PLEDGE AGREEMENT
OF
XXXXXX XXXXXXXXXX
THIS PLEDGE AGREEMENT entered into as of June 11, 1999 by and between
XXXXXX XXXXXXXXXX ("Pledgor") and KEYBANK NATIONAL ASSOCIATION, as agent for
the Lenders under the Credit Agreement (as defined below) is as follows:
SECTION 1. RECITALS.
(A) Pledgor is a shareholder of the Borrower and is entering into this
Agreement to induce Lenders to advance additional credit to the Borrower.
(B) Lenders are willing to advance additional credit to the Borrower
provided Pledgor executes and delivers this Pledge Agreement for the benefit
of Lenders.
SECTION 2. DEFINITIONS.
All capitalized terms used herein and not otherwise defined herein shall
have the meaning attributed to them in the Credit Agreement, and the
following terms shall have the meanings set forth below (with all such
meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"CREDIT AGREEMENT" means that certain Amended and Restated Credit
Agreement dated as of April 8, 1999, as amended by that certain First
Amendment to Amended and Restated Credit Agreement of even date herewith and
as said agreement may be amended or restated from time to time hereafter.
"LIABILITIES" means (i) the principal amount of all Obligations in
excess of the credit that Lenders would have been obligated to advance under
that certain Amended and Restated Credit Agreement dated as of April 8, 1999
as such agreement existed before the date hereof ("Principal"), (ii) all
interest payable under the Credit Agreement with respect to the Principal,
and (iii) all of Pledgor's obligations hereunder. For purposes of determining
the amount of Principal outstanding at any time after the occurrence of an
Event of Default, all reductions to the Obligations shall be deemed to be
applied first to those Obligations which are not Principal and last to the
Principal.
PAGE 1
EXECUTION COPY
"PLEDGED COLLATERAL" means all of Pledgor's property and interests in
property described in Section 3(A) below.
"PLEDGED SHARES" means 759,000 shares of the Borrower's issued and
outstanding common stock evidenced by a certificate for 2,656,500 shares
bearing CUSIP No. 000000000.
SECTION 3. PLEDGE; DELIVERY.
(A) To secure the full and prompt performance of all of the
Liabilities, Pledgor hereby pledges to Administrative Lender and grants to
Administrative Lender, for the benefit of and on behalf of the Lenders, a
security interest in (i) the Pledged Shares, (ii) the certificate(s)
representing the Pledged Shares, (iii) all dividends, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any of the Pledged Shares and (iv) all
proceeds thereof.
(B) Contemporaneously herewith, Pledgor has delivered to McDonald
Investments, Inc. as agent for the Administrative Lender all of the
certificates representing the Pledged Shares, together with separate stock
transfer forms duly endorsed, in blank, for the transfer of the Pledged
Shares. If at any time Pledgor obtains possession of any other certificate,
document or other evidence representing any of the Pledged Collateral,
Pledgor will immediately deliver such certificate, document or other evidence
to Administrative Lender or agent designated by Administrative Lender. During
such time as any such certificate, document or other evidence representing
any of the Pledged Collateral is in Pledgor's possession or control, Pledgor
shall hold or control such certificate, document or other evidence in trust
for Administrative Lender's benefit. All certificates, documents or other
evidence delivered to Administrative Lender or its agent shall be accompanied
by separate stock powers duly endorsed, in blank, for transfer.
(C) At any time after the occurrence of an Event of Default,
Administrative Lender, at its option and without any obligation to do so, may
transfer to or register in its name, or the name of any nominee, all or any
part of the Pledged Collateral.
(D) Upon the final, irrevocable payment of the Liabilities,
Administrative Lender shall return all Pledged Collateral to Pledgor, less
such amounts as needed to pay the Liabilities in accordance with the terms of
this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Pledgor hereby represents and warrants to Administrative Lender as
follows:
PAGE 2
EXECUTION COPY
(i) there is no stamp duty, tax, levy, impost, deduction,
charge, withholding or similar duty, tax or fee imposed on or by virtue of the
execution or delivery of this Agreement or any other document to be furnished
hereunder or in connection herewith;
(ii) to ensure the legality, validity, enforceability or
admissibility in evidence of this Agreement, it is not necessary that this
Agreement or any other document be filed or recorded with any
governmental, administrative or judicial authority or regulatory body;
(iii) the Pledged Shares have been duly authorized and validly
issued and are fully paid and non-assessable with no personal liability
attaching to the ownership thereof (e.g., the Pledged Shares do not oblige the
owner thereof to make any further payments in respect thereof);
(iv) there are no restrictions upon the transfer of any of the
Pledged Shares, and Pledgor has the unqualified right to transfer the Pledged
Shares without obtaining the consent of any Person, except for restrictions
imposed by applicable securities laws;
(v) the Pledged Shares are registered in Pledgor's name;
(vi) Pledgor is the sole legal and beneficial owner of the entire
right, title and interest in and to the Pledged Collateral, free and clear of
any Lien or contractual obligation, except for the security interests created
by this Agreement, and Pledgor will defend Administrative Lender's rights and
title to the Pledged Collateral against the claims of all Persons;
(vii) the pledge and delivery of the Pledged Shares pursuant to
this Agreement creates a valid and perfected first priority security interest
in the Pledged Shares securing payment and performance of the Liabilities; and
(viii) no authorization, approval or other action by, and no
notice to or filing with any governmental, administrative or judicial
authority or regulatory body is required (a) for the pledge by Pledgor of the
Pledged Collateral pursuant to this Agreement, (b) for the execution,
delivery or performance of this Agreement by Pledgor, or (c) for the exercise
by Administrative Lender of the voting or other rights provided for in this
Agreement or the remedies in respect of the Pledged Collateral pursuant to
this Agreement (except as may be required in connection with the disposition
of the Pledged Collateral by laws affecting the offering and sale of
securities generally).
PAGE 3
EXECUTION COPY
Section 5. FURTHER ASSURANCES.
Pledgor, at its expense and from time to time, will promptly execute and
deliver all further instruments and documents, and take all further action
that may be necessary or desirable, or that Administrative Lender may
request, in order to (i) continue, perfect and protect the security interest
granted hereby, and (ii) to enable Administrative Lender to exercise and
enforce its rights and remedies hereunder with respect to any Pledged
Collateral. Without prejudice to the generality of the foregoing, each such
instrument or document shall be in such form as Administrative Lender shall
stipulate and shall contain such provisions as Administrative Lender
reasonably considers necessary for the perfection or enforcement of the
rights granted hereby.
Section 6. VOTING RIGHTS.
(A) So long as no Event of Default is continuing:
(i) Pledgor shall be entitled to exercise all voting and other
consensual rights pertaining to the Pledged Collateral for any purpose
not inconsistent with the terms of the Loan Documents;
(ii) Pledgor may receive and retain any distributions paid in
respect of the Pledged Collateral; provided, however, that all noncash
distributions made in respect of, or in exchange for, any Pledged
Collateral shall be delivered to Administrative Lender and held as
Pledged Collateral and shall, if received by Pledgor, be received in trust
for the benefit of Administrative Lender, be segregated from Pledgor's
other property, and be immediately delivered to Administrative Lender in
the same form as so received (with any necessary endorsement).
(B) During the continuance of an Event of Default:
(i) all of Pledgor's rights pursuant to Section 6(A) shall, at
Administrative Lender's election, cease and shall thereupon become vested
in Administrative Lender, or such nominee(s) of Administrative Lender as
Administrative Lender shall direct, who shall thereupon have the sole
right to exercise such voting and other consensual rights and to receive
and hold as Pledged Collateral such distributions; and
(ii) all distributions received by Pledgor contrary to the
provisions of Section 6(B)(i) shall be received in trust for the benefit
of Lenders, shall be segregated from Pledgor's other property, and shall
be immediately delivered to
PAGE 4
EXECUTION COPY
Administrative Lender, as Pledged Collateral, in the same form as so
received (with any necessary endorsement).
SECTION 7. TRANSFERS AND OTHER LIENS.
Pledgor will not (i) sell, transfer, or otherwise dispose of, or grant
any option or rights to purchase with respect to, or permit any person to be
registered as holder of, any of the Pledged Collateral or (ii) create or
permit to exist any Lien upon any of the Pledged Collateral, except for the
security interest created under this Agreement. Provided, however, that
Pledgor may enter into agreements for the sale of the Pledged Collateral as
part of the sale of a majority interest in Xxxxxxxxxx Industries, Inc. Such
agreements shall not impair the rights of Administrative Lender, and the
Pledged Collateral shall not be released to Pledgor or any other party except
upon full compliance with the terms of this Agreement.
SECTION 8. ATTORNEY-IN-FACT.
Pledgor hereby irrevocably appoints Administrative Lender, and each and
every person to whom Administrative Lender shall from time to time delegates
the exercise of this power of attorney, jointly and severally, to be his
attorney and in his name and otherwise on his behalf after the occurrence of an
Event of Default to sign, seal, execute, deliver, perfect and do all other
acts which may be required (or which Administrative Lender considers
necessary) to carry out any obligation imposed on Pledgor pursuant to this
Agreement, to consummate any sale or other dealing by Administrative Lender
of the Pledged Collateral, or to enable Administrative Lender to exercise the
powers conferred on it pursuant to this Agreement or by law. Administrative
Lender shall have full power to delegate the power conferred on it by this
Section 8, but no such delegation shall preclude the subsequent exercise of
such power by Administrative Lender itself or preclude Administrative Lender
from making a subsequent delegation thereof to some other person, and any
such delegation may be revoked by Administrative Lender at any time.
SECTION 9. ADMINISTRATIVE LENDER'S DUTIES.
The powers conferred on Administrative Lender hereunder are solely to
protect its interest in the Pledged Collateral and shall not impose any duty
upon Administrative Lender to exercise any such powers. Administrative Lender
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
Administrative Lender accords its own property, it being understood that
Administrative Lender shall not have responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Pledged Collateral, whether
PAGE 5
EXECUTION COPY
Administrative Lender has or is deemed to have knowledge of such matters, or
(ii) taking any necessary steps to preserve rights against any parties with
respect to any Pledged Collateral.
SECTION 10. REMEDIES UPON DEFAULT.
(A) If any Event of Default is continuing:
(i) Administrative Lender may exercise in respect of the
Pledged Collateral, in addition to other rights and remedies provided
for herein or in the Loan Documents or otherwise available to it, all
the rights and remedies of a secured party on default under the Code,
and Administrative Lender may also, without notice except as specified
below, sell the Pledged Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's board or
any of Administrative Lender's offices or elsewhere, for cash, on
credit or for future delivery and upon such other terms as
Administrative Lender may deem commercially reasonable. Administrative
Lender is hereby authorized at any such sale (if it deems it advisable
to do so) to restrict the prospective bidders or purchasers to persons
who will represent and agree that they are purchasing the Pledged
Shares for their own account in compliance with Regulation D of the
Securities Act of 1933 (or under any other applicable exemption
available under applicable law). Pledgor agrees that, to the extent
notice of sale shall be required by law, at least five days notice to
Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. Administrative Lender is not obligated to make any sale
of the Pledged Collateral, regardless of notice of sale having been
given. Administrative Lender 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; and
(ii) any cash held by Administrative Lender as Pledged
Collateral and all cash proceeds received by Administrative Lender in
respect of any sale of, collection from, or other realization upon
the Pledged Collateral may, in Administrative Lender's sole
discretion, be held by Administrative Lender as collateral for, and/or
then or at any time thereafter applied (after payment of any amounts
payable to Administrative Lender pursuant to Section 11(B)) against
the Liabilities in such order as Administrative Lender shall elect.
Any surplus of such cash or cash proceeds held by Administrative
Lender and remaining after payment in full of the Liabilities shall be
paid over to Pledgor or to any other Person lawfully entitled to
receive such surplus.
PAGE 6
EXECUTION COPY
(B) Without precluding any other methods of sale, the sale of
the Pledged Collateral, or any part thereof, shall have been made in a
commercially reasonable manner if conducted in conformity with reasonable
commercial practices of banks or finance companies disposing of similar
property, but in any event, Administrative Lender may sell or otherwise
dispose of the Pledged Collateral without assuming any credit risk and
without any obligation to advertise.
(C) Pledgor recognizes that federal and/or state securities and
other laws may limit the flexibility desired to achieve an otherwise
commercially reasonable disposition of the Pledged Collateral, and in the
event of potential conflict between such laws or regulations and what in
other circumstances might constitute commercial reasonableness, it is
intended that consideration for such laws and regulations will prevail over
attempts to achieve such commercial reasonableness. In connection with any
sale or other disposition of the Pledged Collateral, compliance by
Administrative Lender with the written advice of its counsel concerning the
potential effect of any such law or regulation shall not be cause for
Pledgor, or any other Person, to claim that such sale or other disposition
was not commercially reasonable, it being the intent of Pledgor that
Administrative Lender not be obligated to risk contravening any such law or
regulation in order to effect what, but for such law or regulation, would be
a commercially reasonable disposition.
(D) By way of example, and not by way of limitation, with
respect to any sale or other disposition of any of the Pledged Collateral
(i) such sale or disposition shall be commercially reasonable if made by and
through a licensed broker/dealer acting under instructions to obtain in his
judgment the best disposition price known to him in the market (however, this
provision does not suggest that such disposition is either preferable or
exclusive) and (ii) such sale or disposition shall be deemed to have been a
public sale if, in connection with such sale or disposition, Administrative
Lender obtains bids from at least two qualified purchasers.
(E) To the extent permitted by applicable law, Pledgor hereby
waives all rights now or hereafter conferred by statute or otherwise which may
require Administrative Lender to give any notice (except the notice of sale
provided for in Section 10(A)(i)), make any demand, or invoke any legal
process with respect to the sale or other disposition of the Pledged
Collateral or which may require Administrative Lender to sell or otherwise
dispose of the Pledged Collateral in mitigation of Administrative Lender's
damages, or which may otherwise limit or modify any of Administrative
Lender's remedies or rights under this Agreement.
(F) Administrative Lender shall be under no duty to sell or
otherwise realize upon the Pledged Collateral. At any time, Administrative
Lender may release or surrender all or any part of the Pledged Collateral to
Pledgor.
PAGE 7
EXECUTION COPY
SECTION 11. INDEMNITY AND EXPENSES.
(A) Pledgor shall indemnify and hold Administrative Lender harmless
from and against all claims, damages, losses, liabilities and expenses
arising out of or in connection with or resulting from this Agreement, but
otherwise without limit and without regard to the cause(s) thereof or the
negligence of any party, including, but not limited to, any negligent act or
omission of Administrative Lender, unless and to the extent such claim,
damage, loss, liability or expense was attributable to Administrative
Lender's gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction.
(B) Pledgor, upon demand, will pay to Administrative Lender the amount
of any expenses, including the fees and expenses of Administrative Lender's
attorneys (whether incurred at the trial or appellate level, in an
arbitration proceeding, in bankruptcy, including, without limitation, any
adversary proceeding, contested matter or motion, or otherwise), that
Administrative Lender may incur in connection with (i) the administration of
this 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 Administrative Lender's rights in
respect to enforcement of this Agreement, or (iv) the failure by Pledgor to
perform or observe any of the provisions hereof.
SECTION 12. SECURITY INTEREST ABSOLUTE.
All rights of Administrative Lender, all security interests hereunder,
and all obligations of Pledgor hereunder shall be absolute and unconditional
irrespective of:
(i) any invalidity or unenforceability in whole or in part of any
Loan Document;
(ii) any change in the time, manner or place of payment of, or in
any other term of, any of the Obligations, or any other amendment or
waiver of or any consent to any departure from any Loan Document;
(iii) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty for all or any of the Obligations;
(iv) any agreement by Administrative Lender to subordinate
Borrower's payment of the Obligations to the payment by Borrower of
any other obligations; or
PAGE 8
EXECUTION COPY
(v) any other circumstance which might otherwise constitute a
defense available to, or discharge of, Pledgor or a third party pledgor.
Section 13. MISCELLANEOUS.
(A) No delay, failure or discontinuance of Administrative Lender in
exercising any right, power or remedy hereunder shall affect or operate as a
waiver of such right, power or remedy; nor shall any single or partial
exercise of any such right, power or remedy preclude, waive or otherwise
affect any other or further exercise thereof or the exercise of any other
right, power or remedy. Any waiver, consent or approval of any kind by
Administrative Lender of any breach of or default under this Agreement must
be in writing and shall be effective only to the extent set forth in such
writing.
(B) Any notice or other communication required or permitted hereunder
shall be in writing, shall be addressed to the party to be notified at the
address set forth below, or at such other address as each party may designate
for itself from time to time by notice hereunder, and will be deemed to have
been delivered (i) five days following deposit in the United States mails
with proper first class postage prepaid, (ii) the next business day after
such notice was delivered to a regularly scheduled overnight delivery carrier
or (iii) upon receipt of notice given by telecopy, mailgram, telegram, telex
or personal delivery:
To Administrative Lender: KeyBank National Association
Large Corporate Group
46th Floor
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Vice President
Fax No.: (000) 000-0000
To Pledgor: Xxxxxx Xxxxxxxxxx
c/x Xxxxxx & Xxxxxxx, P.C.
The 1515 Building
0000 XX Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxxx
Fax No.: (000) 000-0000
(C) Time is of the essence of each and every provision of this
Agreement.
PAGE 9
EXECUTION COPY
(D) This Agreement cannot be modified, amended or changed in any respect
orally or by the conduct of the parties. Any amendment, modification or
change may be made only by a writing signed by the party against whom
enforcement is sought.
(E) Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement will be prohibited by or invalid under
applicable law, such provision will be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
(F) Each party will promptly execute and deliver to the other parties
all instruments, agreements and documents, and take all further action, that
may be reasonably necessary to enable a party to perform its obligations
hereunder and to exercise and enforce its rights and remedies hereunder.
(G) This Agreement represents the complete undertaking and agreement of
the parties with respect to the subject matter hereof and supersedes any and
all prior and contemporaneous discussions, negotiations or correspondence.
(H) If legal action is required to enforce the terms of this Agreement,
the prevailing party will be entitled to reasonable attorneys' fees and costs
incurred therein, whether incurred at arbitration, trial, on appeal, in a
bankruptcy proceeding, or otherwise.
(I) This Agreement shall be governed by and construed in accordance
with the laws of the State of Oregon.
(J) Until all the Obligations have been fully paid, in cash, and
performed, Pledgor shall have no right of subrogation or any other right to
participate in any security for any of the Obligations or other Liabilities.
(K) This Agreement shall be binding upon and inure to the benefit of
the respective heirs, successors and assigns of the parties.
(L) UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE
BY BANK AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS
WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY
THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE
SIGNED BY BANK TO BE ENFORCEABLE.
PAGE 10
EXECUTION COPY
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
PLEDGOR:
/s/ Xxxxxx Xxxxxxxxxx
---------------------------------------
Xxxxxx Xxxxxxxxxx
ADMINISTRATIVE LENDER:
KEYBANK NATIONAL ASSOCIATION
By: [ILLEGIBLE]
------------------------------------
Title: Vice President
---------------------------------
PAGE 11
EXECUTION COPY
