EXHIBIT 10.5
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PLEDGE, ASSIGNMENT AND SECURITY AGREEMENT
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This Agreement dated effective December 11, 2001, and granted by
Xxxx X. Xxxxxx ("Pledgor"), to THE F&M BANK & TRUST COMPANY, an Oklahoma banking
corporation, having its principal office at 0000 Xxxxx Xxxxxxx, Xxxxx, Xxxxxxxx
00000 ("Bank").
Concurrently herewith, Bank and PLASTIC PALLET PRODUCTION, INC., a
Texas corporation ("Borrower") have entered into a Loan Agreement ("Loan
Agreement") whereby Bank has or will advance sums on a promissory note payable
to the Bank in an amount not to exceed THREE MILLION DOLLARS ($3,000,000.00)
(hereinafter the obligations under the Note will be referred to as the "Note").
Pledgor is a guarantor of part of the sums owed by Borrower to Bank
under the Note ("Guaranty") and desires Bank to advance sums to Borrower under
the Note and Loan Agreement. The advances by Bank to Borrower will benefit
Pledgor as an owner of Borrower.
As used herein, "UCC" shall mean the Uniform Commercial Code of
Oklahoma, as amended and in effect as of the date hereof, as the context may
require. All other capitalized terms, unless defined herein, shall have the
meanings set forth in the Loan Agreement.
1. Pledge and Security Interest. As security for the due and
punctual payment of all indebtedness of the Borrower and Pledgor to the Bank
arising under the Note and Guaranty, including all extensions, renewals and
changes in the form thereof, whether for principal, interest, premiums, fees,
expenses or otherwise as well as all future advances or obligations owed Bank
(including without limitation) direct, indirect, contingent, joint, several,
joint and several or howsoever created (all such indebtedness and obligations
being herein sometimes referred to as the "Obligations"), together with any and
all expenses which may be incurred by the Bank in collecting any or all of the
Obligations or in enforcing any rights hereunder (all such expenses being
hereinafter referred to as the "Expenses") (the "Obligations" and the "Expenses"
shall also be part of the "Secured Obligations"), the Pledgor hereby pledges,
assigns, transfers, sets over and delivers unto and for the benefit of the Bank
the certificates for the Pledged Securities listed on Exhibit " A," with stock
powers covering such certificates executed in blank, together with shares
represented thereby and all cash securities, dividends or other property at any
time and from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares (all collectively
referred to herein as the "Pledged Securities").
TO HAVE AND TO HOLD the Pledged Securities, together with all
rights, titles, interests, powers, privileges and preferences appertaining or
incidental thereto, including all cash proceeds received in respect to the
Pledged Securities and all securities delivered in substitution or addition to
the foregoing Pledged Securities, unto the Bank, its successors and assigns,
forever as security for the Secured Obligations subject, however, to the tenI1s,
covenants and conditions hereinafter set forth.
2. Representations and Warranties. The Pledgor represents and
warrants as follows:
(a) The Pledged Securities have been validly authorized and
issued, are fully paid and non-accessible and the
Pledgor owns the same beneficially free and clear of any
liens, charges or encumbrances thereon or affecting the
title thereto.
(b) The Pledgor has good right and lawful authority to
pledge and deposit the Pledged Securities as provided
herein and warrants and will preserve and defend all
right, title and interest in and to the Pledged
Securities delivered to the Bank hereunder against the
claims of all persons, and will maintain and preserve
the lien hereof as long as this Agreement shall remain
in full force and effect.
(c) The Pledged Securities are shares of Precis Smart Card
Systems, Inc., currently constitute 285,000 and
________________ shares which are certificates number
0288, CUSIP #000000000 and _______________ and are part
of the issued and outstanding shares.
3. Appointment of the Bank; Registration in Nominee Name. The Bank
shall have the right and absolute discretion to appoint one or more agents for
the purpose of retaining physical possession of the certificates representing or
evidencing the Pledged Securities, which may be held in the name of the Pledgor,
endorsed or assigned in blank in favor of the Bank. In addition to all other
rights possessed by the Bank, the Bank may, from time to time after the
occurrence of an uncured Event of Default (hereinafter defined) or an event
which with the giving of notice or the lapse of time, or both, would be an Event
of Default, at the Bank's sole discretion and without notice to the Pledgor,
take any or all of the following actions: (a) execute the blank stock power to
authorize transfer of the Pledged Securities; (b) transfer all or any part of
the Pledged Securities into the name of the Bank or its nominee for public or
private sale; (c) take control of any proceeds of any of the Pledged Securities;
and (d) exchange certificates or instruments representing or evidencing the
Pledged Securities for certificates or instruments of smaller or larger
denominations for any purpose consistent with its performance of this Agreement.
4. Voting Rights, Dividends, Replacement of Pledged Securities.
(a) So long as there has not occurred an uncured Event of
Default, the Pledgor shall be entitled to exercise any
and all voting rights and powers relating or pertaining
to the Pledged Securities or any part thereof for any
purpose not inconsistent with the terms of this
Agreement.
(b) Unless Bank expressly consents in writing, the Pledgor
shall not receive and not be entitled to retain any and
all stock and/or stock dividends in respect of the
Pledged Securities, whether resulting from a
subdivision, combination or reclassification of the
outstanding capital stock of the issuer thereof or
received in exchange for the Pledged Securities, or any
part thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets
to which such issuer or the Pledgor may be a party or
otherwise. Any and all cash dividends and
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distributions and other property received in respect of
the Pledged Securities or in payment of the principal of
or in redemption of or in exchange for any Pledged
Securities (either at maturity, upon call for redemption
or otherwise), shall become part of the Pledged
Securities and delivered to Bank or, if received by the
Pledgor, shall be held in trust for the benefit of the
Bank and shall forthwith be delivered to the Bank or its
designated agent (accompanied by proper instruments of
assignment and/or stock powers executed by the Pledgor
in accordance with the Bank's instructions) to be held
subject to the terms of this Agreement.
(c) Upon the occurrence of an uncured Event of Default, at
the option of the Bank, all rights of the Pledgor to
exercise the voting rights and powers which it is
entitled to exercise shall cease and all such rights
shall thereupon become vested in the Bank, which shall
have the sole and exclusive right and authority to
exercise such voting and/or consensual rights and
powers. After the occurrence of an Event of Default, the
Bank shall receive and be entitled to retain as
collateral any and all cash dividends and distributions,
if any, paid in respect of the Pledged Securities. Any
and all money and other property paid over to or
received by the Bank pursuant to the provisions of
subsection (b) above shall be retained by the Bank as
part of the Pledged Securities and be applied in
accordance with the provisions hereof.
5. Remedies Upon Default. Upon the occurrence of an uncured Event of
Default in the payment of the Secured Obligations when due (whether by
acceleration or otherwise), then, in addition to having the right to exercise
any rights and remedies of a secured party upon default under the Uniform
Commercial Code in effect in the State of Oklahoma, the Bank may, without being
required to give any notice to the Pledgor, apply the cash (if any) then held by
it hereunder to the payment in full of the Secured Obligations and all other
indebtedness referred to in the order and manner specified therein. If there
shall be no such cash or the cash so applied shall be insufficient to pay all
Obligations in full, the Bank may thereupon sell the Pledged Securities, or any
part thereof, and shall apply the proceeds of such sale to the payment in full
of the Secured Obligations and all other indebtedness referred herein in the
order and manner specified therein.
If Pledgor commences the cure of an event of default which requires
more than fifteen (15) days and Pledgor has immediately initiated steps which
are reasonably sufficient to cure such event of default and continues to take
reasonable and necessary steps to cure the event of default, Borrower may
continue to cure the event of default beyond any cure period so long as the
event of default is capable of being cured within a reasonable time and Borrower
continues in good faith to effect a cure.
6. Sale of the Pledged Securities.
(a) Notwithstanding anything to the contrary herein, sale of
the Pledged Securities may be made at any public or
private sale, for cash, upon credit or for future
delivery, as the Bank shall deem appropriate in a
commercially reasonable manner. The Bank shall be
authorized at any such sale (to the extent it, in its
sole discretion, deems advisable) to restrict the
prospective bidders or purchasers to
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persons who will represent and agree that they are
purchasing the Pledged Securities then being sold for
their own account for investment and not with a view to
the distribution or resale thereof, and upon
consummation of any such sale the Bank shall have the
right to assign, transfer and deliver to the purchaser
or purchasers thereof the Pledged Securities sold. Each
such purchaser at any such sale shall hold the property
purchased absolutely free from any claim or right on the
part of the Pledgor, and the Pledgor hereby waives (to
the extent permitted by law) all rights of redemption,
stay and/or appraisal which the Pledgor may now have or
may at any time in the future have under any rule or
statute now existing or hereafter enacted. To the extent
that notice of sale shall be required to be given by
law, the Bank shall give the Pledgor at least fifteen
(15) days' written notice of the Bank's intention to
make any such public or private sale. Such notice, in
case of public sale, shall state the time and place
fixed for such sale. Any such public sale shall be held
at such time or times within ordinary business hours and
at such place or places as the Bank may fix in the
notice of such sale. At any such sale, the Pledged
Securities, or portion thereof, to be sold may be sold
in one lot as an entirety or in separate parcels, as the
Bank may, in its sole discretion, determine, and the
Bank may bid (which bid may be, in whole or in part, in
the form of cancellation of indebtedness) for and
purchase the whole or any part of the Pledged
Securities. The Bank shall not be obligated to make any
sale of the Pledged Securities if it shall determine not
to do so, regardless of the fact that notice of sale of
the Pledged Securities may have been given. The Bank
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 case sale of all or any part of the
Pledged Securities is made on credit or for future
delivery, the Pledged Securities so sold may be retained
by the Bank until the sale price is paid by the
purchaser or purchasers thereof, but the Bank shall not
incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Pledged
Securities so sold and, in the case of any such failure,
such Pledged Securities may be sold again upon like
notice. As an alternative to the Bank's right to sell
hereunder or under the Uniform Commercial Code, the Bank
may proceed by suit or suits at law or in equity to
foreclose this Agreement and to sell the Pledged
Securities, or any portion thereof, pursuant to a
judgment or decree of a court or courts of competent
jurisdiction.
(b) The Pledgor understands that compliance with federal or
state banking and/or securities laws may strictly limit
the course of conduct of the Bank if the Bank were to
attempt to dispose of all or any part of the Pledged
Securities and may also limit the extent to which or the
manner in which any subsequent transferee of the Pledged
Securities may dispose of the same. The Pledgor agrees
that in any sale of any of the Pledged Securities, the
Bank is hereby authorized to comply with any such
limitation or restriction in connection with such sale
as it may be advised by counsel is necessary to avoid
violation of applicable law (including, without
limitation, compliance with such procedures as may
restrict the number of
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prospective bidders and purchasers and/or further
restrict such prospective bidders or purchasers to
persons who will represent and agree that they are
purchasing for their own account for investment and not
with a view to the distribution or resale of such
Pledged Securities), or in order to obtain any required
approval of the sale or of the purchaser by any
governmental regulatory authority or official, and the
Pledgor further agrees that such compliance shall not
result in such sale being considered or deemed not to
have been made in a commercially reasonable manner, nor
shall the Bank be liable or accountable to the Pledgor
for any discount allowed by reason of the fact that such
Pledged Securities are sold in compliance with any such
limitation or restriction.
(c) The Pledgor agrees that to register the Pledged
Securities if, in connection with any sale, exchange or
other disposition of the Pledged Securities,
registration with, or notice to, any governmental
commission or regulatory authority shall, in the opinion
of the Bank, be required.
(d) Under the Reorganization Plan, Pledgor is the
beneficiary of a Registration Rights Agreement, and
Pledgor shall take all actions to allow Bank, in the
event Bank deems it necessary, to exercise Pledgor's
rights as the holder of the right to request
registration of the Pledged Securities under the
Registration Rights Agreement. Pledgor further grants
Bank the power, coupled with an interest in Pledgor's
name or in Bank's name, or both, to exercise all rights,
benefits or options under the Registration Rights
Agreement to require the registration of the Pledged
Securities and sale thereunder. Pledgor further waives
all right to object to Bank's request pursuant to this
paragraph to require registration of the Pledged
Securities received under the Reorganization Plan.
7. Application of Proceeds of the Pledged Securities Sale. The Bank
shall apply all cash held by it pursuant to Section 4 hereof and the proceeds of
sale of the Pledged Securities as follows:
First: to the payment of the Expenses, including but not limited to
the costs and expenses of such sale or the collection of such cash,
including the out-of-pocket expenses of the Bank and the reasonable
fees and out-of-pocket expenses of counsel employed in connection
therewith, and to the payment of all advances made by the Bank for
the account of the Pledgor hereunder and the payment of all costs
and expenses incurred by the Bank in connection with the
administration and enforcement of this Agreement;
Second: to the payment of the Obligations; and
Third: the balance, if any, of such proceeds shall be paid to the
Pledgor or his assigns, or as a court of competent jurisdiction may
direct.
8. The Bank Appointed Attorney-in-Fact. The Pledgor hereby appoints
the Bank 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 the Bank may deem necessary or
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advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
the Bank shall, to the extent permitted herein, 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 dividend, interest payment or
other distribution payable or distributable in respect of the Pledged Securities
or any part thereof and to give full discharge for the same.
9. Miscellaneous.
(a) No Waiver. No failure on the part of the Bank to
exercise, and no delay in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any such
right, power or remedy by the Bank preclude any other or
further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are
cumulative and not exclusive of any other remedies
provided by law. The Bank may extend or renew the
Obligations and grant releases, compromises or
indulgences with respect to the Secured Obligations, any
extension or renewal thereof, any security therefor, to
any obligor hereunder or thereunder, and no such action
shall impair the Bank's rights hereunder.
(b) Termination. This Agreement shall terminate when the
Secured Obligations have been fully performed and paid,
at which time the Bank shall reassign and redeliver (or
cause to be so reassigned and redelivered) to the
Pledgor, without recourse or warranty and at the expense
of the Pledgor against receipt, such of the Pledged
Securities (if any) as shall not have been sold or
otherwise applied by the Bank pursuant to the terms
hereof and which is still held by the Bank hereunder,
together with appropriate instruments of reassignment
and release.
(c) Addresses for Notices, Etc. All notices, requests,
demands, directions and other communications provided
for hereunder shall be in writing (including telegraphic
communication) and mailed, telegraphed or delivered as
set out in the Loan Agreement, or, as to any party, to
such other address as such party shall specify by a
notice in writing to the other parties.
(d) Further Assurances. The Pledgor agrees to do such
further reasonable acts and things, and to execute and
deliver such additional conveyances, assignments,
agreements and instruments as the Bank may at any time
request in connection with the administration or
enforcement of this Agreement (including, without
limitation, to aid the Bank in the sale of all or any
part of the Pledged Securities) or related to the
Pledged Securities or any part thereof or in order
better to assure and confirm unto the Bank its rights,
powers and remedies hereunder. The Pledgor hereby
consents and agrees that the issuer of the Pledged
Securities, or any registrar or transfer agent for any
of the Pledged Securities, shall be entitled to accept
the provisions hereof as conclusive evidence of the
right of the Bank to affect any transfer pursuant to
Section 2, notwithstanding any other notice or
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direction to the contrary heretofore or hereafter given
by the Pledgor or any other person to such issuer or to
any such registrar or transfer agent.
(e) Binding Agreement; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties
hereto, their respective successors and assigns, except
that the Pledgor shall not be permitted to assign this
Agreement or any interest herein or in the Pledged
Securities, or any part thereof, or otherwise pledge,
encumber or grant any option with respect to the Pledged
Securities, or any part thereof, or any cash or property
held by the Bank as Pledged Securities under this
Agreement.
(f) Governing Law; Amendments. This Agreement shall be
governed by the laws of the State of Oklahoma. No
provision of this Agreement may be amended, waived or
modified, nor may any of the Pledged Securities be
released, unless specifically provided for herein,
except in writing signed by the Bank.
(g) Headings. Paragraph headings used herein are for
convenience only and shall not affect the construction
of this Agreement.
(h) Jurisdiction; Venue. Pledgor agrees that the courts
sitting in Tulsa County, Oklahoma (both state and
federal) shall have exclusive jurisdiction to resolve
any disputes in law or in equity arising out of this
Agreement, and Pledgor submits to the jurisdiction of
the District Court, State of Oklahoma, 14th Judicial
District or the United States District Court, Northern
District of Oklahoma, waiving all obligations to venue.
(i) Counterparts. This Agreement may be executed in
counterpart (or by facsimile signature with the original
signature page to be delivered thereafter) and each
counterpart shall constitute an original as if each
signature is contained on a single document.
10. Definitions. "Event of Default" shall include but not be limited
to any event or failure of the Borrower or Pledgor to comply with any of the
terms, covenants, agreements or obligations contained in this Agreement, the
Loan Agreement or the Note or any other writing between the Bank and the Pledgor
arising in connection with the Bank's financing of the Borrower.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
THE F&M BANK & TRUST COMPANY
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx, Senior Vice President
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