EXHIBIT 10.7
CANADIAN PLEDGE AGREEMENT
PLEDGE AGREEMENT (as the same may be amended, restated, supplemented
or otherwise modified from time to time, the "Agreement") dated as of June 30,
2004, is made by DYNAMIC DETAILS, INCORPORATED, a California corporation
("Details"), DDI CANADA ACQUISITION CORP., an Ontario Corporation ("DDI");
Details and DDI are sometimes collectively referred to herein as "Canadian
Pledgors" and individually as a "Canadian Pledgor"), in favour of GE CANADA
FINANCE HOLDING COMPANY, a Nova Scotia unlimited liability company, as agent (in
such capacity, "Canadian Agent") for the lenders ("Canadian Lenders") from time
to time party to the Credit Agreement (as defined below).
RECITALS
A. Pursuant to that certain Credit Agreement of even date
herewith by and among Dynamic Details Canada, Corp., the other Credit Parties
party thereto, Canadian Agent and Canadian Lenders (including all annexes,
exhibits and schedules thereto, as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
Canadian Lenders have agreed to make certain financial accommodations for the
direct or indirect benefit of Canadian Pledgors.
B. Each Canadian Pledgor is the record and beneficial owner of
the shares of or interests in Stock (as defined in the Credit Agreement) listed
as owned by it in PART A of SCHEDULE I hereto and the owner of the promissory
notes and other Instruments (as defined in the Credit Agreement) and the
beneficiary of the letters of credit listed as held by it in PART B of SCHEDULE
I hereto.
C. Each Canadian Pledgor is either a direct or indirect
beneficiary of the financial accommodations made available to Borrowers under
the Credit Agreement.
D. In order to induce Canadian Lenders to extend the financial
accommodations as provided for in the Credit Agreement, each Canadian Pledgor
has agreed to pledge the Pledged Collateral (as hereinafter defined) to Canadian
Agent, for the benefit of Canadian Agent and Canadian Lenders, in accordance
herewith. These recitals shall be construed as part of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, each Canadian Pledgor and
Canadian Agent agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized
terms or matters of construction defined or established in ANNEX A to the Credit
Agreement shall be applied herein as defined or established therein, and the
following terms shall have (unless otherwise
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provided elsewhere in this Agreement) the following respective meanings (such
meanings being equally applicable to both the singular and plural form of the
terms defined):
"Pledged Collateral" shall have the meaning assigned to it in
SECTION 2 hereof.
"Pledged Entity" shall mean an issuer of Pledged Stock or Pledged
Indebtedness.
"Pledged Indebtedness" shall mean the Indebtedness evidenced by the
promissory notes, other Instruments and letters of credit listed on PART B of
SCHEDULE I.
"Pledged Stock" shall mean those shares of or interest in Stock\
listed in PART A of SCHEDULE I.
SCHEDULE I.
2. Pledge. Each Canadian Pledgor hereby pledges and grants to
Canadian Agent, for the benefit of Canadian Agent and Canadian Lenders, a first
priority Lien on all of its right, title and interest in and to all of the
following (collectively, the "Pledged Collateral"):
(a) the Pledged Stock owned by it and the certificates, if any,
representing such Pledged Stock, and all dividends, distributions, cash,
Instruments and other property or Proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Pledged Stock;
(b) such portion, as determined by Canadian Agent as provided in
SECTION 6(d) below, of any additional shares of or interests in Stock of a
Pledged Entity from time to time acquired by such Canadian Pledgor in any manner
(which shares or interests shall be deemed to be part of the Pledged Stock owned
by such Canadian Pledgor), and the certificates, if any, representing such
additional shares or interests, and all dividends, distributions, cash,
Instruments and other property or Proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Stock;
(c) the Pledged Indebtedness held by it and the promissory notes,
other Instruments and letters of credit evidencing such Pledged Indebtedness,
and all interest, cash, Instruments and other property and assets from time to
time received, receivable or otherwise distributed in respect of such Pledged
Indebtedness; and
(d) all additional Indebtedness arising after the date hereof and
owing to such Canadian Pledgor and evidenced by promissory notes, other
Instruments or letters of credit, together with such promissory notes,
Instruments and letters of credit, and all interest, cash, Instruments and other
property and assets from time to time received, receivable or otherwise
distributed in respect of such Pledged Indebtedness.
3. Security for Obligations. This Agreement secures, and the
Pledged Collateral is security for, the prompt payment in full when due, whether
at stated maturity, by acceleration or otherwise, and performance of the
Obligations (specifically including each Borrower's Obligations arising under
the cross-guaranty provisions of Section 12 of the Credit Agreement and each
Guarantor's obligations arising under the Guaranties).
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4. Delivery of Pledged Collateral. All certificates and all
promissory notes, other Instruments and letters of credit evidencing the Pledged
Collateral shall be delivered to and held by or on behalf of Canadian Agent, for
the benefit of Canadian Agent and Canadian Lenders, pursuant hereto. All Pledged
Stock shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Canadian Agent
and all promissory notes or other Instruments evidencing the Pledged
Indebtedness shall be endorsed by the Canadian Pledgor pledging such Pledged
Indebtedness. If the constating documents of any Pledged Entity restrict the
transfer of the securities of such Pledged Entity, then the Canadian Pledgor
will also deliver to Canadian Agent a certified copy of a resolution of the
directors or shareholders of such Pledged Entity consenting to the transfer(s)
contemplated by this Agreement, including any prospective transfer of the
Pledged Collateral by Canadian Agent upon a realization on the security
constituted hereby in accordance with this Agreement, provided that, if any
Pledged Entity is a ULC (as defined herein) no such resolution shall be
delivered by such Canadian Pledgor hereunder.
5. Representations and Warranties. Each Canadian Pledgor
represents and warrants to Canadian Agent that:
(a) (i) Such Canadian Pledgor is, and at the time of delivery of
the Pledged Stock owned by it to or on behalf of Canadian Agent will be, the
sole holder of record and the sole beneficial owner of such Pledged Collateral
pledged by it free and clear of any Lien thereon or affecting the title thereto,
except for (A) any Lien created by this Agreement or the other Loan Documents
and (B) Permitted Encumbrances, and (ii) such Canadian Pledgor is, and at the
time of delivery of the Pledged Indebtedness held by it to or on behalf of
Canadian Agent will be, the sole owner and holder of such Pledged Collateral
free and clear of any Lien thereon or affecting title thereto, except for (A)
any Lien created by this Agreement or the other Loan Documents and (B) Permitted
Encumbrances.
(b) (i) All of the Pledged Stock (other than shares in a ULC ("ULC
SHARES") owned by such Canadian Pledgor has been duly authorized, validly issued
and is fully paid and nonassessable and all of the ULC Shares owned by such
Canadian Pledgor has been duly authorized, validly issued and is fully paid (ii)
the Pledged Indebtedness held by such Canadian Pledgor has been duly authorized,
authenticated or issued and delivered by, and constitutes the legal, valid and
binding obligation of, each Pledged Entity issuing same, and no such Pledged
Entity is in default thereunder.
(c) Such Canadian Pledgor has the right and requisite authority to
pledge, assign, transfer, deliver, deposit and set over the Pledged Collateral
(other than ULC Shares) pledged by such Canadian Pledgor to or on behalf of
Canadian Agent as provided herein and to pledge the ULC Shares by such Canadian
Pledgor to or on behalf of Canadian Agent as provided herein.
(d) None of the Pledged Stock or Pledged Indebtedness owned or
held by such Canadian Pledgor has been issued or transferred in violation of the
securities legislation of any jurisdiction to which such issuance or transfer
may be subject.
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(e) Subject to the provisions of Section 29 hereof, such Canadian
Pledgor is the sole owner of the Pledged Stock pledged by it hereunder and such
Pledged Stock, if certificated, is presently represented by the certificates
listed in PART A of SCHEDULE I hereto. Except as listed on SCHEDULE III hereto,
as of the date hereof, there are no existing options, warrants, calls or
commitments of any character whatsoever relating to the Pledged Stock pledged by
such Canadian Pledgor hereunder.
(f) No consent, approval, authorization or other order or other
action by, and no notice to or filing with, any Governmental Authority or any
other Person is required (i) for the pledge by such Canadian Pledgor of the
Pledged Collateral owned or held by it pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by such Canadian Pledgor,
or (ii) for the exercise by Canadian Agent of the voting or other rights
provided for in this Agreement or the remedies in respect of such Pledged
Collateral pursuant to this Agreement, except as may be required in connection
with such disposition by legislation affecting the offering and sale of
securities generally.
(g) The pledge, assignment and delivery of the Pledged Collateral
owned or held by it pursuant to this Agreement will create a valid first
priority Lien on and a first priority perfected security interest in favor of
Canadian Agent, for the benefit of Canadian Agent and Canadian Lenders, upon
such Pledged Collateral and the Proceeds thereof, securing the payment of the
Obligations, subject to no other Lien except for (i) any Lien created by this
Agreement or the other Loan Documents and (ii) Permitted Encumbrances.
(h) This Agreement has been duly authorized, executed and
delivered by such Canadian Pledgor and constitutes a legal, valid and binding
obligation of such Canadian Pledgor enforceable against such Canadian Pledgor in
accordance with its terms.
(i) The Pledged Stock constitutes the respective percentages of
the issued and outstanding shares of Stock of each Pledged Entity set forth in
Part A of Schedule I hereto.
(j) Except as disclosed in PART B of SCHEDULE I, none of the
Pledged Indebtedness held by such Canadian Pledgor is subordinated in right of
payment to other Indebtedness (except for the Obligations) or subject to the
terms of an indenture.
The representations and warranties set forth in this SECTION 5 shall survive the
execution and delivery of this Agreement and any disposition or payment of the
Obligations until repayment and performance in full of the Obligations and
termination of all rights of the Canadian Pledgors that, if exercised, would
result in the existence of Obligations.
6. Covenants. Each Canadian Pledgor covenants and agrees that
until the Termination Date:
(a) Without the prior written consent of Canadian Agent, such
Canadian Pledgor will not sell, assign, transfer, pledge, or otherwise encumber
any of its rights in or to any Pledged Collateral owned or held by it, or any
unpaid dividends, interest or other distributions o
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payments with respect to such Pledged Collateral, or xxxxx x Xxxx on such
Pledged Collateral, except as otherwise expressly permitted by the Credit
Agreement;
(b) Such Canadian Pledgor will, at its expense, promptly execute,
acknowledge and deliver all such Instruments and deliver letters of credit and
take any other action deemed necessary or desirable by Canadian Agent in order
to protect and perfect the Lien in favor of Canadian Agent, for the benefit of
Canadian Agent and Canadian Lenders, upon the Pledged Collateral, including the
filing of any necessary PPSA financing statements, which may be filed by
Canadian Agent without the signature of such Canadian Pledgor, and will
cooperate with Canadian Agent, at such Canadian Pledgor's expense, in obtaining
all necessary approvals and making all necessary filings under federal,
provincial, local or foreign law in connection with such Liens or any sale or
transfer of such Pledged Collateral. Such Canadian Pledgor also acknowledges
that this Agreement has been prepared based on the existing laws of the Province
of Ontario and that a change in such laws, or the laws of other jurisdictions,
may require the execution and delivery of different forms of security
documentation. Accordingly, Canadian Pledgor agrees that Canadian Agent will
have the right to require that this Agreement be amended, supplemented or
replaced, and that Canadian Pledgor will immediately on request by Canadian
Agent authorize, execute and deliver any such amendment, supplement or
replacement (i) to reflect any changes in such laws, whether arising as a result
of statutory amendments, court decisions or otherwise, (ii) to facilitate the
creation and registration of appropriate security in all appropriate
jurisdictions, or (iii) if Canadian Pledgor merges or amalgamates with any other
Person or enters into any corporate reorganization, in each case in order to
confer on Canadian Agent security interests similar to, and having the same
effect as, the security interests created by this Agreement.
(c) Such Canadian Pledgor has and will defend the title to the
Pledged Collateral owned or held by it and the Liens of Canadian Agent in such
Pledged Collateral against the claim of any Person and will maintain and
preserve such Liens; and
(d) Such Canadian Pledgor will, upon obtaining ownership of any
additional Stock, promissory notes or other Instruments or letters of credit of
a Pledged Entity or Stock, promissory notes or other Instruments or letters of
credit otherwise required to be pledged to Canadian Agent pursuant to any of the
Loan Documents that does not already constitute Pledged Collateral hereunder,
promptly (and in any event within five Business Days after it acquires any such
additional Stock, notes or other Instruments or letters of credit) deliver to
Canadian Agent a Pledge Amendment, duly executed by such Canadian Pledgor, in
substantially the form of SCHEDULE II (each, a "Pledge Amendment"), in respect
of any such additional Stock, notes or other Instruments or letters of credit,
pursuant to which such Canadian Pledgor shall deliver and pledge to Canadian
Agent all of such additional Stock, notes and other Instruments or letters of
credit. Such Canadian Pledgor hereby authorizes Canadian Agent to attach each
such Pledge Amendment to this Agreement and agrees that all Pledged Stock and
Pledged Indebtedness listed in any such Pledge Amendment and delivered to
Canadian Agent concurrently with Canadian Pledgor's delivery of such Pledge
Amendment shall for all purposes hereunder be considered Pledged Collateral.
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7. Canadian Pledgor's Rights. So long as no Default or Event of
Default shall have occurred and be continuing and until written notice shall be
given to any Canadian Pledgor in accordance with SECTION 8(a):
(a) Each Canadian Pledgor shall have the right, from time to time,
to vote and give consents with respect to the Pledged Collateral pledged by it
hereunder or any part thereof for all purposes not inconsistent with the
provisions of this Agreement, the Credit Agreement or any other Loan Document;
provided, that no vote shall be cast, and no consent shall be given or action
taken, that would have the effect of impairing the position or interest of
Canadian Agent in respect of the Pledged Collateral or that would authorize,
effect or consent to (unless and to the extent expressly permitted by the Credit
Agreement):
(i) the dissolution or liquidation, in whole or in part, of
a Pledged Entity;
(ii) the consolidation or merger of a Pledged Entity with any other
Person;
(iii) the sale, disposition or encumbrance of all or
substantially all of the assets of a Pledged Entity, except for Liens in
favor of Canadian Agent;
(iv) any change in the authorized number of shares, the stated
capital or the authorized share capital of, or the interests in, a Pledged
Entity or the issuance of any additional shares of or interests in its
Stock; or
(v) the alteration of the voting rights with respect to the Stock
of a Pledged Entity.
(b) Each Canadian Pledgor shall be entitled, from time to time, to
collect and receive for its own use all cash dividends and interest paid in
respect of the Pledged Stock and Pledged Indebtedness pledged by it hereunder to
the extent not in violation of the Credit Agreement, except for any and all: (i)
dividends and interest paid or payable other than in cash in respect of any such
Pledged Collateral, Instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any such Pledged
Collateral; (ii) dividends and other distributions paid or payable in cash in
respect of any such Pledged Stock in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in capital of a Pledged Entity; and (iii) cash paid, payable or
otherwise distributed in respect of principal of, or in redemption of, or in
exchange for, any such Pledged Collateral; provided, that until actually paid
all rights to such distributions shall remain subject to the Lien in favor of
Canadian Agent created by this Agreement and the other Loan Documents.
(c) upon the occurrence and during the continuance of an event of
default, all dividends and interest (other than such cash dividends and interest
as are permitted to be paid to each canadian pledgor in accordance with clause
(b) above) and all other distributions in respect of any of the pledged stock or
pledged indebtedness, whenever paid or made, shall be
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delivered to canadian agent to hold as pledged collateral and shall, if received
by such canadian pledgor, be received in trust for the benefit of canadian
agent, for the benefit of canadian agent and canadian lenders, be segregated
from the other property or funds of such canadian pledgor, and be forthwith
delivered to canadian agent as pledged collateral in the same form as so
received (with any necessary indorsements).
(d) Sections 7(a), (b) and (c) shall not apply to ULC Shares. For
greater certainty, any Canadian Pledgor pledging ULC Shares is entitled to
exercise all voting rights in respect of such ULC Shares and to give consents in
respect thereof, provided however, each such Canadian Pledgor agrees that no
vote shall be cast and no consent shall be given or action taken that would have
the effect of impairing the position or interest of the Canadian Agent in
respect of such ULC Shares or that would authorize, effect or consent to (unless
and to the extent expressly permitted by the Credit Agreement):
(i) the dissolution or liquidation, in whole or in part, of
a Pledged Entity;
(ii) the consolidation or merger of a Pledged Entity with any
other Person;
(iii) the sale, disposition or encumbrance of all or
substantially all of the assets of a Pledged Entity, except for
Liens in favor of Canadian Agent;
(iv) any change in the authorized number of shares, the
stated capital or the authorized share capital of, or the interests
in, a Pledged Entity or the issuance of any additional shares of or
interests in its Stock; or
(v) the alteration of the voting rights with respect to the
Stock of a Pledged Entity.
Any Canadian Pledgor pledging ULC Shares is entitled to receive and deal
with all dividends and all other distributions or other like payments at any
time payable on or with respect to ULC Shares (to the extent not in violation of
the Credit Agreement) and the Canadian Agent shall forthwith deliver to such
Canadian Pledgor any dividends, distributions or other like payments received by
the Canadian Agent.
8. Defaults and Remedies; Proxy.
(a) Upon the occurrence and during the continuation of any Event
of Default, and concurrently with written notice to any Canadian Pledgor,
Canadian Agent (personally or through an agent) is hereby authorized and
empowered to:
(i) transfer and register in its name or in the name of its
nominee the whole or any part of the Pledged Collateral (other than
ULC Shares) pledged by such Canadian Pledgor hereunder, to exchange
certificates or Instruments representing or evidencing such Pledged
Collateral for certificates or Instruments of smaller or larger
denominations, to exercise (other than in respect of the ULC
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Shares) the voting and all other rights as a holder with respect
thereto, to collect and receive (other than in respect of the ULC
Shares) all cash dividends, interest, principal and other
distributions made thereon, to sell in one or more sales after
fifteen days' notice of the time and place of any public sale or of
the time at which a private sale is to take place (which notice such
Canadian Pledgor agrees is commercially reasonable) the whole or any
part of such Pledged Collateral and to otherwise act with respect to
such Pledged Collateral (other than ULC Shares) as though Canadian
Agent were the outright owner thereof. Any sale shall be made at a
public or private sale at Canadian Agent's place of business, or at
any place to be named in the notice of sale, either for cash or upon
credit or for future delivery at such price as Canadian Agent may
deem fair, and Canadian Agent may be the purchaser of the whole or
any part of such Pledged Collateral so sold and hold the same
thereafter in its own right free from any claim of any Canadian
Pledgor or any right of redemption. Each sale shall be made to the
highest bidder, but Canadian Agent reserves the right to reject any
and all bids at such sale that, in its discretion, it shall deem
inadequate. Demands of performance, except as otherwise herein
specifically provided for, notices of sale, advertisements and the
presence of property at sale are hereby waived and any sale
hereunder may be conducted by an auctioneer or any officer or agent
of Canadian Agent. EACH PLEDGOR HEREBY REVOKES ALL PREVIOUS PROXIES
WITH REGARD TO THE PLEDGED STOCK AND IRREVOCABLY CONSTITUTES AND
APPOINTS AGENT AS THE PROXY AND ATTORNEY-IN-FACT OF SUCH PLEDGOR
WITH RESPECT TO THE PLEDGED COLLATERAL PLEDGED BY SUCH CANADIAN
PLEDGOR HEREUNDER, INCLUDING THE RIGHT TO VOTE THE PLEDGED STOCK OF
SUCH CANADIAN PLEDGOR, WITH FULL POWER OF SUBSTITUTION TO DO SO. THE
APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH
AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE TERMINATION DATE. IN
ADDITION TO THE RIGHT TO VOTE THE PLEDGED STOCK OF SUCH CANADIAN
PLEDGOR, THE APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT
SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS,
PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED STOCK
WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS
OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING
AT SUCH MEETINGS). EXCEPT WITH RESPECT TO ULC SHARES (WHICH ARE
GOVERNED BY THE PROVISIONS OF SECTION 8(F) HEREOF, SUCH PROXY SHALL
BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION
(INCLUDING ANY TRANSFER OF SUCH PLEDGED STOCK ON THE RECORD BOOKS OF
THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF SUCH
PLEDGED STOCK OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE
OF AN EVENT OF DEFAULT. NOTWITHSTANDING THE FOREGOING, AGENT SHALL
NOT HAVE ANY DUTY TO EXERCISE ANY SUCH RIGHT OR TO PRESERVE
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THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY
DELAY IN DOING SO;
(ii) exercise all of the rights and remedies granted to
secured parties under the PPSA and any other applicable statute, or
otherwise available to Canadian Agent at law or in equity; and
(iii) apply to a court of competent jurisdiction for the sale
or foreclosure of any or all of the Pledged Collateral.
(b) If, at the original time or times appointed for the sale of
the whole or any part of the Pledged Collateral pledged by any Canadian Pledgor
hereunder, (i) the highest bid, if there is but one sale, shall be inadequate to
discharge in full all the Obligations, or (ii) such Pledged Collateral is
offered for sale in lots, the highest bid for the lot offered for sale at any of
such sales would indicate to Canadian Agent, in its discretion, that the
proceeds of the sales of the whole of such Pledged Collateral would be unlikely
to be sufficient to discharge all the Obligations, then Canadian Agent may, on
one or more occasions and in its discretion, postpone any of said sales by
public announcement at the time of sale or the time of previous postponement of
sale, and no other notice of such postponement or postponements of sale need be
given, any other notice being hereby waived; provided, that any sale or sales
made after such postponement shall be after fifteen days' notice to such
Canadian Pledgor.
(c) Each Canadian Pledgor recognizes that Canadian Agent may be
unable to effect a public sale of any or all the Pledged Collateral and may be
compelled to resort to one or more private sales thereof. Each Canadian Pledgor
also acknowledges that any such private sale may result in prices and other
terms less favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall not
be deemed to have been made in a commercially unreasonable manner solely by
virtue of such sale being private. Canadian Agent shall be under no obligation
to delay a sale of any of the Pledged Collateral.
(d) Each Canadian Pledgor agrees to the maximum extent permitted
by applicable law that following the occurrence and during the continuance of an
Event of Default it will not at any time plead, claim or take the benefit of any
appraisal, valuation, stay, extension, moratorium or redemption law now or
hereafter in force in order to prevent or delay the enforcement of this
Agreement, or the absolute sale of the whole or any part of the Pledged
Collateral or the possession thereof by any purchaser at any sale hereunder, and
each Canadian Pledgor waives the benefit of all such laws to the extent it
lawfully may do so. Each Canadian Pledgor agrees that it will not interfere with
any right, power or remedy of Canadian Agent provided for in this Agreement or
now or hereafter existing at law or in equity or by statute or otherwise, or the
exercise or beginning of the exercise by Canadian Agent of any one or more of
such rights, powers or remedies. No failure or delay on the part of Canadian
Agent to exercise any such right, power or remedy and no notice or demand that
may be given to or made upon any Canadian Pledgor by Canadian Agent with respect
to any such remedies shall operate as a waiver thereof, or limit or impair
Canadian Agent's right to take any action or to exercise any power or
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remedy hereunder, without notice or demand, or prejudice its rights as against
any Canadian Pledgor in any respect.
(e) Each Canadian Pledgor further agrees that a breach of any of
the covenants contained in this SECTION 8 will cause irreparable injury to
Canadian Agent, that Canadian Agent shall have no adequate remedy at law in
respect of such breach and, as a consequence, agrees that each and every
covenant contained in this SECTION 8 shall be specifically enforceable against
such Canadian Pledgor, and each Canadian Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such covenants
except for a defense that the Obligations are not then due and payable in
accordance with the agreements and Instruments governing and evidencing the
Obligations.
(f) Notwithstanding the foregoing provisions of Section 8, the
remedies set out in this Section 8 shall only become enforceable with respect to
ULC Shares and shall only apply to ULC Shares upon (i) the occurrence and during
the continuation of any Event of Default, and (ii) the giving of notice by the
Canadian Agent to the applicable Canadian Pledgor, and such further steps being
taken thereunder so as to register Canadian Agent, any Canadian Lender or any
nominee of the foregoing as holder of the ULC Shares, and, in any event, any
provisions of Section 8(a)(i) with respect to the exercise of voting rights, or
with respect to the receipt of dividends or other distributions or like
payments, shall not apply to ULC Shares.
9. Waiver. No delay on Canadian Agent's part in exercising any
power of sale, Lien, option or other right hereunder, and no notice or demand
that may be given to or made upon any Canadian Pledgor by Canadian Agent with
respect to any power of sale, Lien, option or other right hereunder, shall
constitute a waiver thereof, or limit or impair Canadian Agent's right to take
any action or to exercise any power of sale, Lien, option, or any other right
hereunder, without notice or demand, or prejudice Canadian Agent's rights as
against any Canadian Pledgor in any respect.
10. Assignment. Canadian Agent may assign, endorse or transfer any
Instrument evidencing all or any part of the Obligations as provided in, and in
accordance with, the Credit Agreement, and the holder of such Instrument shall
be entitled to the benefits of this Agreement.
11. Termination. Immediately following the Termination Date,
Canadian Agent shall deliver to each Canadian Pledgor (as the case may be) the
Pledged Collateral pledged by such Canadian Pledgor at the time subject to this
Agreement and all instruments of assignment executed in connection therewith,
free and clear of the Liens created in favor of Canadian Agent under this
Agreement and the other Loan Documents and, except as otherwise provided herein,
all of such Canadian Pledgor's obligations hereunder shall at such time
terminate.
12. Lien Absolute. All rights of Canadian Agent hereunder, and all
obligations of each Canadian Pledgor hereunder, shall be absolute and
unconditional irrespective of:
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(a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document or any other agreement or Instrument
governing or evidencing any Obligations;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any part of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Credit Agreement, any other
Loan Document or any other agreement or Instrument governing or evidencing any
Obligations;
(c) any exchange, release or non-perfection of any other
Collateral or any release or amendment or waiver of, or consent to departure
from any guarantee for, all or any of the Obligations;
(d) the insolvency of any Canadian Pledgor; or
(e) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, such Canadian Pledgor.
13. Release. Each Canadian Pledgor consents and agrees that
Canadian Agent may at any time, or from time to time, in its discretion:
(a) renew, extend or change the time of payment of, or the manner,
place or terms of payment of, all or any part of the Obligations; and
(b) exchange, release or surrender all or any of the Collateral
(including the Pledged Collateral), or any part thereof, by whomsoever
deposited, that is now or may hereafter be held by Canadian Agent in connection
with all or any of the Obligations;
all in such manner and upon such terms as Canadian Agent may deem proper, and
without notice to or further assent from such Canadian Pledgor, it being hereby
agreed that such Canadian Pledgor shall be and remain bound by this Agreement
irrespective of the value or condition of any of the Collateral and
notwithstanding any such change, exchange, settlement, compromise, surrender,
release, renewal or extension, and notwithstanding also that the Obligations
may, at any time, exceed the aggregate principal amount thereof set forth in the
Credit Agreement or any other agreement governing any Obligations. Each Canadian
Pledgor hereby waives notice of acceptance of this Agreement, presentment,
demand, protest and notice of dishonor of any and all of the Obligations, and
any delay by Canadian Agent or any Canadian Lender in commencing suit against
any party hereto or Person liable hereon, and in giving any notice to or of
making any claim or demand hereunder upon such Canadian Pledgor. No act or
omission of any kind on Canadian Agent's part shall in any event affect or
impair this Agreement.
14. Reinstatement. This Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Canadian Pledgor or any Pledged Entity for liquidation or
reorganization, should any Canadian Pledgor or any Pledged Entity become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any Canadian
Pledgor's or Pledged Entity's assets, and shall continue to be effective or be
reinstated, as the case may be, if at any
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time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a "fraudulent
preference," "fraudulent transfer," or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
15. Notices. Except as otherwise provided in this Agreement,
whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other party, or whenever any of the parties
desires to give and serve upon any other party any communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be given in the
manner, and deemed received, as provided for in the Credit Agreement.
16. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
17. No Waiver; Cumulative Remedies. Neither Canadian Agent nor any
Canadian Lender shall by any act, delay, omission or otherwise be deemed to have
waived any of its rights or remedies hereunder, and no waiver shall be valid
unless in writing, signed by Canadian Agent and then only to the extent therein
set forth. A waiver by Canadian Agent of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which
Canadian Agent would otherwise have had on any future occasion. No failure to
exercise nor any delay in exercising on the part of Canadian Agent or any
Canadian Lender, any right, power or privilege hereunder, shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None of the
terms or provisions of this Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by Canadian Agent and
Canadian Pledgors.
18. Successors and Assigns. This Agreement and all obligations of
Canadian Pledgors hereunder shall be binding upon the successors and assigns of
each Canadian Pledgor (including any trustee on behalf of such Canadian Pledgor)
and shall, together with the rights and remedies of Canadian Agent, for the
benefit of Canadian Agent and Canadian Lenders, hereunder, inure to the benefit
of, and be enforceable by, Canadian Agent and its successors and assigns. No
sales of participations, other sales, assignments, transfers or other
dispositions of any agreement governing or instrument evidencing the Obligations
or any portion thereof or interest therein shall in any manner impair the Lien
granted to Canadian Agent, for the benefit of Canadian Agent and Canadian
Lenders, hereunder. No Canadian Pledgor may assign, sell, hypothecate or
otherwise transfer any interest in or obligation under this Agreement.
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19. Counterparts. This Agreement may be authenticated in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement. This Agreement may be authenticated by manual
signature, facsimile or, if approved in writing by Canadian Agent, electronic
means, all of which shall be equally valid.
20. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY
OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE PROVINCE OF ONTARIO APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT
PROVINCE, AND ANY APPLICABLE LAWS OF CANADA. EACH CANADIAN PLEDGOR HEREBY
CONSENTS AND AGREES THAT THE COURTS LOCATED IN THE PROVINCE OF ONTARIO SHALL
HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES AMONG
CANADIAN PLEDGORS, CANADIAN AGENT AND CANADIAN LENDERS PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT,
PROVIDED, THAT CANADIAN AGENT, CANADIAN LENDERS AND CANADIAN PLEDGORS
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF THE PROVINCE OF ONTARIO, AND, PROVIDED, FURTHER, NOTHING IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE CANADIAN AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOUR OF CANADIAN AGENT. EACH CANADIAN PLEDGOR
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND EACH CANADIAN PLEDGOR HEREBY WAIVES ANY
OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER
VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL
OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH CANADIAN PLEDGOR HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY
BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CANADIAN PLEDGOR AT
THE ADDRESS SET FORTH ON ANNEX I TO THE CREDIT AGREEMENT AND THAT SERVICE SO
MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE MAIL, PROPER POSTAGE PREPAID.
21. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON
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AND THE PARTIES WISH APPLICABLE PROVINCIAL LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES ARISING HEREUNDER OR
RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE, AMONG CANADIAN AGENT, CANADIAN LENDERS, AND CANADIAN
PLEDGORS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.
22. Attachment; No Obligation to Advance. Each Canadian Pledgor
confirms that value has been given by Canadian Agent to Canadian Pledgor, that
Canadian Pledgor has rights in the Pledged Collateral (other than after-acquired
property) and that Canadian Pledgors and Canadian Agent have not agreed to
postpone the time for attachment of the security interests created by this
Agreement to any of the Pledged Collateral. The security interests created by
this Agreement will have effect and be deemed to be effective whether or not the
Obligations or any part thereof are owing or in existence before or after or
upon the date of this Agreement. Neither the execution of this Agreement nor any
advance of funds shall oblige Canadian Agent to advance any funds or any
additional funds.
23. Section Titles. The Section titles contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
24. No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
25. Advice of Counsel. Each of the parties represents to each
other party hereto that it has discussed this Agreement and, specifically, the
provisions of SECTION 20 and SECTION 21, with its counsel.
26. Benefit of Canadian Lenders. All Liens granted or contemplated
hereby shall be for the benefit of Canadian Agent, for the benefit of Canadian
Agent and Canadian Lenders, and all proceeds or payments realized from the
Pledged Collateral in accordance herewith shall be applied to the Obligations in
accordance with the terms of the Credit Agreement.
27. Miscellaneous.
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(a) Canadian Agent may execute any of its duties hereunder by or
through agents or employees and shall be entitled to advice of counsel
concerning all matters pertaining to its duties hereunder.
(b) Each Canadian Pledgor agrees to promptly reimburse Canadian
Agent for actual out-of-pocket expenses, including reasonable counsel fees,
incurred by Canadian Agent in connection with the administration and enforcement
of this Agreement.
(c) Neither Canadian Agent, nor any of its representative
officers, directors, employees, agents or counsel shall be liable for any action
lawfully taken or omitted to be taken by it or them hereunder or in connection
herewith, except for its or their own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.
28. Nova Scotia Unlimited Liability Companies. Notwithstanding
anything else contained in this Agreement or any other document or agreement
among all or some of the parties hereto, DDI is the sole registered and
beneficial owner of all Pledged Stock which are shares of a Pledged Entity or
any other Person whose securities are the subject hereof and which is an
unlimited liability company (a "ULC") and will remain so until such time as such
shares are effectively transferred into the name of Canadian Agent, any Canadian
Lender or any nominee of the foregoing on the books and records of such ULC.
Accordingly, DDI shall be entitled to receive and retain for its own account any
dividend on or other distribution, if any, in respect of such Pledged Stock
(except insofar as DDI has granted a security interest therein) and shall have
the right to vote such Pledged Stock and to control the direction, management
and policies of a Pledged Entity to the same extent as DDI would if such Pledged
Stock were not pledged to Canadian Agent (for its own benefit and for the
benefit of the Canadian Lenders) pursuant hereto. Nothing in this Agreement or
any other document or agreement among all or some of the parties hereto is
intended to, and nothing in this Agreement or any other document or agreement
among all or some of the parties hereto shall, constitute Canadian Agent, any
Canadian Lender or any Person other than DDI, a member of a ULC for the purposes
of the Companies Act (Nova Scotia) until such time as notice is given to DDI and
further steps are taken thereunder so as to register Canadian Agent, any
Canadian Lender or any nominee of the foregoing as holder of shares of the ULC.
To the extent any provision hereof would have the effect of constituting
Canadian Agent or any Canadian Lender as a member of any ULC prior to such time,
such provision shall be severed therefrom and ineffective with respect to
Pledged Stock which are shares of a ULC without otherwise invalidating or
rendering unenforceable this Agreement or invalidating or rendering
unenforceable such provision insofar as it relates to Pledged Stock which are
not shares of a ULC.
29. Intercreditor Agreement. The parties acknowledge that (a) DDI
stock certificate No. C-2 and (b) the promissory note of DDI in favor of Dynamic
Details, Incorporated dated December 29, 2003, in the initial principal amount
of CAD$12,903,801, were each previously delivered to US Agent in connection with
the US Credit Agreement, and that US Agent is holding such stock certificate and
promissory note for the benefit of Canadian Agent in accordance with the terms
of the GE Capital Intercreditor Agreement of even date herewith between US Agent
and Canadian Agent.
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-17-
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed as of the date first written above.
"CANADIAN PLEDGORS"
DDI CANADA ACQUISITION CORP. DYNAMIC DETAILS, INCORPORATED
By: /s/ XXXXXXX XXXXXXXX By: /s/ XXXXXXX XXXXXXXX
------------------------------- -------------------------------
Name: Xxxxxxx Xxxxxxxx Name: Xxxxxxx Xxxxxxxx
Title: Vice President and Secretary Title: Vice President and Secretary
"CANADIAN AGENT"
GE CANADA FINANCE HOLDING
COMPANY
By: /s/ XXXXXXX X. XXXXX
--------------------------------
Name: Xxxxxxx X. Xxxxx
President
SCHEDULE I
PART A
PLEDGED SHARES
PERCENTAGE OF
STOCK NUMBERS OF OUTSTANDING SHARES
CLASS OF CERTIFICATES SHARES Or OR
PLEDGED ENTITY STOCK HOLDER OF STOCK NUMBER(S) INTERESTS* INTERESTS
--------------------------------------------------------------------------------------------------------
Dynamic Details Common DDi Canada 1 100 100%
Canada, Corp. Acquisition Corp.
--------------------------------------------------------------------------------------------------------
DDi Canada Common Dynamic Details, C-2 715 65%
Acquisition Corp. Incorporated
--------------------------------------------------------------------------------------------------------
DDi Canada Common Dynamic Details, C-3 385 35%
Acquisition Corp. Incorporated
--------------------------------------------------------------------------------------------------------
PART B
PLEDGED INDEBTEDNESS
INITIAL PRINCIPAL CANADIAN MATURITY INTEREST
PLEDGED ENTITY AMOUNT PLEDGOR ISSUE DATE DATE RATE
-----------------------------------------------------------------------------------------------
DDi Canada CAD Dynamic December 29, December 9.75%
Acquisition $12,903,801 Details, 2003 29, 2013
Corp. Incorporated
-----------------------------------------------------------------------------------------------
Dynamic Details CAD DDi Canada February 2, December 10%
Canada, Corp. $12,903,801 Acquisition 2004 29, 2013
Corp.
-----------------------------------------------------------------------------------------------
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated as of______________,____ is
delivered pursuant to SECTION 6(d) of the Pledge Agreement referred to below.
All defined terms herein shall have the meanings assigned thereto or
incorporated by reference in the Pledge Agreement. The undersigned hereby
certifies that the representations and warranties in SECTION 5 of the Pledge
Agreement are and continue to be true and correct, both as to the promissory
notes, other Instruments, letters of credit, shares and interests pledged prior
to this Pledge Amendment and as to the promissory notes, other Instruments,
shares or interests pledged pursuant to and delivered to Canadian Agent
concurrently with Canadian Pledgor's delivery of this Pledge Amendment. The
undersigned further agrees that this Pledge Amendment may be attached to that
certain Pledge Agreement dated as of June 30, 2004 (the "Pledge Agreement"), by
and among Dynamic Details, Incorporated and DDi Canada Acquisition Corp., as
Canadian Pledgors, and GE Canada Financing Holding Company, as Canadian Agent,
and that the Pledged Stock and Pledged Indebtedness listed in this Pledge
Amendment shall be and become a part of the Pledged Collateral referred to in
the Pledge Agreement and shall secure all Obligations referred to in the Pledge
Agreement.
"Canadian Pledgor"
By: __________________________
Name: __________________________
Title:__________________________
NAME AND
ADDRESS OF
CANADIAN CERTIFICATE NUMBER OF
PLEDGOR PLEDGED ENTITY CLASS OF STOCK NUMBER(S) SHARES OR INTERESTS
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
INITIAL PRINCIPAL
PLEDGED ENTITY AMOUNT ISSUE DATE MATURITY DATE INTEREST RATE
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
SCHEDULE III
EXISTING OPTIONS, WARRANTS, CALLS OR COMMITMENTS
RELATING TO THE PLEDGED STOCK
None.
