STOCK PLEDGE AGREEMENT
In order to induce WEI ACQUISITION CO. ("SECURED
PARTY") to accept from A&M INVESTMENT ASSOCIATES #3, LLC
("DEBTOR") (i) its Secured Recourse Promissory Note, dated
January 31, 1997, in the original principal amount of $335,000
(the "RECOURSE PROMISSORY NOTE") and (ii) its Secured Non-
Recourse Promissory Note, dated January 31, 1997, in the original
principal amount of $5,005,000 (the "NON-RECOURSE PROMISSORY
NOTE"; and, together with the Recourse Promissory Note, the
"NOTES") in connection with the issuance by Secured Party to
Debtor of certain shares of Secured Party's common stock, par
value $0.01 per share (the "STOCK"), pursuant to that certain
Stock Subscription Agreement, dated as of January 31, 1997, by
and between Debtor and Secured Party, the parties hereto agree as
follows:
1. Pledge; Grant of Security.
(a) Security Interest. Debtor hereby pledges,
hypothecates, assigns, grants, transfers, sets over and delivers
to Secured Party and hereby grants and assigns to Secured Party
with power of sale, a continuing security interest in all of
Debtor's right, title and interest in and to the Stock, together
with the certificates representing the Stock, all securities
hereafter delivered to Debtor in substitution for or in addition
to the Stock, all certificates and instruments representing or
evidencing such securities, all securities or other non-cash
property at any time and from time to time received, receivable,
or otherwise distributed in respect of any or all of the
foregoing, and all securities, cash or other property at any time
and from time to time received, receivable, or otherwise
distributed in exchange for, or in respect of, any or all of the
foregoing, all of which (to the extent received by Debtor) Debtor
shall deliver to Secured Party promptly upon receipt for
retention by Secured Party hereunder. The Stock, certificates,
instruments, securities, cash and other property which are
subject to the pledge and security interest created hereby, are
herein collectively referred to as the "COLLATERAL".
(b) Delivery of Certificates. Concurrently with
the execution of this Agreement, Debtor shall deliver the
certificate or certificates representing the Stock to Secured
Party, together with a stock power endorsed for transfer in blank
by Debtor, to be held by Secured Party pursuant to this
Agreement.
2. Security for Obligations. This Agreement secures,
and the Collateral is collateral security for, the prompt payment
or performance in full when due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or
otherwise (including the payment of amounts that would become due
but for the operation of the automatic stay under Section 362(a)
of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all
obligations and liabilities of every nature of Debtor now or
hereafter existing under or arising out of the Notes and all
extensions or renewals thereof, whether for principal, interest
(including without limitation interest that, but for the filing
of a petition in bankruptcy with respect to Debtor, would accrue
on such obligations), fees, expenses, indemnities or otherwise,
whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly
owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all
or any portion of such obligations or liabilities that are paid,
to the extent all or any part of such payment is avoided or
recovered directly or indirectly from Secured Party as a
preference, fraudulent transfer or otherwise (all such
obligations and liabilities being the "UNDERLYING DEBT"), and all
obligations of every nature of Debtor now or hereafter existing
under this Agreement (all such obligations of Debtor, together
with the Underlying Debt, being the "SECURED OBLIGATIONS").
3. Representations and Warranties. Debtor represents
and warrants as follows:
(a) Authorization. Debtor has full power and
authority to grant security interests in the Collateral, and to
execute, deliver, and perform this Agreement, without the consent
or approval of any other person.
(b) Binding Obligation. This Agreement
constitutes the legally valid and binding obligation of Debtor,
enforceable against Debtor in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors' rights generally.
(c) Ownership of Collateral. Except for the
security interest created by this Agreement, Debtor owns, or at
the time the Collateral comes into existence will own, the
Collateral free and clear of any lien, mortgage, pledge,
assignment, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to
give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of
the foregoing (any of the foregoing, a "LIEN"). Except as may
have been filed in favor of Secured Party relating to this
Agreement, no effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is
on file in any filing or recording office.
(d) No Conflict. The execution, delivery and
performance by Debtor of this Agreement will not (i) violate any
provision of law applicable to Debtor, or any order, judgment or
decree of any court or other agency of government binding on
Debtor, (ii) be in conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default
under any contractual obligation of Debtor or (iii) result in or
require the creation or imposition of any Lien upon any of his
properties or assets.
(e) Other Information. All information
heretofore, herein or hereafter supplied to Secured Party by or
on behalf of Debtor with respect to the Collateral is accurate
and complete in all respects.
4. Voting Powers. At any time during which an Event
of Default shall not have occurred and be continuing, Debtor
shall retain and be entitled to exercise all voting powers
pertaining to the Stock or any part thereof.
5. Further Assurances. Debtor agrees that from time
to time, at the expense of Debtor, Debtor will promptly execute
and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that
Secured Party may request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to
enable Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, Debtor will (i) execute
and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be
necessary or desirable, or as Secured Party may request, in order
to perfect and preserve the security interests granted or
purported to be granted hereby and (ii) at Secured Party's
request, appear in and defend any action or proceeding that may
affect Debtor's title to or Secured Party's security interest in
all or any part of the Collateral.
6. Transfers and Other Liens. Prior to the payment
and performance in full of the Secured Obligations, Debtor shall
not (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral; or (ii) except for
the security interest created by this Agreement, create or suffer
to exist any lien upon or with respect to any of the Collateral
to secure the indebtedness or other obligations of any person or
entity; or (iii) do, or permit or suffer to be done, anything
that may impair the value of the Collateral or the security
intended to be effected hereby and shall use its best efforts to
preserve, protect and enhance the value of the Collateral.
7. Events of Default. The occurrence of any of the
following events shall constitute an "Event of Default":
(a) Failure to Make Payments When Due. Failure
of Debtor to pay any principal, interest or other amount due
under the Notes when due, whether by required prepayment,
declaration, acceleration, demand or otherwise, including the
failure to prepay the Notes to the extent required under Sections
7 and 8 of the Management Services Agreement dated as of January
31, 1997, among Xxxxxxx & Marsal, Inc., Xxxxxxx X. Xxxxxxx XX,
the Debtor, Cerberus Partners, L.P. and Secured Party (the
"MANAGEMENT SERVICES AGREEMENT"); or
(b) Breach of Covenants. Failure of Debtor to
perform or observe any other term, covenant or agreement on his
part to be performed or observed pursuant to this Agreement or
the Notes within five (5) days after written notice of such
failure is given to Debtor by Secured Party; or
(c) Breach of Representation or Warranty. Any
representation or warranty made by Debtor to Secured Party in
connection with this Agreement or the Notes shall prove to have
been false in any material respect when made; or
(d) Involuntary Bankruptcy, etc. (i) A court
having jurisdiction in the premises shall enter a decree or order
for relief in respect of Debtor in an involuntary case under
Title 11 of the United States Code entitled "Bankruptcy" (as now
and hereinafter in effect, or any successor thereto, the
"BANKRUPTCY CODE") or any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, which decree or
order is not stayed; or any other similar relief shall be granted
under any applicable federal or state law or (ii) an involuntary
case shall be commenced against Debtor under any applicable
bankruptcy, insolvency or other similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in
the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar
powers over Debtor or over all or a substantial part of Debtor's
property shall have been entered; or the involuntary appointment
of an interim receiver, trustee or other custodian of Debtor for
all or a substantial part of Debtor's property shall have
occurred; or a warrant of attachment, execution or similar
process shall have been issued against any substantial part of
the property of Debtor, and, in the case of any event described
in this clause (ii), such event shall have continued for 60 days
unless dismissed, bonded or discharged; or
(e) Voluntary Bankruptcy, etc. An order for
relief shall be entered with respect to Debtor, or Debtor shall
commence a voluntary case under the Bankruptcy Code or any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order
for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or
shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial
part of Debtor's property.
8. Rights and Remedies. (a) If any Event of Default
shall have occurred, all of the Secured Obligations shall
immediately become due and payable and Secured Party may exercise
in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the
Uniform Commercial Code as in effect in any relevant jurisdiction
(whether or not the Code applies to the affected Collateral).
Secured Party shall have full recourse to the Maker (directly and
as to a deficiency in respect of the Collateral) and the
Collateral in respect of the Secured Obligations arising under
the Recourse Promissory Note, but Secured Party's sole remedy in
respect of the Secured Obligations arising under the Non-Recourse
Promissory Note shall be against the Collateral. In exercising
its remedies against the Collateral, Secured Party may, upon ten
(10) days' written notice to Debtor, but without any other demand
or notice whatsoever, transfer ownership of the Stock to Secured
Party in discharge of the Secured Obligations to the extent of
the fair market value of the shares of the Stock so transferred,
to the extent required to pay all of the Secured Obligations,
such transfer to be free and clear of any right or equity of
redemption, which right or equity is hereby expressly waived and
released.
(b) In the event shares of the Stock are so
transferred in discharge of any or all of the Secured
Obligations, such transfer shall be applied first to the fees
incurred as set forth in Section 13, second to the Obligations
arising in respect of the Non-Recourse Promissory Note and third
to the Obligations arising in respect of the Recourse Promissory
Note, in each case first to liabilities for interest and then to
liabilities for principal. All rights and remedies hereunder are
in addition to whatever other rights the parties hereto may
otherwise have against one another, and no exercise of any such
rights or remedies shall be deemed to preclude the exercise of
any other rights or remedies.
(c) If Debtor and Secured Party are unable to
agree upon the fair market value of the shares of Stock so
transferred, the fair market value shall be determined in the
manner set forth in Section 7(e) of the Management Services
Agreement.
(d) In the event the fair market value of the
Stock exceeds the aggregate amount of the Secured Obligations,
the number of shares of Stock to be transferred to Secured Party
pursuant to Section 8(a) shall be determined by multiplying the
number of shares of Stock, by a fraction, the numerator of which
is the aggregate amount of the Secured Obligations and the
denominator of which is the aggregate fair market value of the
Stock determined as provided herein, with any fractional interest
settled in cash.
9. Continuing Security Interest; Transfer of Notes.
This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until
the payment in full of the Secured Obligations, (ii) be binding
upon Debtor, its successors and assigns and (iii) inure, together
with the rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause
(iii), Secured Party may assign or otherwise transfer the Notes
only to any affiliate of Secured Party, and such affiliate shall
thereupon become vested with all the benefits in respect thereof
granted to Secured Party herein or otherwise. Upon the payment
in full of all Secured Obligations, the security interest granted
hereby shall terminate and all rights to the Collateral shall
revert to Debtor. Upon any such termination Secured Party will,
at Debtor's expense, execute and deliver to Debtor such documents
as Debtor shall reasonably request to evidence such termination.
10. Amendments; Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, and no
consent to any departure by Debtor therefrom, shall in any event
be effective unless the same shall be in writing and signed by
Secured Party and, in the case of any such amendment or
modification, by Debtor.
11. Notices. Any communications between Secured Party
and Debtor and any notices or requests provided herein to be
given shall be given in accordance with the provisions set forth
in the Management Services Agreement.
12. Failure or Indulgence Not Waiver. No failure or
delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude any other or further
exercise thereof or of any other power, right or privilege.
13. Indemnity and Expenses. Debtor agrees to
indemnify Secured Party from and against any and all claims,
losses and liabilities arising out of or resulting from this
Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities resulting from
Secured Party's negligence or willful misconduct. Debtor will
upon demand pay to Secured Party the amount of any and all
reasonable expenses, including the reasonable fees and
disbursements of counsel and of any experts and agents, which
Secured Party may incur in connection with (i) the administration
of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from or other
realization upon any of the Collateral, (iii) the exercise or
enforcement of any of its rights hereunder or (iv) the failure by
Debtor to perform or observe any of the provisions hereof.
14. Severability. In case any provision in or
obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not
in any way be affected or impaired thereby.
15. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose or be given any substantive effect.
16. Governing Law; Terms. This Agreement and the
rights and obligations of the parties hereunder shall be governed
by, and shall be construed and enforced in accordance with, the
internal laws of the State of New York without regard to
conflicts of laws principles, except to the extent that the
Uniform Commercial Code of the applicable jurisdiction provides
that the validity or perfection of the security interest
hereunder, or remedies hereunder, in respect of any particular
collateral are governed by the laws of a jurisdiction other than
the State of California. Unless otherwise defined herein or in
the Notes, terms used in Articles 8 and 9 of the Uniform
Commercial Code in the State of California are used herein as
therein defined.
17. Counterparts. This Agreement may be executed in
one or more counterparts and by different parties hereto in
separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
18. Subject to Management Services Agreement. The
parties hereby agree that, notwithstanding anything to the
contrary contained herein, the Stock shall be subject to the
terms and provisions of Sections 7 and 8 of the Management
Services Agreement, and nothing contained herein shall limit the
operation of such Sections 7 and 8.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of January 31, 1997.
A&M INVESTMENT ASSOCIATES #3, LLC
/s/ Xxxxxxx X. Xxxxxxx
By ____________________________
Name: Xxxxxxx X. Xxxxxxx XX
Title: Manager
WEI ACQUISITION CO.
/s/ Xxx Xxxxxxxxx
By ____________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
and Secretary
