PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "Pledge") is entered into as of the 30th
day of June, 1997 by XxxxxXxx Acquisition Corp., a Delaware corporation
("Pledgor") in favor of Xxxxxxxx-Xxxxxx Industries of Minnesota, Inc., a
Minnesota corporation, and Xxxxxxxx-Xxxxxx Industries of Georgia, Inc., a
Georgia corporation (collectively, "Pledgee").
WITNESSETH:
A Pursuant to a Purchase and Sale Agreement dated as of June 30, 1997
(the "Purchase Agreement") by and among XxxxxXxx Technologies, Inc., Xxxxxxxx
Xxxxxx Industries, Inc., Pledgor and Pledgee, Pledgor has acquired from Pledgee
all the issued and outstanding capital stock of BFI Tire Recyclers of Minnesota,
Inc., a Minnesota corporation ("BTM"), and BFI Tire Recyclers of Georgia, Inc.,
a Georgia corporation ("BTG").
B. Pursuant to the Purchase Agreement, Pledgor has delivered to Pledgee
the Note (as defined in the Purchase Agreement) and is to deliver the Final
Working Capital Note (as defined in the Purchase Agreement and, together with
the Note, the "Notes").
C. Pledgee has required as a condition to the consummation of the
transactions contemplated by the Purchase Agreement, and in order to secure the
prompt and complete payment, observance and performance of Pledgor's obligations
under the Agreement and all of Pledgor's obligations and liabilities under the
Notes (all such obligations and liabilities being hereinafter referred to
collectively as the "Obligations"), that Pledgor execute and deliver this Pledge
to Pledgee.
NOW, THEREFORE, for and in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms used herein or in any
certificate, report or other document delivered pursuant hereto shall have the
meanings assigned to them below or in the Purchase Agreement (unless otherwise
defined):
"Collateral" means the Pledged Shares (as hereinafter defined) and any
other property at any time, whether now or hereafter, pledged with Pledgee
hereunder (whether described herein or not) and all income therefrom, increases
therein; proceeds thereof and replacements and substitutions therefor.
"Default" means Pledgor's failure to observe or perform any obligations
under this Pledge or to pay any and all amounts due under the Notes.
"Pledged Shares" means all shares of the capital stock of BTM or BTG
now or at any time or times hereafter owned by Pledgor.
2. Grant of Security Interest. As security for the complete payment,
observance and performance of the Obligations, Pledgor hereby grants to Pledgee,
a security interest in the Collateral. Certificates representing all of the
Pledged Shares, accompanied by stock powers duly executed in blank by Pledgor,
have been delivered to Pledgee by Pledgor.
In case Pledgor shall acquire, by purchase, stock dividend, stock
split, distribution of capital or otherwise, any additional securities of any
class of securities of BTM or BTG or any securities exchangeable for or
convertible into any class of securities of BTM or BTG, Pledgor shall forthwith
pledge and deliver such additional or other securities to Pledgee under this
Pledge, accompanied by stock powers and/or assignments duly executed in blank by
or on behalf of Pledgor.
3. Representations, Warranties and Covenants of Pledgor. Pledgor
represents and warrants that (a) the Pledged Shares have, to the best of
Pledgor's knowledge, been validly and legally issued and are fully paid and
nonassessable; (b) Pledgor is the record and beneficial owner of, and has good
and marketable title to, the Pledged Shares, subject to no pledges, liens,
charges, options, restrictions or other encumbrances known to Pledgor other than
(1) the lien of this Pledge and (2) restrictions imposed by applicable
securities laws; (c) Pledgor has the corporate power and authority to enter into
this Pledge; (d) pursuant to this Pledge, and so long as Pledgee retains
possession of the Collateral, the Pledgee has and at all times will have a
valid, prior and perfected security interest in the Collateral in accordance
with the terms hereof; (e) neither this Pledge, nor the pledge of the Pledged
Shares hereunder, will violate any agreement or commitment to which Pledgor is a
party or by which Pledgor or any of its property is bound or affected; and (f)
this Pledge is the valid and binding obligation of the Pledgor, enforceable in
accordance with its terms except as enforceability is subject to applicable
bankruptcy, reorganization, moratorium, fraudulent conveyance, insolvency and
similar laws and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
3.1 General Covenants. Pledgor covenants that it will:
(a) not sell, assign, exchange or otherwise dispose of any
Collateral or any interest therein;
(b) not grant, create or permit to exist any lien, security
interest or other charge or encumbrance upon or with respect to any of the
Collateral, other than the security interests therein created hereby or
specified in Section 3 above;
(c) not take or fail to take any action that would impair the
value of any of the Collateral; and
(d) pay or cause to be paid when due all taxes, assessments
and governmental charges, if any, levied or assumed or imposed upon or with
respect to any of the Collateral.
4. Liquidation, Recapitalization, Etc. In case any distribution of
capital or stock dividend shall be made on or in respect of any of the Pledged
Shares, or any money or property
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shall be distributed upon or with respect to any of the Pledged Shares, pursuant
to a recapitalization or reclassification of the capital of BTM or BTG or
pursuant to a reorganization or liquidation or dissolution of BTM or BTG, the
money or property so distributed shall be delivered to Pledgee to be held by it
as part of the Pledged Shares and as security for the Obligations. All sums of
money and property, if any, paid or distributed in respect of the Pledged
Shares, upon such a liquidation, dissolution, reorganization, recapitalization
or reclassification, which are received by Pledgor shall, until paid or
delivered to Pledgee, be held in trust for Pledgee as part of the Collateral and
as security for the Obligations.
5. Dividends, Voting, Etc., Prior to Maturity. Unless and until a
Default shall have occurred and be continuing, and until notice of such Default
has been given by Pledgee, Pledgor shall be entitled to receive all regular cash
dividends paid in respect of the Pledged Shares, to vote the Pledged Shares and
to give consents, waivers and ratifications in respect of the Pledged Shares;
provided, however, that no vote shall be cast, or consent, waiver or
ratification given or action taken that would be inconsistent with or violate
any provisions of any of the Notes or of this Pledge,. Until the occurrence and
continuance of a Default, Pledgee shall pay over to Pledgor, forthwith upon
receipt, all regular cash dividends paid on the Pledged Shares, and shall
execute and deliver to Pledgor such proxies or other documents in writing as may
be necessary to enable Pledgor to exercise the foregoing rights. All such rights
of Pledgor to receive regular cash dividends on the Pledged Shares, to vote and
give consents, waivers and ratifications shall cease forthwith in case a Default
shall have occurred and be continuing, without any notice (except as provided in
this Section 5) or demand by Pledgee to Pledgor.
6. Remedies. If a Default shall have occurred and be continuing for in
excess of ten (10) days without being waived or cured, Pledgee shall thereafter
have the following rights and remedies (to the maximum extent permitted by
applicable law) in addition to the rights and remedies of a secured party under
the Uniform Commercial Code of The Commonwealth of Massachusetts, all such
rights and remedies being cumulative, not exclusive, and enforceable
alternatively, successively or concurrently, at such time or times as Pledgee,
in its sole and absolute discretion, deems expedient:
(a) Pledgee may vote any or all shares of the Pledged Shares
(whether or not the same shall have been transferred into its name or the name
of its nominee or nominees) and give all consents, waivers and ratifications in
respect of the Pledged Shares and otherwise act with respect thereto as though
it were the outright owner thereof (Pledgor hereby irrevocably constituting and
appointing Pledgee the proxy and attorney-in-fact of Pledgor, with full power of
substitution, to do so);
(b) Pledgee may demand, xxx for, collect or make any
compromise or settlement Pledgee deems suitable in respect of any Collateral
held by it hereunder;
(c) Pledgee may sell, assign or otherwise transfer any or all
of the Collateral, for cash and/or credit and upon such terms, at such place or
places and at such time or times and to such Persons as Pledgee, in its sole and
absolute discretion, deems expedient, all without demand for performance by
Pledgor or any notice or advertisement whatsoever except such as may be required
by Applicable Law; and
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(d) Pledgee may cause all or any part of the Pledged Shares
held by it to be transferred into its name or the name of its nominee or
nominees.
If any of the Collateral is sold by Pledgee upon credit or for future
delivery, Pledgee shall not be liable for the failure of the purchaser to pay
for the same and in such event Pledgee may resell such Collateral.
All proceeds from each sale of, or other realization upon, all or any
part of the Collateral shall be applied or paid over as follows:
(i) first, to the payment of all reasonable costs and expenses
incurred in connection with such sale or other realization,
including reasonable attorneys' fees;
(ii) second, to the payment of the Obligations (with Pledgor
remaining liable for any deficiency); and
(iii) third, the balance (if any) of such proceeds shall be paid to
Pledgor, subject to any duty imposed by law or otherwise to
the holder of any subordinate lien in the Collateral known to
Pledgee or subject to the direction of a court of competent
jurisdiction.
Pledgee may buy any part or all of the Collateral at any public sale
and if any part or all of the Collateral is of a type customarily sold in a
recognized market or is of the type which is the subject of widely-distributed
standard price quotations, Pledgee may, in its sole and absolute discretion, buy
at private sale and may make payments therefor by any means including, without
limitation, cancellation, in whole or in part, of any of the Obligations secured
thereby. Pledgee may, in its sole and absolute discretion, apply the cash
proceeds actually received from any sale or other disposition to the reasonable
expenses of retaking, holding, preparing for sale, selling and the like, to
reasonable attorneys fees, and all legal expenses, travel and other expenses
which may be incurred by Pledgee in attempting to collect the Obligations or to
enforce this Pledge, the Purchase Agreement or any instrument executed or
required to be executed pursuant hereto or thereto or any instrument evidencing
the Obligations or in the prosecution or defense of any legal action related to
the subject matter of this Pledge, the Purchase Agreement or any instrument
executed or required to be executed pursuant hereto or thereto or any Instrument
evidencing the Obligations, and then to the Obligations with respect to
principal or interest, or both, or other fees and expenses, in such proportions
as Pledgee, in its sole and absolute discretion, shall determine; and any
surplus shall be paid to Pledgor.
Pledgor recognizes that Pledgee may be unable to effect a public sale
of the Pledged Shares or other Collateral by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, or in other applicable
laws, regulations or agreements to which such Pledged Shares or other Collateral
may be subject but may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers who will be obligated to represent
and agree among other things, to acquire such Pledged Shares or other Collateral
for their own account, for investment, and not with a view to the distribution
or resale thereof. Pledgor agrees that any
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such private sales may be at prices and other terms less favorable to the seller
than if sold at public sales and agrees that any such private sales shall be
deemed to have been made in a commercially reasonable manner. Pledgee shall be
under no obligation to delay a sale of any of the Pledged Shares for the period
of time necessary to permit the issuer of such securities to register such
securities for public sale under the said Securities Act or other applicable
law, even if the issuer would agree to do so.
7. Marshalling. Pledgee shall not be required to marshal any present or
future security for (including without limitation this Pledge and the Collateral
pledged hereunder), or guaranties of, the Obligations or any of them, or to
resort to such security or guaranties in any particular order; and all of the
rights hereunder and in respect of such security and guaranties shall be
cumulative and in addition to all other rights, however existing or arising. To
the maximum extent permitted by applicable law, Pledgor hereby agrees that it
will not invoke any law relating to the marshalling of collateral that might
cause delay in or impede the enforcement of Pledgee's rights under this Pledge
or any instrument executed or required to be executed pursuant hereto or under
any other instrument evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
guaranteed, and, to the maximum extent permitted by applicable law, Pledgor
hereby irrevocably waives the benefits of all such laws.
8. Pledgor's Obligations Not Affected. The obligations of Pledgor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by (a) any bankruptcy, insolvency, arrangement, readjustment,
composition or the like of Pledgor; (b) any exercise or nonexercise, or any
waiver, by Pledgee of any right, remedy, power or privilege under or in respect
of any of the Obligations or any security therefor (including this Pledge); (c)
any amendment to or modification of any of the Obligations; (d) any amendment to
or modification of any instrument (other than this Pledge) evidencing or
securing or guaranteeing any of the Obligations; or (e) the taking of additional
security for, or any guaranty of, any of the Obligations or the release or
discharge or termination of any security or guaranty for any of the Obligations;
whether or not Pledgor shall have notice or knowledge of any of the foregoing.
9. Termination. Upon payment and performance in full of the
Obligations, this Pledge shall terminate, and Pledgor shall be entitled to the
return of such of the Collateral in the possession or control of Pledgee as has
not theretofore been disposed of pursuant to the provisions hereof, together
with any moneys and other property of Pledgor at the time held by Pledgee
hereunder.
10. Further Assurances. Pledgor will do all such acts, and will furnish
to Pledgee all such financing statements, certificates, legal opinions and other
documents and will obtain all such governmental consents and approvals and will
do or cause to be done all such other things, including without limitation the
execution and delivery of further agreements and instruments, as Pledgee may
reasonably request from time to time in order to give full effect to this Pledge
and to secure the rights of Pledgee hereunder.
11. Successors and Assigns. This Pledge shall be binding upon Pledgor
and its successors and assigns and shall inure to the benefit of Pledgee and its
successors and assigns.
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Pledgor's successors and assigns shall include, without limitation, any
receiver, trustee or debtor-in-possession of or for Pledgor.
12. No Waiver, Etc. No act, failure or delay by Pledgee shall
constitute a waiver of its rights and remedies hereunder or otherwise. No single
or partial waiver by the Pledgee of any default or right or remedy which it may
have shall operate a waiver of any other default, right or remedy or of the same
default, right or remedy on a future occasion. Pledgor hereby waives
presentment, notice of dishonor and protest of all instruments, included in or
evidencing any of the Obligations or the Collateral, and any and all other
notices and demands whatsoever (except as expressly provided herein).
13. Notices. Any notice, request or other communication required or
desired to be served, given or delivered under this Pledge shall be in writing
and shall be deemed to have been validly served, given or delivered five (5)
days after deposit in the United States mails, registered or certified mail,
with proper postage prepaid and addressed to the party to be notified as
follows:
If to Pledgor: c/x XxxxxXxx Technologies, Inc.
0 Xxxxxxx Xxxx, Xxxxxxxx X
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Pledgee: c/o Xxxxxxxx Xxxxxx Industries, Inc.
000 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Secretary
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Xxxxxxxx Xxxxxx Industries, Inc.
000 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxx, Xx., Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address as either party may hereafter designate for itself by
written notice to the other party in the manner herein prescribed.
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14. Paragraph Headings. The paragraph headings in this Pledge are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions of this Pledge.
15. Counterparts. This Pledge may be executed in separate counterparts,
each of which shall be an original and all of which taken together shall
constitute one and the same instrument.
16. Applicable Law. This Pledge shall be governed by and construed in
accordance with the internal laws (as distinguished from the conflicts of law
provisions) of The Commonwealth of Massachusetts. Whenever possible, each
provision of this Pledge shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Pledge shall be
held to be prohibited or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Pledge.
IN WITNESS WHEREOF, Pledgor and Pledgee have executed on the day and
year first above written.
XXXXXXXX ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
Title: President
XXXXXXXX-XXXXXX INDUSTRIES OF
MINNESOTA, INC.
By: /s/ Xxxxxx X. Xxxxxx
Title: Vice President
XXXXXXXX-XXXXXX INDUSTRIES OF
GEORGIA, INC.
By: /s/ Xxxxxx X. Xxxxxx
Title: Vice President
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