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EXHIBIT 10.4
STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT is made as of this 16th day of December,
1997, by and between Xxxxxx General Corporation, a California corporation (the
"Company"), and BankBoston, N.A., a national banking association (the "Bank").
WHEREAS, the Company is the legal and beneficial owner of the issued
and outstanding shares of each class of the capital stock of Advanced Tank
Certification, Inc., a Tennessee corporation, as more particularly described on
Annex A; and
WHEREAS, the Company has entered into a certain Term Loan and
Acquisition Line Agreement of even date herewith (as amended and in effect from
time to time, the "Credit Agreement"), with the Bank, pursuant to which the
Bank, subject to the terms and conditions contained therein, is to make Loans
(as defined therein) to the Company; and
WHEREAS, it is a condition precedent to the Bank making the Loans to
the Company under the Credit Agreement that the Company execute and deliver to
the Bank a pledge agreement in substantially the form hereof; and
WHEREAS, the Company wishes to grant pledges and security interests in
favor of the Bank as herein provided;
NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
Section 1. Pledge of Stock, Etc.
(a) The Company hereby pledges, assigns, grants a security
interest in, and delivers to the Bank, all of the shares of capital stock of the
Subsidiaries (defined below) of every class, as more fully described on Annex A
hereto, to be held by the Bank subject to the terms and conditions hereinafter
set forth. The certificates for such shares, accompanied by stock powers or
other appropriate instruments of assignment thereof duly executed in blank by
the Company, have been delivered to the Bank.
(b) In case the Company shall acquire any additional shares of
the capital stock of any Subsidiary or of any corporation which is the successor
of any Subsidiary, or any securities exchangeable for or convertible into shares
of such capital stock of any class of any Subsidiary, by purchase or otherwise,
then the Company shall forthwith deliver to and pledge such shares or other
securities to the Bank under this Agreement. The Company agrees
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that the Bank may from time to time attach as Annex A hereto an updated list of
the shares of capital stock or securities at the time pledged with the Bank
hereunder.
Section 2. Definitions. The term "Obligations" and all other
capitalized terms used herein without definition shall have the respective
meanings provided therefor in the Credit Agreement. Terms used herein and not
defined in the Credit Agreement or otherwise defined herein that are defined in
the Uniform Commercial Code of Massachusetts have such defined meanings herein,
unless the context otherwise indicated or requires, and the following terms
shall have the following meanings:
Stock. Includes the shares of stock described in Annex A attached
hereto and any additional shares of stock at the time pledged with the Bank
hereunder.
Stock Collateral. The property at any time pledged to the Bank
hereunder (whether described herein or not) and all income therefrom, increases
therein and proceeds thereof, but excluding from the definition of "Stock
Collateral" any income, increases or proceeds received by the Company to the
extent expressly permitted by Section 6.
Subsidiary or Subsidiaries. Advanced Tank Certification, Inc., a
Tennessee corporation, and each other Subsidiary (as defined in the Credit
Agreement) now owned or hereafter acquired by the Company, but excluding,
Toxguard Systems, Inc., Toxguard Fluid Technologies, Inc., and all Persons
listed on Schedule 6.2 to the Credit Agreement.
Section 3. Security for Obligations. This Agreement and the security
interest in and pledge of the Stock Collateral hereunder are made with and
granted to the Bank as security for the payment and performance in full of all
the Obligations.
Section 4. Liquidation, Recapitalization, Etc.
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Any sums or other property paid or distributed upon or with
respect to any of the Stock, whether by dividend or redemption or upon the
liquidation or dissolution of the issuer thereof or otherwise constitute
security for payment of the Obligations, and shall, except to the limited extent
provided in Section 6, be paid over and delivered to the Bank to be held by the
Bank as security for the payment and performance in full of all of the
Obligations. In case, pursuant to the recapitalization or reclassification of
the capital of the issuer thereof or pursuant to the reorganization thereof, any
distribution of capital shall be made on or in respect of any of the Stock or
any property shall be distributed upon or with respect to any of the Stock, the
property so distributed shall be delivered to the Bank to be held by it as
security for the Obligations. Except to the limited extent provided in Section
6, all sums of money and property paid or distributed in respect of the Stock,
whether as a dividend or upon such a liquidation, dissolution, recapitalization
or reclassification or otherwise, that are received by the Company shall, until
paid or delivered to the Bank, be held in trust for the Bank as security for the
payment and performance in full of all of the Obligations.
Section 5. Warranty of Title; Authority. The Company hereby represents
and warrants that: (a) the Company has good and marketable title to the Stock
described in Section 1, subject to no pledges, liens, security interests,
charges, options, restrictions or other encumbrances except the pledge and
security interest created by this Agreement, (b) the Company has full power,
authority and legal right to execute, deliver and perform its obligations under
this Agreement and to pledge and grant a security interest in all of the Stock
Collateral pursuant to this Agreement, and the execution, delivery and
performance hereof and the pledge of and granting of a security interest in the
Stock Collateral hereunder have been duly authorized by all necessary corporate
or other action and do not contravene any law, rule or regulation or any
provision of the Company's charter documents or by-laws or of any judgment,
decree or order of any tribunal or of any agreement or instrument to which the
Company is a party or by which it or any of its property is bound or affected or
constitute a default; thereunder, and (c) the information set forth in Annex A
hereto relating to the Stock is true, correct and complete in all respects. The
Company covenants that it will defend the Bank's rights and security interest in
such Stock against the claims and demands of all persons whomsoever. The Company
further covenants that it will have the like title to and right to pledge and
grant a security interest in the Stock Collateral hereafter pledged or in which
a security interest is granted to the Bank hereunder and will likewise defend
the Bank's rights, pledge and security interest thereof and therein.
Section 6. Dividends, Voting, Etc., Prior to Maturity. So long as no
Default or Event of Default shall have occurred and be continuing, the Company
shall be entitled to receive all cash
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dividends paid in respect of the Stock, to vote the Stock and to give consents,
waivers and ratifications in respect of the Stock; provided, however, that no
vote shall be cast or consent waiver or ratification given by the Company if the
effect thereof would in the reasonable judgment of the Bank impair any of the
Stock Collateral or be inconsistent with or result in any violation of any of
the provisions of the Credit Agreement, the Notes or any of the other Loan
Documents. All such rights of the Company to receive cash dividends shall cease
in case a Default or an Event of Default shall have occurred and be continuing.
All such rights of the Company to vote and give consents, waivers and
ratifications with respect to the Stock shall, at the Bank's option, as
evidenced by the Bank's notifying the Company of such election, cease in case a
Default or an Event of Default shall have occurred and be continuing.
Section 7. Remedies
(a) If a Default or an Event of Default shall have occurred
and be continuing, the Bank shall thereafter have the following rights and
remedies (to the extent permitted by applicable law) in addition to the rights
and remedies of a secured party under the Uniform Commercial Code of
Massachusetts, all such rights and remedies being cumulative, not exclusive, and
enforceable alternatively, successively or concurrently, at such time or times
as the Bank deems expedient:
(i) if the Bank so elects and gives notice of such
election to the Company, the Bank may vote any or all shares of the
Stock (whether or not the same shall have been transferred into its
name or the name of its nominee or nominees) for any lawful purpose,
including, without limitation, if the Bank so elects, for the
liquidation of the assets of the issuer thereof, and give all consents,
waivers and ratifications in respect of the Stock and otherwise act
with respect thereto as though it were the outright owner thereof (the
Company hereby irrevocably constituting and appointing the Bank the
proxy and attorney-in-fact of the Company, with full power of
substitution, to do so);
(ii) the Bank may demand, xxx for, collect or make any
compromise or settlement the Bank deems suitable in respect of any
Stock Collateral;
(iii) the Bank may sell, resell, assign and deliver, or
otherwise dispose of any or all of the Stock Collateral, for cash or
credit or both and upon such terms at such place or places, at such
time or times and to such entities or other persons as the Bank thinks
expedient, all without demand for performance by the Company or any
notice or advertisement whatsoever except as expressly provided herein
or as may otherwise be required by law;
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(iv) the Bank may cause all or any part of the Stock held
by it to be transferred into its name or the name of its nominee or
nominees; and
(v) the Bank may set off against the Obligations any
and all sums deposited with it or held by it.
(b) In the event of any disposition of the Stock Collateral as
provided in clause (iii) of Section 7(a), the Bank shall give to the Company at
least five Business Days prior written notice of the time and place of any
public sale of the Stock Collateral or of the time after which any private sale
or any other intended disposition is to be made. The Company hereby acknowledges
that five Business Days prior written notice of such sale or sales shall be
reasonable notice. The Bank may enforce its rights hereunder without any other
notice and without compliance with any other condition precedent now or
hereunder imposed by statute, rule of law or otherwise (all of which are hereby
expressly waived by the Company, to the fullest extent permitted by law). The
Bank may buy any part or all of the Stock Collateral at any public sale and if
any part or all of the Stock 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, the Bank may buy at private sale and may make
payments thereof by any means. The Bank may 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, travel and all other expenses which may be incurred by the Bank
in attempting to collect the Obligations or to enforce this Agreement or in the
prosecution or defense of any action or proceeding related to the subject matter
of this Agreement, and then to the Obligations in the order set forth in such
order or preference as the Bank may determine after proper allowance for
Obligations not then due. Only after such applications, and after payment by the
Bank of any amount required by Section 9-504(1)(c) of the Uniform Commercial
Code of the Commonwealth of Massachusetts, need the Bank account to the Company
for any surplus. To the extent that any of the Obligations are to be paid or
performed by a person other than the Company, the Company waives and agrees not
to assert any rights or privileges which it may have under Section 9-112 of the
Uniform Commercial Code of the Commonwealth of Massachusetts.
(c) The Company recognizes that the Bank may be unable to
effect a public sale of the Stock by reason of certain prohibitions contained in
the Securities Act, federal banking laws, and other applicable laws, but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers. The Company agrees that any such private sales may be at prices
and other terms less favorable to the seller than if sold at public sales and
that such private sales shall not by reason thereof be deemed not to have been
made in a commercially reasonable manner. The Bank shall be under no obligation
to delay a sale of any of
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the Stock for the period of time necessary to permit the issuer of such
securities to register such securities for public sale under the Securities Act,
or such other federal banking or other applicable laws, even if the issuer would
agree to do so. Subject to the foregoing, the Bank agrees that any sale of the
Stock shall be made in a commercially reasonable manner, and the Company agrees
to use its best efforts to cause the issuer or issuers of the Stock contemplated
to be sold, to execute and deliver, and cause the directors and officers of such
issuer to execute and deliver, all at the Company's expense, all such
instruments and documents, and to do or cause to be done all such other acts and
things as may be necessary or, in the reasonable opinion of the Bank, advisable
to exempt such Stock from registration under the provisions of the Securities
Act, and to make all amendments to such instruments and documents which, in the
opinion of the Bank, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Company further
agrees to use its best efforts to cause such issuer or issuers to comply with
the provisions of the securities or "Blue Sky" laws of any jurisdiction which
the Bank shall designate and, if required, to cause such issuer or issuers to
make available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act.
(e) The Company further agrees to do or cause to be done all such other
acts and things as may be reasonably necessary to make any sales of any portion
or all of the Stock pursuant to this Section 7 valid and binding and in
compliance with any and all applicable laws (including, without limitation, the
Securities Act, the Securities Exchange Act of 1934, as amended, the rules and
regulations of the Securities and Exchange Commission applicable thereto and all
applicable state securities or "Blue Sky" laws), regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at the Company's expense. The Company further agrees
that a breach of any of the covenants contained in this Section 7 will cause
irreparable injury to the Bank, that the Bank has no adequate remedy at law in
respect of such breach and, as a consequence, agrees that each and every
covenant contained in this Section 7 shall be specifically enforceable against
the Company and the Company hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants.
Section 8. Marshalling. The Bank shall not be required to marshal any
present or future security for (including but not limited to this Agreement and
the Stock Collateral), or other assurances of payment of, the Obligations or any
of them, or to resort to such security or other assurances of payment in any
particular order. All of the Bank's rights hereunder and in respect of such
security and other assurances of payment shall be cumulative and in addition
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to all other rights, however existing or arising. To the extent that it lawfully
may, the Company 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
the Bank's rights under this Agreement 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 payment thereof is otherwise
assured, and to the extent that it lawfully may the Company hereby irrevocably
waives the benefits of all such laws.
Section 9. Company's Obligations Not Affected. The obligations of the
Company hereunder shall remain in full force and effect without regard to, and
shall not be impaired by (a) any exercise or nonexercise, or any waiver, by the
Bank of any right, remedy, power or privilege under or in respect of any of the
Obligations or any security thereof (including this Agreement); (b) any
amendment to or modification of the Credit Agreement, the Notes, the other Loan
Documents or any of the Obligations; (c) any amendment to or modification of any
instrument (other than this Agreement) securing any of the Obligations; or (d)
the taking of additional security for, or any other assurances of payment of,
any of the Obligations or the release or discharge or termination of any
security or other assurances of payment or performance for any of the
Obligations; whether or not the Company shall have notice or knowledge of any of
the foregoing.
Section 10. Transfer, Etc., by Company. Without the prior written
consent of the Bank, the Company will not sell, assign, transfer or otherwise
dispose of, grant any option with respect to, or pledge or grant any security
interest in or otherwise encumber or restrict any of the Stock Collateral or any
interest therein, except for the pledge thereof and security interest therein
provided for in this Agreement.
Section 11. Further Assurances. The Company will do all such acts, and
will furnish to the Bank all such financing statements, certificates, legal
opinions and other documents and will obtain all such governmental consents and
corporate approvals and will do or cause to be done all such other things as the
Bank may reasonably request from time to time in order to give full effect to
this Agreement and to secure the rights of the Bank hereunder, all without any
cost or expense to the Bank. If the Bank so elects, a photocopy of this
Agreement may at any time and from time to time be filed by the Bank as a
financing statement in any recording office in any jurisdiction.
Section 12. Bank's Exoneration. Under no circumstances shall the Bank
be deemed to assume any responsibility for or obligation or duty with respect to
any part or all of the Stock Collateral of any nature or kind or any matter or
proceedings arising out of or relating thereto, other than (a) to exercise
reasonable care in the physical custody of the Stock Collateral and (b) after a
Default or an Event of Default shall have occurred and be con-
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tinuing to act in a commercially reasonable manner. The Bank shall not be
required to take any action of any kind to collect, preserve or protect its or
the Company's rights in the Stock Collateral or against other parties thereto.
The Bank's prior recourse to any part or all of the Stock Collateral shall not
constitute a condition of any demand, suit or proceeding for payment or
collection of any of the Obligations.
Section 13. No Waiver, Etc.. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the party to be charged. No act, failure or delay by
the Bank shall constitute a waiver of its rights and remedies hereunder or
otherwise. No single or partial waiver by the Bank of any default or right or
remedy that it may have shall operate as a waiver of any other default, right or
remedy or of the same default, right or remedy on a future occasion. The Company
hereby waives presentment, notice of dishonor and protest of all instruments,
included in or evidencing any of the Obligations or the Stock Collateral, and
any and all other notices and demands whatsoever (except as expressly provided
herein or in the Credit Agreement).
Section 14. Notices, Etc. All notices, requests and other
communications hereunder shall be made in the manner set forth in Section 12.1
of the Credit Agreement.
Section 15. Termination. Upon final payment and performance in full of
the Obligations, this Agreement shall terminate and the Bank shall, at the
Company's request and expense, return such Stock Collateral in the possession or
control of the Bank as has not theretofore been disposed of pursuant to the
provisions hereof, together with any moneys and other property at the time held
by the Bank hereunder.
Section 16. Default Interest. Until paid, all amounts due and payable
by the Company hereunder shall be a debt secured by the Stock Collateral and all
other Collateral and shall bear, whether before or after judgment, interest at
the default rate of interest set forth in the Credit Agreement.
Section 17. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. THE
COMPANY AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT
SITTING THEREIN AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURT AND
TO SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE COMPANY BY MAIL AT
THE ADDRESS SPECIFIED IN SECTION 12.1 OF THE LOAN AGREEMENT. THE COMPANY HEREBY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
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Section 18. Waiver of Jury Trial. THE BANK AND THE COMPANY AND ITS
SUBSIDIARIES AGREE THAT NONE OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A)
SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION
BASED UPON, OR ARISING OUT OF, THIS AGREEMENT, ANY RELATED INSTRUMENTS, ANY
COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR
(B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE
BEEN FULLY DISCUSSED BY THE BANK AND THE COMPANY AND ITS SUBSIDIARIES, AND THESE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NEITHER THE BANK NOR THE COMPANY
AND ITS SUBSIDIARIES HAS AGREED WITH OR REPRESENTED TO THE OTHER THAT THE
PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
Section 19. Miscellaneous. The headings of each section of this
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Agreement and all rights and obligations hereunder shall be
binding upon the Company and its respective successors and assigns, and shall
inure to the benefit of the Bank and its successors and assigns. If any term of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity of all other terms hereof shall be in no way affected thereby, and this
Agreement shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein. The Company acknowledges
receipt of a copy of this Agreement.
IN WITNESS WHEREOF, intending to be legally bound, the Company and the
Bank have caused this Agreement to be executed as of the date first above
written.
XXXXXX GENERAL CORPORATION
By:___________________________
Title:________________________
BANKBOSTON, N.A.
By:___________________________
Title:________________________
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The undersigned Subsidiaries hereby join in the above Agreement for the
sole purpose of consenting to and being bound by the provisions of Sections
4(a), 6 and 7 thereof, the undersigned hereby agreeing to cooperate fully and
in good faith with the Bank and the Company in carrying out such provisions.
ADVANCED TANK CERTIFICATION, INC.
By:___________________________
Title:________________________
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ANNEX A
None of the issuers has any authorized, issued or outstanding shares of
its capital stock of any class or any commitments to issue any shares of its
capital stock of any class or any securities convertible into or exchangeable
for any shares of its capital stock of any class except as otherwise stated in
this Annex A.
Number of Number of
Record Class of Authorized Issued Number of Par or
Issuer Owner Shares Shares Shares Outstanding Shares Liquidation Value
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Advance Tank Xxxxxx General Common 10, 112.1 10, 112.1 No Par
Certification, Inc. Corporation
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