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EXHIBIT 10.4
FORM OF STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement (the "Agreement") is entered into as
of _________, 1994 by and between ____________ [MANAGER] ("Pledgor") and CHIEF
AUTO PARTS INC., a Delaware corporation (the "Secured Party").
W I T N E S S E T H
WHEREAS, the Secured Party has agreed [(I)] to make a loan to
Pledgor in the aggregate amount of $___________, [ AND (II) TO MAKE A LOAN TO
PLEDGOR IN THE AGGREGATE AMOUNT OF $_____, EACH] pursuant to that certain Stock
Purchase Agreement dated as of ______, 1994 among the Secured Party, TCW
Special Credits Fund V - The Principal Fund, a California limited partnership
and Pledgor (the "Stock Purchase Agreement") (terms not otherwise defined
herein are used as defined in the Stock Purchase Agreement), and, as evidence
thereof, Pledgor has executed and delivered to the Secured Party [___]
promissory NOTE[S] dated as of even date herewith ([COLLECTIVELY,] the
"NOTE[S]");
WHEREAS, Pledgor holds an aggregate of ____ shares purchased by
Pledgor on the date hereof (the "Pledged Shares") of the common stock, par
value $0.01 per share, of the Secured Party; and
WHEREAS, as a condition to the making of the LOAN[S] evidenced by
the NOTE[S], the parties contemplate that the Pledged Shares will be pledged
and delivered by Pledgor to the Secured Party, with duly endorsed instruments
of transfer, as security for such LOAN[S].
NOW, THEREFORE, in consideration of the mutual covenants,
conditions and provisions contained herein and in the NOTE[S] and for other
good and valuable consideration, the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used herein without
definition, which are defined in or by reference in the NOTE[S], shall have the
respective meanings specified therein.
Section 2. Pledge. Pledgor hereby conveys, pledges, assigns
and transfers to the Secured Party, and hereby grants to the Secured Party, a
valid, first priority security interest (the "Security Interest") in Pledgor's
right, title, interest in and to the Pledged Shares and the
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certificates representing the Pledged Shares, all dividends, cash, securities,
instruments and other property from time to time paid, payable or otherwise
distributed in respect of or in exchange for all or any part of the Pledged
Shares and all proceeds thereof (the "Pledged Collateral").
Section 3. Secured Obligations. The Security Interest shall
secure for the benefit of the Secured Party the following (collectively, the
"Secured Obligations"):
(a) payment and performance of each and every obligation,
covenant and agreement of Pledgor now, or hereafter existing contained herein
or in the NOTE[S], whether for principal, interest, fees, expenses or
otherwise, and any amendments or supplements thereto, extensions or renewals
thereof or replacements therefor; and
(b) payment of all sums advanced upon an Event of Default or
in accordance herewith by the Secured Party to protect the Pledged Collateral,
with interest thereon at the rate equal to the highest interest rate under the
NOTE[S] as in effect from time to time;
in each case whether direct or indirect, joint or several, absolute or
contingent, liquidated or unliquidated, now or hereafter existing, renewed or
restructured, whether or not from time to time decreased or extinguished
(except as provided in Section 18 hereof) and later increased, created or
incurred, and including all indebtedness, obligations and liabilities of
Pledgor under any instrument now or hereafter evidencing or securing any of the
foregoing.
Section 4. Delivery of Collateral; Issuance of Additional
Shares.
(a) All certificates or instruments representing or evidencing
the Pledged Shares shall be delivered to the Secured Party on the date hereof,
and shall be held by the Secured Party or on behalf of the Secured Party
pursuant hereto at all times hereafter, and all certificates and instruments
representing or evidencing the Pledged Collateral hereunder shall be delivered
to the Secured Party immediately upon, and held by the Secured Party at all
times after, receipt thereof by Pledgor. All such certificates or instruments
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Secured Party.
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(b) Upon the occurrence and during the continuance of an Event
of Default hereunder, the Secured Party shall have the right, at any time in
its discretion, to transfer to or to register on the books of the Secured Party
in the name of the Secured Party or any of its nominees any or all of the
Pledged Collateral (with, in the discretion of the Secured Party, such transfer
or registration expressly empowering the Secured Party to vote shares of stock
included in the Pledged Collateral), subject only to the revocable rights
specified in Section 8(a) hereof. In addition, the Secured Party shall have
the right at any time to exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of smaller or
larger denominations.
Section 5. Non-Recourse. Notwithstanding any other provision
to the contrary contained herein, the parties hereto agree that the Secured
Party's sole recourse against Pledgor for the payment of principal, interest,
fees, costs and other expenses in connection with the NOTE[S] shall be limited
to the Secured Party's security interest in the Pledged Collateral. The
Secured Party shall at all times have the right to proceed against any portion
of the security held herefor in such order and in such manner as provided in
this Agreement, without waiving any rights with respect to any other security.
The Secured Party shall not seek a personal judgment against Pledgor for
payment under the NOTE[S] and no recourse shall be had for the payment of the
NOTE[S] against Pledgor or his or her successors or any of Pledgor's or his or
her successor's properties or assets (except as to the aforesaid security
interest in the Pledged Shares), all such liability being, by the acceptance
hereof and as part of the consideration for the receipt of the security
interests hereunder, expressly waived and released by the Secured Party and any
of its assignees.
Section 6. Representations and Warranties; Certain Covenants.
(a) Pledgor hereby represents and warrants that Pledgor is the
legal and equitable owner of the Pledged Collateral free and clear of all
liens, charges, encumbrances and security interests of every kind and nature,
other than Permitted Encumbrances (as defined below).
(b) Pledgor covenants that:
(i) except for the Security Interest granted hereby,
the security interests permitted under or otherwise contemplated
hereby and the repurchase agreement provided
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for herein ("Permitted Encumbrances"), Pledgor will not create,
assume, incur or permit to exist or to be created, assumed or
incurred, directly, or indirectly, any lien of any kind on, or
any repurchase agreement with respect to, the Pledged Collateral,
and will defend the Pledged Collateral against, and take such
action as is necessary to remove, any such lien, and will defend
the Security Interest against the claims and demands of all
persons; and
(ii) Pledgor shall advise the Secured Party promptly, in
reasonable detail, of any lien or claim made or asserted against
any of the Pledged Collateral; and of the occurrence of any other
event which would have a material adverse effect on the
enforceability of the Security Interest created hereunder.
(c) Pledgor may, upon thirty days prior written notice to the
Secured Party, transfer a part of the Pledged Collateral to one or more persons
if: (i) the person(s) acquiring such Pledged Collateral grant(s) to the Secured
Party a pledge of such Pledged Collateral, on terms and conditions acceptable
to the Secured Party; (ii) the ownership of such Pledged Collateral by such
person(s) would not cause Pledgor to breach any of his covenants set forth
herein or cause any Event of Default (or event that with giving of notice,
lapse of time or both could constitute an Event of Default); and (iii) each
such person is otherwise reasonably acceptable to the Secured Party.
(d) Pledgor may transfer a part of the Pledged Collateral
pursuant to (i) an offering by the Secured Party for the general sale of its
common stock registered with the Securities and Exchange Commission on a
registration statement (other than a registration statement on Form S-4 or S-8
or any successor form for securities to be offered in a transaction of the type
referred to in Rule 145 under the Securities Act of 1933 or to the employees of
the Secured Party pursuant to any employee benefit plan, respectively), (ii)
Rule 144 or Rule 701 of the Securities Act of 1933 following any public
offering of the common stock of the Company (or any successor or similar
statute or rule), or (iii) a Transfer as contemplated pursuant to Article IV of
the Stock Purchase Agreement. Upon any transfer of the Pledged Collateral
pursuant to this Section 6(d), Pledgor shall apply the proceeds received by
Pledgor to prepay the principal and interest on the NOTE(S). The Secured Party
shall release any Security Interest in the Pledged Collateral to be sold
pursuant to this Section 6(d) but shall retain its Security
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Interest in the proceeds of the sale of the Pledged Collateral.
Notwithstanding the foregoing, if the fair market value of
the Pledged Collateral to be transferred pursuant to this Section 6(d) is less
than the product obtained from the multiplication of (A) the balance of all
accrued and unpaid interest and principal owing in respect of the NOTE(S), owed
by the Pledgor to the Secured Party (the "Combined Note Balance"), and (B) a
fraction equal to the fair market value of the Pledged Collateral to be
transferred hereby divided by the fair market value of the Pledged Collateral
immediately prior to such transfer (the "Value Percentage"), then the Secured
Party shall have the right, but not the obligation, to purchase from Pledgor
the Pledged Collateral to be transferred hereby. The consideration for such
purchase shall be the cancellation of outstanding principal and interest owing
in respect of the NOTE(S) in an amount equal to the Combined Note Balance
multiplied by the Value Percentage.
(e) Pledgor shall not, other than as provided for in Section
6(c) or 6(d), transfer, or consent to the transfer of, any of the Pledged
Collateral.
Section 7. Further Assurances. Pledgor agrees that at any
time and from time to time, at the expense of Pledgor, Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action that the Secured Party may reasonably request, in order to perfect and
protect the Security Interest granted or intended to be granted hereby or to
enable the Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral.
Section 8. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default hereunder shall have
occurred and be continuing:
(i) Pledgor shall be entitled to exercise any and all
voting and other consensual rights (if any) pertaining to the
Pledged Collateral or any part thereof for any purpose not
prohibited by the terms of this Agreement; and
(ii) except as otherwise provided in Sections 4(b), 8(b)
and 8(d) hereof, Pledgor shall be entitled to receive and retain
any dividends and other property (other than cash
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or other securities) from time to time paid, payable or otherwise
distributed in respect of the Pledged Collateral.
(b) Pursuant to the terms of the NOTE[S], Pledgor is required
to make mandatory prepayments on the NOTE[S] in an amount equal to one hundred
percent (100%) of any cash dividends payable or otherwise distributed in
respect of the Pledged Shares.
(c) Pledgor hereby irrevocably appoints the Secured Party as
Pledgor's proxyholder with respect to the Pledged Shares and any other voting
securities forming a part of the Pledged Collateral with full power and
authority to vote such Pledged Shares and other voting securities and to
otherwise act with respect to such Pledged Shares or other voting securities on
behalf of Pledgor, provided that this proxy shall only be operative upon the
occurrence of an Event of Default and so long as such Event of Default
continues. Such proxy shall be irrevocable for so long as any of the Secured
Obligations remain in existence. Pledgor shall execute and deliver (or cause
to be executed and delivered) to the Secured Party all proxies and other
instruments as the Secured Party may reasonably request for the purpose of
enabling the Secured Party to exercise the voting and other rights which it is
entitled to exercise pursuant to this Section 8(c); and
(d) Upon the occurrence and during the continuance of an Event of
Default hereunder, all rights of Pledgor to receive and retain dividends and
other property, which they would otherwise be authorized to receive and retain
pursuant to Section 8(a)(ii), shall cease and all such rights shall thereupon
be vested in the Secured Party, who shall thereupon have the sole right to
receive and hold as Pledged Collateral such dividends and other property. All
other property received by Pledgor contrary to the provisions of this Section
8(d) shall be received in trust for the benefit of the Secured Party, shall be
segregated from other property or funds of Pledgor and shall be forthwith
delivered to the Secured Party as Pledged Collateral in the same form as so
received (with any necessary transfer documents or endorsements).
Section 9. Dispositions and Release of Collateral.
(a) Pledgor covenants that Pledgor shall not enter into or
perform any agreement to sell, lease, transfer or otherwise dispose of all or
any part of the Pledged Collateral (other than in accordance with Sections 6(c)
or 6(d) hereof) unless the Security Interest in such Pledged Collateral to be
sold, leased, transferred or otherwise disposed of shall have
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been released prior to or concurrent with the disposition of the Pledged
Collateral.
(b) The Secured Party covenants that the Secured Party shall
release any Security Interest in the Pledged Collateral to permit the transfer
thereof as contemplated by Section 6(d) free and clear of such Security
Interest; provided, however, that the Secured Party shall retain its Security
Interest in the proceeds of the transfer of the Pledged Collateral.
Section 10. Reasonable Care. The Secured Party shall be deemed
to have exercised reasonable care in the custody and preservation of the
Pledged Collateral in its possession if the Pledged Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property, it being understood that the Secured Party shall have no
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not the Secured Party has or is deemed to have
knowledge of such matters, unless reasonably requested in writing to do so by
Pledgor, or (b) taking any necessary steps (other than steps taken in
accordance with the standard of care set forth above to maintain possession of
the Pledged Collateral) to preserve rights against any parties with respect to
any Pledged Collateral.
Section 11. Secured Party Appointed Attorney-in-Fact. Pledgor
hereby irrevocably appoints the Secured Party Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in Pledgor's name or
otherwise, if the Secured Party elects, upon an Event of Default, to take any
action and to execute any instrument which the Secured Party may deem
reasonably necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all instruments
made payable to Pledgor representing any dividend, interest payment or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same, when and to the extent permitted by this
Agreement.
Section 12. Secured Party May Perform. Upon the occurrence and
during the continuance of an Event of Default hereunder (including an Event of
Default resulting from a failure to perform any agreement contained herein), if
Pledgor fails to perform any agreement contained herein, the Secured Party may
itself perform, or cause performance of, such
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agreement, and the expenses of the Secured Party incurred in connection
therewith shall be payable by Pledgor.
Section 13. Events of Default; Remedies.
(a) The occurrence of any of the following events shall
constitute an event of default ("Event of Default") hereunder:
(i) Any Event of Default (as defined in the NOTE[S])
shall have occurred, which Event of Default shall not be waived
or, if capable of being cured, shall not be cured within the
respective periods provided in such NOTE[S];
(ii) Pledgor fails, breaches or defaults in the payment
or performance of any of the obligations, covenants or conditions
contained in this Agreement.
(b) Upon or after the occurrence of an Event of Default:
(i) The Secured Party may exercise (in compliance with
all applicable securities laws) in respect of the Pledged
Collateral, in addition to other rights, powers and remedies
provided for herein or otherwise available to it, all the rights,
powers and remedies of the Secured Party after default under the
Uniform Commercial Code in force and effect in each state in
which such rights, powers and remedies are asserted, all of which
rights, powers and remedies shall be cumulative and not
exclusive, to the extent permitted by applicable law.
(ii) The Secured Party may also, without notice except
as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any
exchange, over the counter or at any of the Secured Party's
offices or elsewhere, for cash, on credit or for future delivery,
and at such price or prices and upon such other terms as may be
commercially reasonable or otherwise in such manner as necessary
to comply with applicable federal and state securities laws.
Pledgor agrees that the Secured Party shall not be required to
register or qualify any of the Pledged Collateral under
applicable state or federal securities laws in connection with
any
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such sale if the sale is effected in a manner that complies with
all applicable federal and state securities laws. The Secured
Party shall be authorized at any such sale (if it deems it
advisable to do so) to restrict the prospective bidders or
purchasers to persons who will represent and agree that they are
purchasing the Pledged Collateral for their own account, for
investment and not with a view to the distribution thereof. Upon
consummation of any such sale the Secured Party shall have the
right to assign, transfer and deliver to the purchaser or
purchasers at any such sale, and such purchasers shall hold, the
property sold absolutely free from any claim or right on the part
of Pledgor, and Pledgor hereby waives (to the extent permitted by
law) all rights of redemption, stay or appraisal which he now has
or may at any time in the future have under applicable law now
existing or hereafter enacted.
(iii) The Secured Party shall give Pledgor at least ten
(10) days' (or such longer period as shall be specified by
applicable law) notice of the time and place of any public sale
or the time after which any private sale is to be made, which
Pledgor agrees shall constitute commercially reasonable
notification. At any such public sale and (to the extent
permitted by law) at any such private sale, the Secured Party may
bid, in whole or in part, in the form of cancellation of Secured
Obligations, and the Secured Party may purchase the whole or any
part of the Pledged Collateral. The Secured Party shall not be
obligated to make any sale of the Pledged Collateral regardless
of notice of sale having been given. The Secured Party may
adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to
which it was so adjourned.
(iv) If a sale of all or any part of the Pledged
Collateral is made on credit or for future delivery, the Pledged
Collateral so sold may be retained by the Secured Party until the
sale price is paid by the purchaser or purchasers thereof, but
the Secured Party shall not incur any liability in case any such
purchaser or purchasers shall fail to take up
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and pay for the Pledged Collateral so sold and, in case of any
such failure, such Pledged Collateral may be sold again upon like
notice. Pledgor agrees to the maximum extent permitted by
applicable law that any sale of the Pledged Collateral conducted
by the Secured Party in accordance with the foregoing provisions
of this Section 13 shall be deemed to be a commercially
reasonable sale under Section 9-504 of the Texas Uniform
Commercial Code.
(v) As an alternative to exercising the power of sale
herein conferred upon it, the Secured Party may proceed by a suit
or suits at law or in equity to foreclose the Security Interest
and to sell the Pledged Collateral, or any portion thereof,
pursuant to a judgment or decree of a court or courts of
competent jurisdiction.
(vi) Any cash held by the Secured Party as the Pledged
Collateral and all cash proceeds received by the Secured Party in
respect of any sale of, collection from, or other realization
upon all or any part of the Pledged Collateral shall be applied
as follows: (a) first, to the payment to the Secured Party of the
costs and expenses of retaking, holding and preparing for sale of
the Pledged Collateral and any other fees, expenses, claims,
demands, losses, judgments, damages and liabilities payable to
the Secured Party pursuant to any provision hereof; and (b)
second, in accordance with the provisions of the NOTE[S].
(vii) Any surplus of such cash or cash proceeds held by
the Secured Party and remaining after payment in full of all the
Secured Obligations shall be reassigned and redelivered as
provided in Section 18 hereof.
Section 14. Security Interest Absolute. All rights of the
Secured Party hereunder, the Security Interest, and all obligations of Pledgor
hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the NOTE[S], any
agreement with respect to any of the Secured Obligations, or any other
agreement or instrument relating to any of the foregoing;
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(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to and departure from the NOTE[S] or any
other agreement or instrument;
(c) any exchange, release or non-perfection of any other
collateral, or any release of, amendment to, waiver of, consent to or departure
from any guaranty, for all or any of the Secured Obligations; and
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Pledgor in respect of the Secured
Obligations or in respect of this Agreement.
Section 15. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered, telexed or telecopied to, or, if mailed,
when received by, the other party at the following addresses (or at such other
address as shall be given in writing by any party to the others):
If to the Secured Party, to:
Chief Auto Parts Inc.
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
With a required copy (which shall not constitute notice to the
principal) to:
Xxxxxx, Xxxx & Xxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
If to Pledgor, to the address set forth under Pledgor's name on
the signature page hereto.
Section 16. Amendments and Waivers. This Agreement may only be
amended by a document signed by the Secured Party and Pledgor. No waiver of
any provision of this Agreement nor consent by the Secured Party to any
departure by Pledgor
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therefrom shall in any event be effective unless the same shall be in writing
and signed by the Secured Party. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No
failure on the part of the Secured Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof (except as
provided above) nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
Section 17. Election of Remedies. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law. The Secured
Party shall have all of the rights and remedies granted herein and available at
law or in equity, and these same rights and remedies may be pursued separately,
successively or concurrently against Pledgor, at the sole discretion of the
Secured Party.
Section 18. Release of Pledged Collateral and Termination.
Immediately following the payment of all the principal, interest, fees, costs
and other expenses due under the NOTE[S], all of the Pledged Collateral shall
be released from the pledge of this Agreement, and the Secured Party shall
reassign and redeliver (or cause to be reassigned and redelivered) to Pledgor,
or, subject to compliance with applicable law, to each person or persons as
Pledgor shall designate or to whoever may be lawfully entitled to receive such
surplus, against receipt, certificates representing the Pledged Shares (if any)
or such Pledged Collateral other than the Pledged Shares (if any) as shall not
have been sold or otherwise applied by the Secured Party pursuant to the terms
hereof and shall still be held by it hereunder, together with appropriate
instruments of reassignment and release.
Any transfer, redelivery or reassignment provided for above shall
be without recourse upon or warranty by the Secured Party (other than a
warranty that the Secured Party has not assigned its rights and interests
hereunder to any other person) and at the expense of the Secured Party.
Section 19. Continuing Security Interest; Assignments. This
Agreement shall create a continuing security interest in the Pledged Collateral
or the proceeds therefrom as provided in Section 9(b) and shall (a) remain in
full force and effect until termination as provided in Section 18, (b) be
binding upon Pledgor, the Secured Party and their respective successors and
assigns, and (c) inure, together with the rights, powers and remedies of
Pledgor and the Secured Party hereunder, to the benefit of Pledgor and the
Secured Party and their respective successors, transferees and assigns, as the
case may be. Notwithstanding the foregoing
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clause (b), Pledgor shall not be permitted to assign this Agreement or any
interest herein except as provided for in Section 6(c) and 6(d).
Section 20. Applicable Law. The parties hereto expressly
acknowledge and agree that this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without giving effect to choice
of laws.
Section 21. Severability. Any provision of this Agreement
which is prohibited, unenforceable or not authorized in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization, without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 22. Number and Gender. Whenever used herein, the
singular number shall include the plural and the plural the singular, and the
use of any gender shall be applicable to all genders.
Section 23. Captions. The captions, headings, and arrangements
used in this Agreement are for convenience only and do not and shall not be
deemed to affect, limit, amplify or modify the terms and provisions hereof.
Section 24. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized, as of the date first above written.
"SECURED PARTY"
CHIEF AUTO PARTS INC.
By:
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Name:
Title:
"PLEDGOR"
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[STOCKHOLDER]
Address
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