenders, that the Agent
and Lenders have no adequate remedy at law in respect of such breaches and
therefore agrees, without limiting the right of the Agent or the Lenders to seek
and obtain specific performance of other obligations of the Pledgors contained
in this Pledge Agreement, that the covenants of the Pledgors contained in
Section 4.1 shall be specifically enforceable against the Pledgors.
8.5. Dispositions Not Authorized. Except as otherwise permitted by the
Credit Agreement, the Pledgors are not authorized to sell or otherwise dispose
of the Collateral, and notwithstanding any course of dealing between the
Borrower and the Agent or other conduct of the Agent, no authorization to sell
or otherwise dispose of the Collateral shall be binding upon the Agent or the
Lenders unless such authorization is in writing signed by the Agent with the
consent or at the direction of the Required Lenders.
8.6. Benefit of Agreement. The terms and provisions of this Pledge
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Agent, the LC Issuer and the Lenders and their respective successors and
assigns, except that the Pledgors shall not have the right to assign their
rights or delegate their obligations under this Pledge Agreement or any interest
herein, without the prior written consent of the Agent.
8.7. Survival of Representations. All representations and warranties of
the Pledgors contained in this Pledge Agreement shall survive the execution and
delivery of this Pledge Agreement.
8.8. Taxes and Expenses. Any taxes (including income taxes) payable or
ruled payable by Federal or State authority in respect of this Pledge Agreement
shall be paid by the Borrower or the Co-Pledgor, together with interest and
penalties, if any. Subject to the terms of the Credit Agreement, the Borrower
shall reimburse the Agent for any and all out-of-pocket expenses and internal
charges (including reasonable attorneys', auditors' and accountants' fees and
reasonable time charges of attorneys, paralegals, auditors and accountants who
may be employees of the Agent) paid or incurred by the Agent in connection with
the preparation, execution, delivery, administration, collection and enforcement
of this Pledge Agreement and in the audit, analysis, administration, collection,
preservation or sale of the Collateral. Any and all costs and expenses incurred
by the Pledgors in the performance of actions required pursuant to the terms
hereof shall be borne solely by the Pledgors.
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8.9. Headings. The title of and section headings in this Pledge
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Pledge Agreement.
8.10. Termination. This Pledge Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full and no commitments of the Agent or the
Lenders which would give rise to any Secured Obligations are outstanding.
8.11. CHOICE OF LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF TEXAS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
8.12. Distribution of Reports. The Borrower authorizes the Agent, as
the Agent may elect in its sole discretion, to discuss with and furnish to its
affiliates and to the Lenders or to any other person or entity having an
interest in the Secured Obligations (whether as a guarantor, Borrower of
collateral, participant or otherwise) all financial statements, audit reports
and other information pertaining to the Borrower and its Subsidiaries whether
such information was provided by the Borrower or prepared or obtained by the
Agent. Neither the Agent nor any of its employees, officers, directors or agents
makes any representation or warranty regarding any audit reports or other
analyses of the Borrower's and its Subsidiaries' condition which the Agent may
in its sole discretion prepare and elect to distribute, nor shall the Agent or
any of its employees, officers, directors or agents be liable to any person or
entity receiving a copy of such reports or analyses for any inaccuracy or
omission contained in or relating thereto.
8.13. Indemnity. The Borrower hereby agrees to indemnify the Agent and
the Lenders, and their respective successors, assigns, agents and employees,
from and against any and all liabilities, damages, penalties, suits, costs, and
expenses of any kind and nature (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent or any Lender is a
party thereto) imposed on, incurred by or asserted against the Agent or the
Lenders, or their respective successors, assigns, agents and employees, in any
way relating to or arising out of this Pledge Agreement, or the purchase,
acceptance, rejection, ownership, delivery, possession, use, operation,
condition, sale, return or other disposition of any Collateral.
8.14. ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES
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HERETO. The provisions of this Pledge Agreement may be amended or waived only by
an instrument in writing signed by the parties hereto.
ARTICLE IX
NOTICES
9.1. Sending Notices. Any notice required or permitted to be given
under this Pledge Agreement shall be sent (and deemed received) in the manner
and to the addresses set forth in Article 13.1 of the Credit Agreement. For
purposes of this Pledge Agreement, the Co-Pledgor's notice address shall be the
same as the Borrower's as set forth in the Credit Agreement.
9.2. Change in Address for Notices. Each of the Borrower, the
Co-Pledgor, the Agent and the Lenders may change the address for service of
notice upon it by a notice in writing to the other parties.
ARTICLE X
THE AGENT
Bank One, Texas, NA has been appointed Agent for the Lenders hereunder
pursuant to Article 10 of the Credit Agreement. It is expressly understood and
agreed by the parties to this Pledge Agreement that any authority conferred upon
the Agent hereunder is subject to the terms of the delegation of authority made
by the Lenders to the Agent pursuant to the Credit Agreement, and that the Agent
has agreed to act (and any successor Agent shall act) as such hereunder only on
the express conditions contained in such Article 10. Any successor Agent
appointed pursuant to Article 10 of the Credit Agreement shall be entitled to
all the rights, interests and benefits of the Agent hereunder.
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IN WITNESS WHEREOF, the Borrower, Co-Pledgor and the Agent have
executed this Pledge Agreement as of the date first above written.
BORROWER:
DAISYTEK, INCORPORATED
By: /s/ Xxxxx Xxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Executive Vice President-Finance
CO-PLEDGOR:
STEADI-SYSTEMS, LTD.
By: /s/ Xxxxx Xxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Executive Vice President-Finance
AGENT:
BANK ONE, TEXAS, NA
By: /s/ Xxxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxxx X. Xxxxxx
Title: First Vice President
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
15
Schedule 1
Other States # of Shares
State of Qualified to # of Auth. Issued/
Name Incorp. do Business Shares Pledged Name of Stockholder
---- ------- ----------- ------ ------- -------------------
Steadi-Systems, Ltd. CA None 15,000 8,820 Daisytek, Inc.
Steadi-Systems New York, NY None 200 200 Steadi-Systems, Ltd.
Ltd.
Steadi-Systems Miami, Inc. FL None 200 200 Steadi-Systems, Ltd.
The Tape Company, Inc. IL None 10,000 1 Daisytek, Incorporated
The Tape Company, Inc. GA None 10,000 1 Daisytek, Incorporated
The Tape Company, Inc. PA None 10,000 1 Daisytek, Incorporated
Tape Distributors of Texas, TX None 10,000 1 Daisytek, Incorporated
Inc.
Tape Distributors of MN None 10,000 1 Daisytek, Incorporated
Minnesota, Inc.
Daisytek Latin America, Inc. FL None 100 100 Daisytek, Incorporated
Arlington Industries, Inc. DE CA, FL, GA, 100 000 Xxxxxxxx, Xxxxxxxxxxxx
XX, XX
Virtual Demand, Inc. DE TX 100 100 Daisytek, Incorporated
Xxxxxxxxxxxx.xxx, Inc. DE IL 100 100 Daisytek, Incorporated
X.X. Xxxxx Company, Inc. DE TN, TX 100 100 Daisytek, Incorporated
Business Supplies DE TX, TN 100 100 Daisytek, Incorporated
Distributors, Inc.
Daisytek Canada, Inc. Canada None 3,150,000 2,047,506(1) Daisytek, Incorporated
----------
(1) Represents the number of issued shares pledged.
