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EXHIBIT 10.22.5
PLEDGE AGREEMENT
This Pledge Agreement dated as of November 29, 2000 ("Pledge
Agreement") is between Probex Corp., a Delaware corporation ("Pledgor"), and
Wilmington Trust Company, as collateral agent for the Noteholders (collectively,
the "Secured Party").
INTRODUCTION
A. Probex Fluids Recovery, Inc., a Delaware corporation (the "Company")
has entered into a Note Purchase Agreement of even date herewith (as the same
may be amended, modified, supplemented or restated from time to time the "Note
Purchase Agreement") with the noteholders party thereto (together with their
successors and assigns and any holder of the 7% Senior Secured Convertible
Notes, due November 28, 2004, issued thereunder (the "Notes") collectively
referred to herein as the "Noteholders").
B. The Pledgor has entered into a Guaranty Agreement of even date
herewith (as such document may be amended, modified, supplemented or restated
from time to time) (the "Guaranty Agreement"), pursuant to which the Pledgor
guaranteed the indebtedness and all other obligations of the Company owing to
the Noteholders under the Notes and the Note Purchase Agreement.
C. The Company, the Noteholders, the Pledgor, and the collateral agent,
have entered into an Intercreditor and Collateral Agency Agreement of even date
herewith (the "Intercreditor Agreement") (1) to establish the relative rights of
the Noteholders with respect to payment of their respective obligations owed by
the Company and the Pledgor, (2) to agree as to the exercise of certain remedies
with respect to the Collateral (as defined in the Intercreditor Agreement), (3)
to appoint Wilmington Trust Company as collateral agent for the benefit of the
Noteholders for the purposes of administering the Collateral Documents (as
defined in the Intercreditor Agreement) and apportioning payments among the
Noteholders, and (4) for other purposes as set forth therein.
D. It is a condition precedent to the effectiveness of the Note
Purchase Agreement that the Pledgor shall secure its obligations under the
Notes, the Note Purchase Agreement, the Guaranty Agreement, the Collateral
Documents and any other Financing Documents (in each case, as such terms are
defined in the Intercreditor Agreement) by entering into this Pledge Agreement.
Therefore, the Pledgor hereby agrees with the Secured Party on behalf
of and for the benefit of the Noteholders as follows:
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SECTION 1. Definitions. Any terms used in this Pledge Agreement that are defined
in the Uniform Commercial Code as in effect in the State of Texas ("UCC") shall
have the meaning assigned to those terms by the UCC, whether specified elsewhere
in this Pledge Agreement or not.
SECTION 2. Pledge.
2.1. Grant of Pledge. Pledgor hereby grants to the Secured Party on
behalf of and for the ratable benefit of the Noteholders a first priority
security interest in the Pledged Collateral (as defined in Section 2.2 below) to
secure the performance and payment of (a) all obligations and all amounts due
and payable by the Company now and hereafter existing under the Note Purchase
Agreement, the Notes and the Collateral Documents (as defined in the
Intercreditor Agreement) whether for principal, interest, premiums, fees,
expenses, indemnifications or otherwise and (b) all obligations of the Pledgor
now or hereafter existing under the Guaranty Agreement, the Collateral Documents
(as defined in the Intercreditor Agreement) and this Pledge Agreement, whether
for principal, interest, premiums, fees, expenses, indemnifications or otherwise
(all such obligations described in the foregoing clauses (a) through (b) being
collectively referred to herein as the "Secured Obligations").
2.2. Pledged Collateral. "Pledged Collateral" shall mean all of
Pledgor's right, title, and interest in the following, whether now owned or
hereafter acquired:
(a) the shares of stock and other equity interests and other
securities of Pledgor listed in the attached Schedule 2.2(a) (the "Initial
Pledged Shares"), the certificates representing the Initial Pledged Shares, and
all dividends, cash, instruments, and other property from time-to-time received,
receivable or otherwise distributed in respect of or in substitution,
replacement or exchange for any of the Initial Pledged Shares;
(b) all additional shares of stock and other securities of any
issuer of the Initial Pledged Shares from time to time acquired by the Pledgor
in any manner (together with the "Initial Pledged Shares", the "Pledged
Shares"), and the certificates representing such additional shares or such
securities, and all dividends, cash, instruments and other property from
time-to-time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares or such securities; and
(c) all Proceeds (as defined in UCC) from the Pledged
Collateral described in paragraphs (a) and (b) of this Section 2.2.
2.3. Delivery of Pledged Collateral. All certificates or Instruments
(as defined in the UCC) representing the Pledged Collateral shall be delivered
to the Secured Party and shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Secured Party. The Secured
Party shall have the right, at any time in its discretion and without notice to
the Pledgor, to transfer to or to register in the name of the Secured Party or
any of its nominees any of the Pledged Collateral, subject to the
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rights specified in Section 2.4. In addition, the Secured Party shall have the
right at any time to exchange the certificates or instruments representing the
Pledged Collateral for certificates or instruments of smaller or larger
denominations.
2.4. Rights Retained by Pledgor. Notwithstanding the pledge in Section
2.1, so long as no Event of Default shall have occurred under the Note Purchase
Agreement (collectively, an "Event of Default") and be continuing:
(a) and, if an Event of Default shall have occurred and be
continuing, until such time thereafter as such voting and other consensual
rights have been terminated pursuant to Section 5 hereof, the Pledgor shall be
entitled to exercise any voting and other consensual rights pertaining to the
Pledged Shares for any purpose not inconsistent with the terms of this Pledge
Agreement or the Note Purchase Agreement; provided, however, that the Pledgor
shall not exercise or shall refrain from exercising any such right if such
action would or could reasonably be expected to have a materially adverse effect
on the value of the Pledged Collateral or any part thereof;
(b) except as may otherwise be provided in the Note Purchase
Agreement, the Pledgor shall be entitled to receive and retain any and all
dividends paid in respect of the Pledged Shares; provided, however, that any and
all (i) dividends paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Shares, and (ii) dividends and other
distributions paid or payable in cash in respect of any Pledged Shares in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in-surplus, shall be, and
shall be delivered to the Secured Party to hold as, Pledged Collateral and
shall, if received by the Pledgor, be received in trust for the benefit of the
Secured Party and the other Noteholders, be segregated from the other property
or funds of the Pledgor, and be delivered to the Secured Party as Pledged
Collateral in the same form as so received (with any necessary endorsement or
assignment); and
(c) at and after such time as voting and other consensual
rights have been terminated pursuant to Section 5 hereof, the Pledgor shall
execute and deliver (or cause to be executed and delivered) to the Secured Party
all proxies and other instruments as the Secured Party may reasonably request to
(i) enable the Secured Party to exercise the voting and other rights which the
Pledgor is entitled to exercise pursuant to paragraph (a) of this Section 2.4,
and (ii) to receive the dividends or other distributions and proceeds of sale of
the Pledged Shares which the Pledgor is authorized to receive and retain
pursuant to paragraph (b) of this Section 2.4.
SECTION 3. Pledgor's Representations and Warranties. The Pledgor represents and
warrants as follows:
(a) The Pledged Shares have been duly authorized and validly
issued and are fully paid and nonassessable.
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(b) The Pledgor is the legal and beneficial owner of the
Pledged Collateral free and clear of any Lien or option, except for (i) the
security interest created by this Pledge Agreement and (ii) Liens permitted by
the Note Purchase Agreement, and the Pledgor has not sold, granted any option
with respect to, assigned, transferred or otherwise disposed of any interest in
or to the Pledged Collateral.
(c) The security interest in the Pledged Collateral created
pursuant to this Pledge Agreement creates a valid, binding, and first priority
security interest in the Pledged Collateral, securing the payment, performance
and observance of the Secured Obligations, and such security interest will be a
perfected first priority security interest upon the receipt of possession by the
Secured Party of the Pledged Shares.
(d) No consent of any other Person and no authorization,
approval, or other action by, and no notice to or filing with, any Governmental
Authority or regulatory body, that has not occurred, is required either (i) for
the pledge by the Pledgor of the Pledged Collateral pursuant to this Pledge
Agreement or for the execution, delivery, or performance (other than
authorizations, approvals or actions required in the performance of its business
generally and which it expects to obtain in the ordinary course of its business)
of this Pledge Agreement by the Pledgor (except to the extent that financing
statements may be required under the UCC to be filed in order to maintain a
perfected security interest in the Pledged Collateral) or (ii) for the exercise
by the Secured Party of the voting or other rights provided for in this Pledge
Agreement or the remedies in respect of the Pledged Collateral pursuant to this
Pledge Agreement (except as may be required by the Intercreditor Agreement or in
connection with such disposition by laws affecting the offering and sale of
securities generally).
(e) The Pledged Shares constitute 100% of the issued and
outstanding shares of capital stock of the Company.
SECTION 4. Pledgor's Covenants.
4.1. Further Assurances. The Pledgor agrees that at any time and from
time-to-time, at the expense of the Pledgor, the Pledgor will promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary and that the Secured Party may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Secured Party to exercise and enforce its rights
and remedies hereunder with respect to any Pledged Collateral.
4.2. Transfer, Other Liens, and Additional Shares. The Pledgor agrees
that it will not (a) sell, assign or otherwise dispose of, or grant any option
with respect to, any of the Pledged Collateral or (b) create or permit to exist
any Lien upon or with respect to any of the Pledged Collateral, except for the
security interest under this Pledge Agreement and Liens permitted by the Note
Purchase Agreement. The Pledgor agrees that it will (a) cause each issuer of the
Pledged Shares not to issue any capital stock or other equity securities in
addition to or in substitution for the Pledged Shares issued by such issuer,
except to the Pledgor and (b) pledge hereunder, immediately upon its
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acquisition (directly or indirectly) thereof, all additional shares of capital
stock or other equity securities of the issuer of the Pledged Shares.
SECTION 5. Remedies upon Default. If any Event of Default shall have occurred
under the Note Purchase Agreement (collectively, an "Event of Default") and
remain uncured and subject to the terms of the Intercreditor Agreement:
5.1. UCC Remedies. To the extent permitted by law, the Secured Party
may exercise in respect of the Pledged Collateral, in addition to other rights
and remedies provided for in this Pledge Agreement or otherwise available to it,
all the rights and remedies of a secured party under the UCC (whether or not the
UCC applies to the affected Pledged Collateral).
5.2. Dividends and Other Rights.
(a) All rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
Section 2.4(a) may be exercised by the Secured Party if Secured Party so elects
and gives notice of such election to the Pledgor and all rights of the Pledgor
to receive the dividends and other distributions on or in respect of the Pledged
Shares and the proceeds of sale of the Pledged Shares shall cease.
(b) All dividends and other distributions on or in respect of
the Pledged Shares and the proceeds of sale of the Pledged Shares which are
received by the Pledgor shall be received in trust for the benefit of the
Secured Party, shall be segregated from other funds of the Pledgor, and shall be
promptly paid over to the Secured Party as Pledged Collateral in the same form
as so received (with any necessary endorsement).
5.3. Sale of Pledged Collateral. The Secured Party may upon ten
business days prior written notice to the Pledgor sell all or part of the
Pledged Collateral at public or private sale, at any of the Secured Party's
offices or elsewhere, for cash, on credit, or for future delivery, and upon such
other terms as are commercially reasonable. The Secured Party shall not be
obligated to make any sale of the Pledged Collateral regardless of notice of
sale having been given. The Secured Party may adjourn any public or private sale
from time-to-time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned.
5.4. Exempt Sale. If, in the opinion of the Secured Party, there is any
question that a public or semi-public sale or distribution of any Pledged
Collateral will violate any state or federal securities law, Secured Party in
its discretion (a) may offer and sell securities privately to purchasers who
will agree to take them for investment purposes and not with a view to
distribution and who will agree to imposition of restrictive legends on the
certificates representing the security, or (b) may sell such securities in an
intrastate offering under Section 3(a)(11) of the Securities Act of 1933, as
amended, and no sale so made in good faith by Secured Party shall be deemed to
be not "commercially
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reasonable" solely because so made. Pledgor shall cooperate fully with Secured
Party in all respects in selling or realizing upon all or any part of the
Pledged Collateral.
5.5. Application of Collateral. Any cash held by the Secured Party as
Pledged Collateral and all cash proceeds received by the Secured Party from the
sale of, collection of, or other realization of any part of the Pledged
Collateral shall be applied by the Secured Party in accordance with the terms of
the Intercreditor Agreement.
SECTION 6. Secured Party as Agent for Pledgor.
6.1. Secured Party Appointed Attorney-in-Fact. The Pledgor hereby
irrevocably appoints the Secured Party the Pledgor's attorney-in-fact, with full
authority to, after the occurrence and during the continuance of an Event of
Default, act for the Pledgor and in the name of the Pledgor, and, in the Secured
Party's discretion, subject to the Pledgor's revocable rights specified in
Section 2.4, to take any action and to execute any instrument which the Secured
Party may deem necessary or advisable to accomplish the purposes of this Pledge
Agreement, including, without limitation, to receive, indorse, and collect all
Instruments (as defined in the UCC) made payable to the Pledgor representing any
dividend, or the Proceeds (as defined in the UCC) of the sale of the Pledged
Shares, or other distribution in respect of the Pledged Shares and to give full
discharge for the same.
6.2. Secured Party May Perform. If the Pledgor fails to perform any
covenant contained herein, the Secured Party may itself perform, or cause
performance of, such covenant. Pledgor shall pay for the reasonable expenses of
the Secured Party incurred in connection therewith in accordance with Section
7.4.
6.3. Secured Party's Duties. Except for the safe custody of any Pledged
Collateral in its possession and the accounting for monies actually received by
it hereunder, the Secured Party shall have no duty as to any Pledged Collateral,
as to ascertaining or taking action with respect to calls, conversion,
exchanges, maturities, tenders or other matters relative to any Pledged
Collateral, whether or not the Secured Party or any other Noteholder has or is
deemed to have knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against any parties or any other rights pertaining to
any Pledged Collateral. The Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which the Secured Party accords its own property. The Secured Party
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Noteholders, in
accordance with the Intercreditor Agreement, and such instructions shall be
binding upon the holders of all Secured Obligations; provided, however, that the
Secured Party shall not be required to take any action which exposes the Secured
Party to personal liability or which is contrary to any Financing Document (as
defined in the Intercreditor Agreement) or applicable law.
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SECTION 7. Miscellaneous.
7.1. Amendments, Etc. No amendment or waiver of any provision of this
Pledge Agreement nor consent to any departure by the Pledgor from the terms of
this Pledge Agreement shall be effective unless the same shall be in writing and
signed by the Pledgor and the Secured Party, as Collateral Agent (as defined in
the Intercreditor Agreement) on behalf of the Noteholders, pursuant to terms of
the Intercreditor Agreement, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
7.2. Addresses for Notices. All notices and other communications
provided for hereunder shall be in the manner and to the addresses set forth in
the Credit Agreement and the Note Purchase Agreement.
7.3. Continuing Security Interest; Transfer of Interest. This Pledge
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in full force and effect until the indefeasible payment in
full and termination of the Secured Obligations (other than indemnification
obligations), (b) be binding upon the Pledgor, its successors, and assigns, and
(c) inure, together with the rights and remedies of the Secured Party hereunder,
to the benefit of and be binding upon, the Secured Party and the other
Noteholders and their respective successors, transferees, and assigns. Without
limiting the generality of the foregoing clause, when the Secured Party or such
other Noteholder assigns or otherwise transfers any interest held by it under
the Note Purchase Agreement or any other Financing Document (as defined in the
Intercreditor Agreement) to any other Person pursuant to the terms of the Note
Purchase Agreement or any other Financing Document (as defined in the
Intercreditor Agreement) that other Person shall thereupon become vested with
all the benefits held by the Secured Party or such Noteholder under this Pledge
Agreement. Upon the payment in full and termination of the Secured Obligations,
the security interest granted hereby shall terminate and all rights to the
Pledged Collateral shall revert to the Pledgor to the extent such Pledged
Collateral shall not have been sold or otherwise applied pursuant to the terms
hereof. Upon any such termination, the Secured Party will, at the Pledgor's
expense, deliver all Pledged Collateral to the Pledgor, execute and deliver to
the Pledgor such documents as the Pledgor shall reasonably request and take any
other actions reasonably requested to evidence or effect such termination.
7.4. Expenses. The Pledgor will upon demand pay to the Secured Party
for its benefit and the benefit of the other Noteholders the amount of any and
all reasonable expenses, including the reasonable legal fees and other
reasonable expenses, which the Secured Party and the other Noteholders may incur
in connection with (i) the administration of this Pledge Agreement, (ii) the
custody or preservation of, or the sale of, collection from or other realization
upon, any of the Pledged Collateral, (iii) the exercise or enforcement of any of
the rights of the Noteholders hereunder or (iv) the failure by the Pledgor to
perform or observe any of the provisions hereof.
7.5. No Waiver; Remedies. To the fullest extent permitted under
applicable law, no failure on the part of the Secured Party to exercise, and no
delay in exercising,
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any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided under any other Financing
Document or by applicable law.
7.6. Choice of Law. This Pledge Agreement shall be governed by and
construed and enforced in accordance with the laws of the state of Texas,
without giving effect to any conflict of laws provisions thereof, except to the
extent that the validity or perfection of the security interests hereunder, or
remedies hereunder, in respect of any particular Pledged Collateral are governed
by the laws of a jurisdiction other than the state of Texas. Notwithstanding
anything to the contrary contained in this Section the rights, duties,
immunities, indemnities and standard of care of Wilmington Trust Company,
individually and as Collateral Agent and Secured Party shall be governed by and
construed in accordance with the laws of the State of Delaware.
[Signatures on the following page]
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The parties hereto have caused this Pledge Agreement to be duly
executed as of the date first above written.
PLEDGOR:
Probex Corp., a Delaware corporation
By: /s/ XXXXX X. XXXX
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Name: Xxxxx X. Xxxx
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Title: Senior Vice President & Chief Financial
Officer
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Address: 00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxx
Telecopy No. 972/890-8545
ACKNOWLEDGED BY ISSUER;
Probex Fluid Recovery, Inc., a Delaware corporation
By: /s/ XXXXX X. XXXX
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Name: Xxxxx X. Xxxx
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Title: Vice President
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Address: 00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxx
Telecopy No. 972/890-8545
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COLLATERAL AGENT:
WILMINGTON TRUST COMPANY
By: /s/ XXXXXX X. XXXX
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Name: Xxxxxx X. Xxxx
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Title: Senior Financial Services Officer
-------------------------------------------
Address: Wilmington Trust Company
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration - Probex
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[SCHEDULES INTENTIONALLY OMITTED]
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