EXHIBIT 10.14
STOCK PLEDGE AND SECURITY AGREEMENT
-----------------------------------
(WITH IRREVOCABLE PROXY)
-----------------------
THIS STOCK PLEDGE AND SECURITY AGREEMENT (WITH IRREVOCABLE PROXY)
("Agreement"), is entered into as of the 29th day of December, 1994, by and
between CPS ACQUISITION CORP., a Georgia Corporation ("Pledgor"), and GREYHOUND
FINANCIAL CORPORATION, a Delaware corporation ("Secured Party").
A. Pledgor has requested that Secured Party extend to it a loan ("Term
Loan") in an amount not to exceed One Million Five Hundred Thousand Dollars
($1,500,000) pursuant to a Term Loan Agreement between Pledgor and Secured Party
dated as of even date herewith (as it may be from time to time renewed, amended,
restated or replaced, "Term Loan Agreement") and evidenced by a promissory note
(as from time to time renewed, amended, restated or replaced, "Term Loan Note").
B. CPS Systems Inc., a Texas corporation ("Company"; and Pledgor and
Company collectively, "Borrowers"), has requested that Secured Party extend to
it in the form a revolving line of credit a loan ("Revolver Loan"; and the Term
Loan and Revolver Loan collectively, "Loans") in a principal amount not to
exceed One Million Dollars ($1,000,000) pursuant to a Revolver Loan and Security
Agreement between Company and Secured Party dated as of even date herewith (as
it may be from time to time renewed, amended, restated or replaced, "Revolver
Loan Agreement"; and the Term Loan Agreement and the Revolver Loan Agreement
collectively, "Loan Agreements") and evidenced by a promissory note (as from
time to time renewed, amended, restated or replaced, "Revolver Loan Note"; and
the Term Loan Note and the Revolver Loan Note collectively, "Notes").
C. The Loan Agreements, Notes, and all other documents now or hereafter
evidencing and/or securing the Loans are hereinafter referred to as the "Credit
Facilities Documents."
D. The Term Loan will be used to pay a part of the acquisition costs of
Pledgor for all of the capital stock of Company. Under the terms of the Credit
Facilities Documents, Acquisition Corp. is required to merge into Company. Upon
such merger, the term "Borrowers" will include only Company.
E. Pledgor owns all the shares of capital stock of Company (such shares,
together with any of the shares of capital stock of Company into which such
shares may be converted upon consummation of the merger, "Shares").
F. In order to induce Secured Party to make the Loans, Pledgor desires to
grant a security interest in, pledge, assign and
transfer to Secured Party, as additional security for the Loans and other
obligations, all of Pledgor's right, title and interest in and to the Shares.
AGREEMENT:
---------
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants, conditions, representations and warranties contained herein, the
parties hereto do hereby agree as follows:
1. Security Interest. Pledgor hereby grants a security interest to Secured
-----------------
Party in and to the Shares, together with all rights thereof or arising
therefrom, all certificates, options or warrants associated therewith, all
additions thereto, dividends and payments arising thereunder, all substitutions
therefor and the proceeds (including, without limitation, all accounts, chattel
paper, contract rights, documents, general intangibles, instruments, and
equipment, inventory and other goods) of all of the foregoing (collectively,
"Collateral"), as security for all of the following (collectively,
"Obligations"): the obligations of Borrowers, or either of them, to Secured
Party under the Loan Agreements and any and all of the other Credit Facilities
Documents (including, without limitation, the obligations of Pledgor under its
Guaranty and Subordination of even date herewith), all obligations of Pledgor
under this Agreement, and all other obligations now or hereafter owed to Secured
Party by Borrowers, or either of them, or their respective successors and/or
assigns to Secured Party. Upon execution of this Agreement, Pledgor shall
deliver to Secured Party the certificates evidencing the Shares together with
stock power(s) and assignment(s) separate from certificate for the certificates
representing the Shares, endorsed in blank, with signature guaranteed as
required by the transfer agent for the Shares, and the books of Pledgor of such
Shares shall contain a legend to reflect such pledge of the Shares hereunder.
2. Covenants, Representations and Warranties. Pledgor covenants,
-----------------------------------------
represents and warrants to Secured Party, with the understanding that Secured
Party is relying on such representations and warranties, that:
(a) the Collateral is the sole and separate Property of Pledgor, and
Pledgor has title to the Collateral and is the legal and beneficial owner
of the Collateral, free from any liens, security interests, assignments,
encumbrances or claims of any kind, other than the security interest
created by this Agreement and, subject to the provisions of the
Subordination Agreement (as defined in the Term Loan Agreement), and the
Subordinated Indebtedness Liens (as defined in the Term Loan Agreement);
2
(b) Except for the Subordinated Indebtedness Liens, so long as it is
subject to the terms and conditions of the Subordination Agreement, Pledgor will
not assign, pledge, encumber or otherwise transfer in any way, so long as this
Agreement shall remain in effect, the whole or any part of the Collateral;
(c) Except for the Subordinated Indebtedness Liens, so long as it is
subject to the terms and conditions of the Subordination Agreement, Pledgor will
not permit or suffer to exist any lien, security interest, encumbrance or claim
of any kind upon the Collateral, except those in favor of Secured Party;
(d) Pledgor shall deliver to Secured Party and Secured Party shall retain
physical possession of all stock certificates and other instruments and
documents representing or evidencing any of the Collateral, which stock
certificates shall be duly endorsed for transfer to Secured Party;
(e) Pledgor will not amend or waive or consent to any amendment or waiver
of the instruments or documents constituting the Collateral or make any
compromise, adjustment, settlement or termination in connection therewith, and
Pledgor will preserve and enforce all of its rights under the corporate
governance documents establishing the rights of holders of shares of stock of
the class held by Pledgor, unless failure to do so would not adversely affect
the Collateral;
(f) Pledgor will accept no payments, distributions or dividends on the
Collateral, Pledgor will hold any such payment, distribution or dividend
received by Pledgor in trust for Secured Party and not commingle it with its
general funds, and Pledgor will immediately remit to Secured Party any payment,
distribution or dividend received by it;
(g) The execution and delivery of this Agreement, and the performance of
its terms, will not result in any violation of or constitute a default under the
terms of any agreement, or other instrument, license, judgment, order, statute,
ordinance or other governmental rule or regulation, applicable to Pledgor or the
Collateral;
(h) Upon its execution and delivery, this Agreement shall create an
enforceable and valid lien upon and security interest in the Collateral;
(i) Pledgor has full power and authority to enter into this Agreement and,
if Pledgor is other than a natural person,
3
the person executing this Agreement on behalf of Pledgor have been duly
authorized to act on behalf of Pledgor in the execution thereof;
(j) The capitalization of the Pledgor consists of ten thousand
(10,000) authorized and issued shares of common stock and upon the merger
of Pledgor into Company will convert into ten thousand (10,000) shares of
common stock of Company; the capitalization of Company consists of five
thousand six hundred (5,600) authorized and issued shares of common stock
and except for the warrants described in schedule 2 (j), there are no
agreements in effect which require or obligate Pledgor or Company to issue
any additional shares of stock of Pledgor or Company and there are no
outstanding warrants, options of other rights to purchase any shares of
stock of Pledgor;
(k) Other than Pledgor and the other stockholders of Pledgor listed in
schedule 2(k), there are no persons who assert any type of ownership
interest or control (whether by virtue of voting rights or otherwise)
whatsoever in Pledgor; and other than Pledgor, there are no other persons
who assert any type of ownership interest in Company.
(1) Other than this Agreement and the pledge agreement creating the
Subordinated Indebtedness Liens on the Collateral, there is no agreement
which imposes any conditions or restrictions on the Shares, and Pledgor
shall take no action to impose any such restrictions prior to full
satisfaction of all of Borrowers' Obligations under the Credit Facilities
Documents;
(m) All of the Shares have been duly authorized, validly issued and
are fully paid and non--assessable;
(n) The granting by Pledgor to Secured Party of the security interest
in the Collateral as evidenced by this Agreement complies with all
applicable federal and state securities laws or qualifies for an exemption
from such registration;
(o) Pledgor will promptly (but not later than three (3) days after
receipt thereof) deliver to Secured Party copies of any notices received
with respect to matters materially affecting the Collateral; and
(p) Pledgor's principal place of business, chief executive office
and/or (if it is a natural person) residence is located at the mailing
address set forth in paragraph 15(m) below, and Pledgor will not change the
location of its principal place of business or chief executive office or
(if
4
it is a natural person) residence without ten (10) days prior written
notice to Secured Party.
3. Default. The occurrence of any of the following shall constitute an
-------
event of default ("Event of Default") under this
Agreement:
(a) A default or violation shall occur in the performance of any of the
obligations of Pledgor under Section 2;
(b) A default or violation in the performance of Pledgor's obligations
under this Agreement or any of the other Loan Documents (other than a
default or violation referred to elsewhere in this Section 3) which
continues unremedied (i) for a period of five (5) Business Days (as defined
below) after notice of such default or violation to Pledgor in the case of
any default or violation which can be cured by the payment of money alone
or (ii) for a period of twenty (20) Business Days after notice to Pledgor
in the case of any other default or violation;
(c) An "Event of Default," as defined elsewhere in any of the other
Credit Facilities Documents.
As used herein, the term "Business Day" means any day other than a Saturday,
Sunday or a day on which banks in, Los Angeles, California, or New York, New
York, are required to close.
4. Remedies. Upon the occurrence of any Event of Default, Secured Party
--------
may, at its option and without further notice to Pledgor, do one or more of the
following:
(a) Sell, assign and deliver any or all of the Collateral or any rights
or interest therein at public or private sale, at Secured Party's option;
(b) Collect any and all dividends or proceeds due from the Collateral
and apply such to all costs and expenses of Secured Party and to all
obligations secured hereby; and
(c) Take such other action and remedies as are provided in the
applicable Uniform Commercial Code or as otherwise allowed by law.
With respect to any sale of the Collateral by Secured Party, whether public or
private, under the UCC or otherwise, notice of such sale shall be deemed
commercially reasonable if given to Pledgor at least ten (10) Business Days
prior to the date of the intended disposition. Any and all remedies conferred
upon Secured
5
Party shall be deemed cumulative with and non--exclusive of any other remedies
allowed by law. The exercise of any one remedy by Secured Party shall not
preclude the exercise of any other. Secured Party may delay exercising a right
or remedy hereunder without waiving that, or any other past, present or future
right or remedy.
5. Maintenance of Priority of Security Interest. Except for the
--------------------------------------------
Subordinated Indebtedness Liens, so long as it is subject to the terms and
conditions of the Subordination Agreement, Pledgor will not, and will it not
attempt to or permit a third party to, assign, pledge, mortgage, lease,
hypothecate or otherwise encumber, sell or otherwise dispose of the Collateral,
and Pledgor will not suffer or permit to be incurred any liens on or security
interests in the Collateral or permit the Collateral to be subjected to any
unpaid charges whatsoever. In addition, Pledgor agrees that it will defend the
Collateral against the claims and demand of all parties; provided, that, at
Secured Party's option, Secured Party may do so at Pledgor's expense. Pledgor
agrees, at its sole cost and expenses, to execute, re--execute, deliver and re--
deliver all documents requested by Secured Party to enable Secured Party to
perfect, preserve and protect its security interest in and on the Collateral,
and does hereby authorize Secured Party to file and record any such documents
for such purposes. If Pledgor declares any share dividend, reclassification,
readjustment, makes any other change in the structure of Pledgor or if any
subscription, warrants or other options are exercisable with respect to the
Collateral, of if Pledgor is a party to any merger or consolidation, all new,
substituted, or additional shares or other securities, issued by reason of such
change or option, shall be subject to the security interest of Secured Party
described herein, and all references to the word "Collateral" shall
automatically be deemed to include such new, substituted or additional shares or
other securities (notwithstanding the fact that such action on the part of
Pledgor may constitute an Event of Default under this Agreement) and immediately
upon the issuance of such new, substituted or additional shares or other
securities, Pledgor shall deliver such shares or other securities to Secured
Party, accompanied by a stock power and assignment apart from certificate (or
other comparable assignment instrument in the case of the issuance of securities
other than stock) endorsed in blank.
6. Taxes. Pledgor will pay promptly, when due, any and all property taxes,
-----
excise taxes (however called) and other taxes, assessments, duties and other
charges, which, if unpaid, might by law or otherwise become a lien or charge
upon the Collateral (including any and all interest, penalties and related
provisional fees) imposed, levied or assessed against the Collateral, or upon or
measured by the use, ownership, possession or operation thereof, or in respect
of this Agreement or incident to the security
6
interest in the Collateral granted and conveyed herein; provided, however, that
Pledgor shall have the right to contest in good faith by appropriate proceedings
promptly initiated, the validity, amount or imposition of such fee or tax if
such contest, in Secured Party's determination, does not have any material
adverse impact on Secured Party's interest under this Agreement or any other
Loan Document or on the Collateral.
7. Pledgor's Failure to Pay Taxes and Other Items. If Pledgor fails to
----------------------------------------------
make any payment or do any act required of it under this Agreement, then Secured
Party shall have the right, but not the obligation, upon three (3) Business Days
notice to Pledgor, and without releasing Pledgor from any obligation under this
Agreement, to make or do the same, and to pay, purchase, contest or compromise
any lien which in Secured Party's judgment places its security interest in the
Collateral or Pledgor's title to the Collateral in jeopardy, and in exercising
any such rights, to expend whatever reasonable amounts Secured Party in its sole
discretion may deem necessary therefor. Any amounts expended by Secured Party
pursuant to this Section 7 shall be a demand obligation owing by Pledgor, which
shall bear interest at the Default Rate (as defined in the Term Loan Agreement)
from the date Secured Party expends such amount until repaid.
8. Indemnification. Pledgor agrees to indemnify, defend and hold harmless
---------------
Secured Party for, from and against all losses, claims, demands and expenses,
including, without limitation, expert witness fees and attorneys' fees, incurred
by Secured Party and arising out of: (a) a misrepresentation or breach of
warranty contained in this Agreement; (b) failure of Debtor to establish or
maintain in favor of Lender a first priority security interest in the Collateral
in favor of Lender subject only to the restrictions set forth in the
Subordination Agreement; or (c) any contest by Debtor of the exercise of any of
Secured Party's rights or remedies under this Agreement, at law or in equity.
9. Unregistered Securities. Pledgor acknowledges that the Shares
-----------------------
constitute unregistered securities subject to legal restrictions upon the
transfer thereof which will render a public sale of the Shares unavailable, and
that Secured Party has no obligation to register the Collateral under federal
and/or state securities laws. If, upon an Event of Default, Secured Party
exercises its right to sell the Shares, Pledgor waives all right to a public
sale and agrees to the private placement of the Shares to any qualified third
party buyer at a commercially reasonable price therefor. Secured Party may in
its discretion at any such sale, restrict the prospective bidders or purchasers
as to their number, nature of business and investment intention and may require
that the persons making such purchases represent and agree to the satisfaction
of Secured Party that they are purchasing the
7
Collateral for their account, for investment, and not for distribution or resale
or place any other restrictions on sale that are necessary to satisfy any
securities law restrictions. Pledgor further acknowledges that the legal
restrictions upon transfer of the Shares adversely affect the marketability of
the Shares and any commercially reasonable price of the Shares will include a
discount from the proportionate part of the net asset value of Pledgor
represented by the Shares to reflect those restrictions upon marketability.
10. Irrevocable Proxy. Pledgor does hereby irrevocably constitute and
-----------------
appoint Secured Party and Secured Party's successors and assigns as its proxy,
with full power, in the same manner, to the same extent, and with the same
effect as if they were to do the same:
(a) To attend all meetings of Pledgor and Company held from the date
hereof, and to vote the Collateral at any such meeting in such manner as
Secured Party shall, in its sole discretion deem appropriate; and
(b) To consent, in the sole discretion of Secured Party, to any and
all actions by or with respect to Pledgor and Company for which the consent
of the Pledgor is or may be necessary or appropriate; and
(c) Without limitation, to do all things which Pledgor can or could do
as a shareholder of Pledgor and Company, giving to Secured Party full power
of substitution and revocation;
provided, however, that this proxy shall not be exercisable by Secured Party,
and Pledgor alone shall have the foregoing powers, so long as no Event of
Default exists, and provided further that this proxy shall terminate at such
time as this Agreement is terminated as provided in Section 11 below. Except for
the proxy of Xxxx Xxxx which expires not later than thirty (30) days from the
date hereof, Pledgor hereby revokes any proxy or proxies heretofore given to any
person or persons and agrees not to give any other proxy in derogation hereof
until such time as this Agreement is terminated as provided below. Pledgor and
Secured Party hereby specifically agree that the proxy granted hereunder shall
be deemed to be valid and irrevocable until this Agreement shall be terminated
as provided below.
11. Attorney-in-Fact. Pledgor hereby appoints Secured Party as Pledgor's
----------------
attorney-in-fact with full power of substitution (without imposing any
obligations on Secured Party), to perform all acts which Secured Party deems
appropriate to perfect and continue the security interest granted hereunder. The
power of attorney
8
granted herein is coupled with an interest and is irrevocable until this
Agreement is terminated as provided below.
12. Termination. Subject to the provisions of the Subordination Agreement
-----------
with respect to the delivery of the Collateral to Lender, this Agreement shall
terminate upon full satisfaction of the indebtedness hereby secured, and, upon
such termination, Secured Party shall return to Pledgor any of the Collateral
held by Secured Party pursuant to this Agreement, and the original executed copy
of this Agreement which contains an irrevocable proxy.
13. Acknowledgment. Pledgor acknowledges that Secured Party would not
--------------
agree to make the Loans to Borrower without the execution, delivery and
performance of this Agreement by Pledgor. Pledgor further acknowledges that it
has received good and sufficient consideration for the execution, delivery and
performance of this Agreement.
14. No Duty to Protect. This is a pledge and assignment of Pledgor's
------------------
rights and benefits in the Collateral without an assumption by Secured Party of
any of Pledgor's duties or obligations attendant thereto. Except for physical
safeguarding of the stock certificate(s) included in the Collateral delivered to
Secured Party, Secured Party shall have no duty to protect, insure, collect or
realize upon the Collateral or any proceeds therefrom. Secured Party shall not
have any obligation to any third party by virtue of Secured Party's possession
of the Collateral.
15. Miscellaneous.
-------------
(a) This Agreement and all other Credit Facilities Documents shall
constitute the entire agreement among the parties hereto with respect to
the subject matter hereof and shall supersede all other prior agreements,
written or oral, with respect thereto.
(b) This Agreement shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns; provided,
however that Pledgor shall not have the right to assign or transfer its
respective rights or obligations under this Agreement except with the prior
written consent of Secured Party. Secured Party, at any time, may sell,
assign, grant or otherwise transfer, in whole or in part, the indebtedness
secured hereby and Secured Party's rights, interest and obligations under
this Agreement or the Collateral and in such event, the transferee shall
have the same rights, powers and authority with respect to this Agreement
and the Collateral so transferred as are hereby given to Secured Party.
9
(c) This Agreement may be amended, modified, renewed or extended but only
by a written instrument, executed by all of the parties hereto in the manner of
the execution of this Agreement.
(d) THIS AGREEMENT AND THE RIGHTS, DUTIES AND OBLIGATIONS OF THE PARTIES
THERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF ARIZONA AND TO THE EXTENT THEY PREEMPT THE LAWS OF SUCH STATE,
THE LAWS OF THE UNITED STATES.
(e) PLEDGOR (A) HEREBY IRREVOCABLY SUBMITS ITSELF TO THE PROCESS,
JURISDICTION AND VENUE OF THE COURTS OF THE STATE OF ARIZONA, MARICOPA COUNTY,
AND TO THE PROCESS, JURISDICTION, AND VENUE OF THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA, FOR THE PURPOSES OF SUIT, ACTION OR OTHER
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF OR, IF SECURED PARTY INITIATES SUCH ACTION, ANY COURT IN WHICH SECURED
PARTY SHALL INITIATE SUCH ACTION AND THE CHOICE OF SUCH VENUE SHALL IN ALL
INSTANCES BE AT SECURED PARTY'S ELECTION; AND (B) WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM
THAT PLEDGOR IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED
COURTS, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM
OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. PLEDGOR HEREBY
WAIVES THE RIGHT TO COLLATERALLY ATTACK ANY JUDGMENT OR ACTION IN ANY OTHER
FORUM.
(f) SECURED PARTY AND PLEDGOR ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT WOULD BE BASED UPON DIFFICULT AND COMPLEX
ISSUES AND THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT ARISING OUT OF ANY SUCH
CONTROVERSY SHALL BE TRIED BY A JUDGE SITTING WITHOUT A JURY, AND PLEDGOR HEREBY
KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY SUCH PROCEEDING.
(g) ALL OF THE PROVISIONS SET FORTH IN THIS PARAGRAPHS 15(d) - (g),
INCLUSIVE, ARE MATERIAL INDUCEMENTS FOR SECURED PARTY'S MAKING THE LOANS TO
BORROWERS.
[Pledgor's initials _______]
(h) All parties hereto shall, from time to time, do and perform such other
and further actions and execute and deliver any and all such other and further
instruments as may be required or reasonably requested by any other party to
establish, maintain and protect the respective rights and
10
remedies of such other party and to carry out and effect the intents and
purposes of this Agreement.
(i) All documents, agreements, certificates and instruments herein required
shall be in form and substance satisfactory in all respects to Secured Party in
its sole discretion and shall be provided at the sole cost and expense of
Pledgor.
(j) The representations and warranties hereunder shall survive the
execution hereof and Secured Party may enforce such representations and
warranties at any time. Pledgor's covenants shall survive the execution hereof
and shall be performed fully and faithfully by Pledgor at all times. The
indemnities of Pledgor shall survive repayment of the indebtedness secured
hereby.
(k) If any term or provision of this Agreement, or the application thereof
to any circumstances, shall be invalid, illegal or unenforceable to any extent,
such term or provision shall not invalidate or render unenforceable any other
term or provision of this Agreement, or the application of such term or
provision to any other circumstance. To the extent permitted by law, the parties
hereto hereby waive any provision of law that render any term or provision
hereof invalid or unenforceable in any respect.
(1) Time is of the essence of this Agreement.
(m) All notices, requests or demands required or permitted to be given
hereunder shall be in writing, and shall be deemed effective (a) upon hand
delivery, if hand delivered; (b) one (1) Business Day after such are deposited
for delivery via Federal Express or other nationally recognized overnight
courier service; or (c) three (3) Business Days after such are deposited in the
United States mails, certified or registered mail, all with delivery charges
and/or postage prepaid, and addressed as shown below, or to such other address
as either party may, from time to time, designate in writing. Written notice may
be given by telecopy to the telecopier number shown below or such other
telecopier number as either party may designate, from time to time, in writing,
provided that such notice shall not be deemed effective unless it is confirmed
within twenty-four (24) hours by hand delivery, courier delivery or mailing of a
copy of such notice in accordance with the requirements set forth above.
11
If to Secured Party: Greyhound Financial Corporation
Dial Tower
Dial Corporate Center
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Vice-President - Law
Telecopy: (000) 000-0000
CPS Acquisition Corp.
c/o CPS Systems, Inc.
0000 Xxxxxxxx Xx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Vice-President - Law
Telecopy: (000) 000-0000
Greyhound Financial Corporation
000 Xx. Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Portfolio Manager
Telecopy: (000) 000-0000
one copy marked "Attention: Vice
President - Law" and the other
marked "Attention: Vice President -
Operation Management"
If to Pledgor: CPS Acquisition Corp.
0000 Xxxxxxxx Xx., Xxxxx 000
Xxxxxx, Xxxxx 00000
(n) This Agreement may be executed in any number of counterparts, each of
which, when so executed and delivered, shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
(o) The headings of the sections and paragraphs of this Agreement have been
inserted for convenience of reference only and shall in no way restrict or
otherwise modify any of the terms or provisions hereof.
(p) All references to the singular shall include the plural and vice versa
and all references to the masculine shall include the neuter or feminine and
vice versa. This Agreement has been reviewed and negotiated by counsel for each
party and no ambiguity in this Agreement shall be construed against any party
based upon its having prepared the same.
16. Waiver of Suretyship Defenses and Rights.
-----------------------------------------
12
(a) Neither (i) the exercise or the failure to exercise by Secured Party of any
rights of remedies conferred on it under any of the other Credit Facilities
Documents, hereunder or existing at law or otherwise, or against any other
security for performance of Obligations, (ii) the commencement of an action
at law or the recovery of a judgment at law against Company or other
obligor ("Third Party Obligor") for the Obligations and the enforcement
thereof through levy or execution or otherwise, (iii) the taking or
institution or any other action or proceeding against Company or any other
Third Party Obligor nor (iv) any delay in taking, pursuing or exercising
any of the foregoing actions, rights, powers or remedies (even though
requested by Pledgor) of Secured Party or anyone acting for Secured Party
shall extinguish or affect the obligations of Pledgor hereunder. Pledgor
shall be and remain liable hereunder until all Obligations are fully paid
and performed, notwithstanding the previous discharge (total or partial)
from further liability of Company or any Third Party Obligor.
(b) Borrower hereby expressly waives: (i) notice of the existence, creation or
non-payment of all or any of the Obligations except as otherwise provided
in this Agreement; (ii) presentment, protest, demand, dishonor, notice of
dishonor, protest and all notices whatsoever with respect to the
Obligations; (iii) all diligence in collection or protection of or
realization on the Obligations or any part thereof, an Obligation
hereunder, or any security for or guarantee of any of the foregoing; (iv)
any right or defense based upon an election of remedies by Secured Party or
marshalling of assets; (v) any defense arising because of Secured Party's
election under Section 1111(b)(2) of the United States Bankruptcy Code
("Bankruptcy Code") in any proceeding instituted under the Bankruptcy Code;
(vi) any defense based on post-petition borrowing or the grant of a
security interest by a Borrower under Section 365 of the Bankruptcy Code;
(vii) any duty on the part of Secured Party to disclose to Pledgor any
facts Secured Party may know or hereafter know about a Borrower, regardless
of whether Secured Party has reason to believe that any such facts
materially increase the risk beyond that which Pledgor intends to assume or
has reason to believe that such facts are known to Pledgor or
13
has a reasonable opportunity to communicate such facts to Pledgor, because
Pledgor represents and warrants that it is fully responsible for being and
keeping informed of the financial condition of each Borrower and of all
circumstances bearing on the risk of non-payment or any obligation
guaranteed hereby; and (viii) any and all suretyship defenses and defenses
in the nature thereof under Arizona and/or any other applicable law,
including, without limitation, the benefits of the provisions of Sections
12-1641 through 12-1646, of the Arizona Revised Statues, Sections 17 and
21, A.R.C.P., and all other laws and procedural rules of similar import.
(c) Without limiting the generality of the foregoing, Pledgor will not assert
against Secured Party any defense of waiver, release, discharge in
bankruptcy, statute of limitation, res judicata, statute of frauds, anti-
deficiency statute, fraud, usury, illegality or unenforceability which may
be available to Borrower with respect to the other Credit Facilities
Documents, or any setoff available to a Borrower against Secured Party,
whether or not on account of a related transaction.
(d) Anything else contained herein to the contrary notwithstanding, Secured
Party, from time to time, without notice to Pledgor, may take all or any of
the following actions without in any manner affecting or impairing the
obligations of Pledgor hereunder: (i) obtain a lien on or a security
interest in any property to secure any of the Obligations; (ii) retain or
obtain the secondary liability of any party or parties, in addition to
Pledgor, with respect to any of the Obligations; (iii) renew, extend or
otherwise change the time for payment or performance of any of the
Obligations for any period; (iv) release or compromise any liability of a
Borrower or any liability of any nature of any other party or parties with
respect to any of the Obligations; (v) exchange, enforce, waive, release
and apply any security for the performance of any of the Obligations and
direct the order or manner of sale thereof as Secured Party may in Secured
Party's discretion determine; (vi) resort to the Collateral for payment of
any Obligations, whether or not Secured Party shall proceed against any
other party primary or secondarily against any other party
14
primarily or secondarily liable on any of the Obligations; (vii) agree to
any amendment (including, without limitation, any amendment which changes
the amount of interest to be paid under the Credit Facilities Documents or
extends the period of time during which a Borrower may obtain advances of a
Loan), any alteration of any of the Credit Facilities Documents or any
waiver of any of the provision of any of the Credit Facilities Documents
and/or exercise Secured Party's rights to consent to any action or non-
action of a Borrower which may violate the covenants and agreements
contained in the Credit Facilities Documents, with or without consideration
and on such terms and conditions as may be acceptable to Secured Party; or
(h) exercise any of Secured Party's rights conferred by the Credit
Facilities Documents or by law.
(e) Notwithstanding anything herein to the contrary, if at any time or any part
of any payment theretofore applied by Secured Party to any of the
Obligations is or must be rescinded or returned by Secured Party for any
reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of a Borrower), such Obligations, for purposes
of this Section 16, to the extent that such payment is or must be rescinded
or returned, shall be deemed to have never been performed; and this Section
16 shall continue to be effective or be reinstated, as the case may be, as
to such Obligations, all as though such application by Secured Party had
not been made.
(f) Borrower shall have no right of subrogation with respect to the Obligations
or any right of indemnification reimbursement or contribution from a
Borrower or from any other Third Party Obligor with respect to the
Obligations regardless of any payment thereon resulting from the provisions
of this Section 16 until the Obligations have been paid and performed in
full and Borrower hereby unconditionally waives any such right of
subrogation, indemnification, reimbursement or arbitration.
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first hereinabove written.
PLEDGOR: CPS ACQUISITION CORP., a
Georgia corporation
By: /s/ Xxxx X. Xxxx
--------------------------------
Print/Type Name: Xxxx X. Xxxx
Title: President
SECURED PARTY: GREYHOUND FINANCIAL CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------
Print/Type Name: Xxxxxxxx Xxxxxx
-------------------
Title: Vice President
-----------------------------
