Execution Copy
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as amended, modified or supplemented
from time to time, this "Agreement") is made and entered into as of April
12, 2002 by KINETEK INDUSTRIES, INC., a Delaware corporation, having an
office at ArborLake Centre, Xxxxx 000, Xxxxx 000, 0000 Xxxx Xxxx Xxxx,
Xxxxxxxxx, Xxxxxxxx 00000 ("Pledgor"), in favor of U.S. BANK NATIONAL
ASSOCIATION, as Trustee under that certain Indenture identified below, a
national banking association with an office at 000 Xxxx Xxxxx Xxxxxx, Xxxxx
Xxxx, Xxxxxxxxx ("Trustee").
W I T N E S S E T H:
WHEREAS, as of the date hereof Kinetek Industries, Inc.
("Kinetek"), has issued (i) those certain 5% Senior Secured Notes due 2007,
in the original principal amount of $15,000,000 and (ii) those certain 10%
Senior Secured Notes due 2007, in the original principal amount of
$11,000,000 (collectively, the "Notes" and each, a "Note") pursuant to the
terms of those two certain Indentures each dated as of even date herewith,
by and among the Trustee, and Kinetek as Issuer (the "Issuer") and the
Guarantors identified below (the "Indentures");
WHEREAS, Advanced D.C. Motors, Inc., a New York corporation,
Electrical Design and Control Company, a Delaware corporation, The Imperial
Electric Corporation, a Delaware corporation, Xxxxxx-Xxxxx Industries,
Inc., an Illinois corporation, Motion Control Engineering, Inc., a
California corporation and Gear Research, Inc., a Delaware corporation,
Kinetek, Inc., a Delaware corporation, Motion Holdings, Inc., a Delaware
corporation, Advanced D.C. Holdings, a Delaware corporation, and FIR Group
Holdings, Inc., a Delaware corporation (collectively, the "Guarantors")
have each guaranteed payment and performance of the Indentures and the
Notes pursuant to certain guarantees contained in the Indentures
(collectively, the "Guarantees"); and
WHEREAS, pursuant to a Security Agreement (as amended, modified or
supplemented from time to time, the "Security Agreement") dated as of the
date hereof, Kinetek has secured its obligations under the Indentures and
the Notes, and the other obligations identified in the Security Agreement,
and by separate Guarantor Security Agreements, dated as of the date hereof,
each of the Guarantors has secured its Guarantee obligations, by liens and
security interests granted therein, that in each case are subordinate to
the Senior Lender Liens;
NOW, THEREFORE, in consideration of the premises, Pledgor hereby
agrees with Agent as follows:
1. Incorporation of Indentures and the Security Agreement. The
Indentures and the Security Agreement and the Guarantor Security Agreement
executed by Pledgor and the terms and provisions thereof are hereby
incorporated herein in their entirety by this reference. All terms
capitalized but not otherwise defined herein shall have the same meanings
herein as in the Indentures or the Security Agreement.
2. Pledge. Pledgor hereby pledges to Trustee, for its own benefit and
the benefit of the Holders, and grants to Trustee, for its own benefit and
benefit of Holders, a security interest in:
(a) the shares of stock of each entity identified on Schedule
I hereto (the "Entities") held by Pledgor (the "Pledged Shares")
and the certificates representing the Pledged Shares, and all
stock dividends, cash dividends, cash, instruments, chattel paper
and other rights, property or proceeds and products from time to
time received, receivable or otherwise distributed in respect of
or in exchange for any or all of the Pledged Shares;
(b) all additional shares of stock of each such Entity at any
time acquired by Pledgor in any manner, and the certificates
representing such additional shares (and any such additional
shares shall constitute part of the Pledged Shares under this
Agreement), and all stock dividends, cash dividends, cash,
instruments, chattel paper and other rights, property or proceeds
and products from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
shares; and
(c) all proceeds of any of the foregoing (the assets
described in this Section 1 are collectively referred to as, the
"Pledged Collateral").
Notwithstanding any other provision contained herein, the security
interest granted by the Pledgor to the Trustee, and any other rights of the
Trustee with respect to the Pledged Collateral described herein, pursuant
to this Agreement, to secure the Secured Obligations (as defined herein)
shall be (i) subordinate and junior in priority to the Liens granted to the
Senior Agent and the Senior Lenders pursuant to the Senior Loan Agreement
or any other Senior Security Documents (the "Senior Holder Liens"), and
(ii) subject to the terms and conditions of the Intercreditor Agreement.
Any provisions contained herein that purport to give the Trustee the right
to exercise its judgment, the right to be satisfied or other similar rights
or decision making abilities shall only be operative after such time as all
indebtedness under the Senior Loan Agreement has been fully and
indefeasibly paid in cash and satisfied and all lending commitments under
the Senior Loan Agreement have been terminated. In addition, the Pledgor
and the Trustee acknowledge and agree that, to the extent that any
provision hereunder imposes an obligation upon the Pledgor that the Pledgor
is unable to satisfy due to the satisfaction of its obligations under the
Senior Loan Agreement and the Senior Security Documents, such provision
shall not become operative until all indebtedness under the Senior Loan
Agreement has been fully and indefeasibly paid in cash and satisfied and
all lending commitments under the Senior Loan Agreement have been
terminated.
3. Security for Obligations. This Agreement and all of the Pledged
Collateral secure the payment and performance of the Obligations (as such
term is defined in the Guarantor Security Agreement executed by the
Pledgor), together with all costs and expenses, including, without
limitation, all court costs and attorneys' and paralegals' fees and
expenses paid or incurred by Trustee or any Holder in endeavoring to
collect all or any part of the Obligations from, or in prosecuting any
action against Pledgor or any guarantor of all or any part of the
Obligations (all such indebtedness, obligations and liabilities described
in this Section 3 being collectively called the "Secured Obligations").
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4. Delivery of Pledged Collateral. Subject to the terms of the
Intercreditor Agreement and the last paragraph of Section 2 hereof, (a) all
certificates or instruments representing or evidencing the Pledged
Collateral shall be delivered to and held by or on behalf of Trustee
pursuant hereto and shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed undated instruments of transfer or
assignment in blank, all in form and substance satisfactory to Trustee, (b)
Trustee shall have the right, at any time in its discretion and without
notice to Pledgor following the occurrence of an Event of Default, to
transfer to or to register in the name of Trustee or any of its nominees
any or all of the Pledged Collateral, and (c) Trustee shall have the right
to exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger
denominations.
5. Representations and Warranties. In order to induce Trustee to enter
into the Indentures and the Other Agreements, Pledgor represents and
warrants to the Trustee that the following statements are true, correct and
complete:
(a) Schedule I hereto completely and accurately sets forth
all of the issued and outstanding stock of each Entity as of the
date hereof. All shares of such stock are owned legally and
beneficially by Pledgor and have been duly authorized and validly
issued and are fully paid and nonassessable. There are no
outstanding warrants, options, subscriptions or other contractual
arrangements for the purchase of any other shares of stock or any
securities convertible into shares of stock of any such Entity,
and there are no preemptive rights with respect to the shares of
stock of any such Entity.
(b) Either the delivery of the Pledged Shares to the Agent in
its control for the benefit of the Agent, the Senior Lenders and
the Trustee as provided in the Intercreditor Agreement, or the
filing of a UCC-1 statement in the jurisdiction of organization of
the Pledgor will be effective to create a valid and perfected
second priority security interest in the Pledged Collateral, free
of any adverse claim other than Senior Liens, securing the payment
of the Secured Obligations.
(c) No consent of any other party other than those under the
Senior Loan Agreement (including, without limitation, any creditor
of Pledgor) and no consent, authorization, approval or other
action by, and no notice to or filing with, any governmental
authority or regulatory body is required either (i) for the pledge
by Pledgor of the Pledged Collateral pursuant to this Agreement or
for the execution, delivery or performance of this Agreement by
Pledgor or (ii) for the exercise by Trustee of the voting or other
rights provided for in this Agreement or the remedies in respect
of the Pledged Collateral pursuant to this Agreement (except as
has already been obtained or taken and except as may be required
in connection with such disposition by laws affecting the offering
and sale of securities generally).
(d) None of the Pledged Shares constitutes margin stock, as
defined in Regulation U of the Board of Governors of the Federal
Reserve System.
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(e) This Agreement is the legal, valid and binding obligation
of Pledgor, enforceable against Pledgor in accordance with its
terms, except as limited by applicable bankruptcy, reorganization,
insolvency or similar laws affecting the enforcement of creditors'
rights generally.
(f) All information heretofore, herein or hereafter supplied
to Trustee by or on behalf of Pledgor with respect to the Pledged
Collateral is and will be accurate and complete in all material
respects.
6. Further Assurances.
(a) Pledgor will, from time to time, at Pledgor's expense,
and upon Trustee's request, promptly execute and deliver all
further instruments and documents and take all further action that
may be necessary or desirable, or that Trustee may reasonably
request, in order to perfect and protect any security interest
granted or purported to be granted hereby, to enable Trustee to
exercise and enforce the rights and remedies of Trustee hereunder
with respect to any Pledged Collateral or to carry out the
provisions and purposes hereof. Without limiting the generality of
the foregoing, Pledgor will: (i) upon Trustee's request, execute
and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be
necessary or desirable, or as Trustee may reasonably request, in
order to perfect and preserve the security interests granted or
purported to be granted hereby under the laws of any applicable
jurisdiction; (ii) upon Trustee's request, appear in and defend
any action or proceeding that may affect Pledgor's title to or
Trustee's security interest in the Pledged Collateral; and (iii)
immediately after the purchase or other acquisition thereof,
deliver to Trustee or its agent (which shall be Agent pursuant to
the Intercreditor Agreement during the term of that Agreement),
all Pledged Shares hereunder.
(b) Unless otherwise required pursuant to the Intercreditor
Agreement, Pledgor will, immediately upon the purchase or
acquisition of any additional shares of stock of any Entity,
deliver to Trustee or its agent (which shall be Agent pursuant to
the Intercreditor Agreement during the term of that Agreement),
such Pledged Shares as required by Section 4 above, together with
a proxy substantially in the form attached hereto as Exhibit A. In
addition, upon the purchase or acquisition of any additional
shares of stock of an Entity, the Pledgor shall deliver to the
Trustee a pledge amendment, duly executed by Pledgor, in
substantially the form of Exhibit B hereto (a "Pledge Amendment"),
in respect of the additional shares which are to be pledged
pursuant to this Agreement. Pledgor hereby authorizes Trustee to
attach each Pledge Amendment to this Agreement and agrees that all
shares listed on any Pledge Amendment delivered to Trustee or its
agent shall for all purposes hereunder be considered Pledged
Collateral.
7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and
Trustee shall not have delivered to Pledgor notice of its election
to exercise the rights set forth in subsection (b) below:
(i) Pledgor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the
Pledged Collateral or any part thereof for any purpose
not inconsistent with the terms of this Agreement or the
Other Agreements.
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(ii) Subject to the terms of the Intercreditor
Agreement and the last paragraph of Section 2 hereof,
Pledgor shall be entitled to receive cash dividend
payments, and other cash distributions, as due with
respect to the Pledged Collateral, but any and all
instruments, chattel paper and other rights, property or
proceeds and products (other than cash or checks)
received, receivable or otherwise distributed in respect
of, or in exchange for, any Pledged Collateral, shall
be, and shall be forthwith, delivered to Trustee or its
agent to hold as Pledged Collateral, and shall, if
received by Pledgor, be received in trust for the
benefit of Trustee , be segregated from the other
property or funds of Pledgor, and be forthwith delivered
to Trustee or its agent as Pledged Collateral in the
same form as so received (with any necessary
endorsement).
(iii) Trustee shall promptly upon request execute
and deliver (or cause to be executed and delivered) to
Pledgor all such proxies and other instruments as
Pledgor may reasonably request for the purpose of
enabling Pledgor to exercise the voting and other rights
which Pledgor is entitled to exercise pursuant to
paragraph (i) above, and to receive the dividends which
Pledgor is authorized to receive and retain pursuant to
paragraph (ii) above.
(b) Subject to the terms of the Intercreditor Agreement and
the last paragraph of Section 2 hereof, upon the occurrence and
during the continuance of an Event of Default:
(i) All rights of Pledgor to receive and retain any
cash dividends and distributions pursuant to subsection
7(a)(ii), and to exercise the voting and other
consensual rights which Pledgor would otherwise be
entitled to exercise pursuant to subsection 7(a)(i),
shall cease to be effective upon notice by Trustee or
its agent to Pledgor of Trustee's intent to exercise its
rights hereunder, and upon delivery of such notice shall
become vested in Trustee who shall thereupon have the
sole right to exercise such voting and other consensual
rights and the sole right to receive and hold as Pledged
Collateral such dividends (and, to the extent
permissible, apply them to payment of the Secured
Obligations). In order to effect such transfer of
rights, Trustee shall have the right, upon such notice,
to date and present to ADC an irrevocable proxy executed
by Pledgor substantially in the form attached hereto as
Exhibit A (a "Proxy"), and
(ii) All dividends which are received by Pledgor
contrary to the provisions of this subsection 7(b) shall
be received in trust for the benefit of Trustee (for its
own benefit and the benefit of Holders), shall be
segregated from other funds of Pledgor and shall be
forthwith paid over to Trustee or its agent as Pledged
Collateral in the same form as so received (with any
necessary endorsement).
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8. Transfers and Other Liens; Additional Shares.
(a) Pledgor agrees that Pledgor will not, other than pursuant
to the Senior Loan Agreement (i) encumber, sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant
any option with respect to, any of the Pledged Collateral or (ii)
enter into any other contractual obligations which could
reasonably be expected to restrict or inhibit the right or ability
of Trustee to sell or otherwise dispose of the Pledged Collateral
or any part thereof after the occurrence of an Event of Default.
(b) Pledgor agrees that it will (i) not cause any Entity to
issue any stock or other securities (including any warrants,
options, subscriptions or other contractual arrangements for the
purchase of stock or securities convertible into stock) in
addition to or in substitution for the Pledged Shares, and (ii)
except as otherwise required in the Intercreditor Agreement,
deliver to the Trustee or its agent, immediately upon its
acquisition (directly or indirectly) thereof, any and all writings
evidencing any additional Pledged Collateral. Pledgor hereby
authorizes Trustee to modify this Agreement by unilaterally
amending Schedule I to include such shares of stock or other
securities.
9. Trustee Appointed Attorney-in-Fact. Subject to the provisions
of the Intercreditor Agreement and the last paragraph of Section 2 hereof,
Pledgor hereby irrevocably appoints Trustee as Pledgor's attorney-in-fact
effective upon the occurrence and during the continuance of an Event of
Default, with full authority in the place and stead of Pledgor and in the
name of Pledgor, Trustee or otherwise, from time to time in the discretion
of Trustee to take any action (including completion and presentation of any
proxy) and to execute any instrument that Trustee may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation, to (i) receive, endorse and collect all instruments made
payable to Pledgor representing any dividend or other distribution in
respect of the Pledged Collateral or any part thereof; (ii) exercise the
voting and other consensual rights pertaining to the Pledged Collateral;
and (iii) sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Pledged Collateral as fully and completely
as though Trustee was the absolute owner thereof for all purposes, and to
do, at the option of Trustee and at Pledgor's expense, at any time or from
time to time, all acts and things that Trustee deems necessary to protect,
preserve or realize upon the Pledged Collateral. Pledgor hereby ratifies
and approves all acts of Trustee made or taken pursuant to this Section 9.
Except as specifically set forth in Section 11 hereof or in the event of
the gross negligence or willful misconduct of Trustee, neither Trustee nor
any person designated by Trustee shall be liable for any acts or omissions
or for any error of judgment or mistake of fact or law. This power of
attorney, being coupled with an interest, shall be irrevocable until all
Secured Obligations shall have been paid in full and the Indentures and the
Guarantor Security Agreement executed by Pledgor shall have been
terminated.
10. Trustee May Perform. Subject to the terms of the Intercreditor
Agreement and the last paragraph of Section 2 hereof, if Pledgor fails to
perform any agreement contained herein, Trustee may itself perform, or
cause performance of, such agreement, and the expenses of Trustee incurred
in connection therewith shall be payable by Pledgor under Section 15
hereof, and be a part of the Secured Obligations.
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11. Limitation on Duty of Trustee with Respect to the Pledged
Collateral. The powers conferred on Trustee hereunder are solely to protect
its interest in the Pledged Collateral and shall not impose any duty on it
to exercise any such powers. Except for the safe custody of any Pledged
Collateral in its possession and the accounting for monies actually
received by it hereunder, Trustee shall have no duty with respect to any
Pledged Collateral. Trustee 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 that is
substantially equivalent to that which Trustee accords its own property, it
being expressly agreed that Trustee shall have no responsibility for (i)
ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Collateral, whether or not Trustee has or is deemed to have knowledge of
such matters, or (ii) taking any necessary steps to preserve rights against
any parties with respect to any Pledged Collateral, but Trustee may do so
and all expenses incurred in connection therewith shall be payable by and
for the sole account of Pledgor.
12. Remedies upon Event of Default. Subject to the provisions of the
Intercreditor Agreement and the last paragraph of Section 2 hereof, if any
Event of Default shall have occurred and be continuing:
(a) Trustee may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all of the rights and
remedies of a secured party under the Uniform Commercial Code (the
"UCC") in the State of New York, whether or not the UCC applies to
the affected Pledged Collateral, and Trustee may also, without
notice except as specified below, sell the Pledged Collateral or
any part thereof in one or more parcels at public or private sale,
at any exchange, broker's board or at any office of Trustee or
elsewhere, for cash, on credit, or for future delivery, at such
price or prices and upon such other terms as Trustee deems
commercially reasonable. Pledgor acknowledges and agrees that such
a private sale may result in prices and other terms which may be
less favorable to the seller than if such sale were a public sale.
Pledgor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days' notice to Pledgor of the
time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable
notification. At any sale of the Pledged Collateral, if permitted
by law, Trustee, on behalf of Holders, may bid (which bid may be,
in whole or in part, in the form of cancellation of indebtedness)
for the purchase of the Pledged Collateral or any portion thereof.
Trustee shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Trustee
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. Trustee shall be under no obligation to
delay a sale of any of the Pledged Collateral for the period of
time necessary to permit the issuing corporation of such
securities to register such securities for public sale under the
Securities Act of 1933, as from time to time amended (the
"Securities Act"), or under applicable state securities laws, even
if the issuing corporation would agree to do so. To the extent
permitted by law, Pledgor hereby specifically waives all rights of
redemption, stay or appraisal which Pledgor has or may have under
any law now existing or hereafter enacted.
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(b) Any cash held by Trustee as Pledged Collateral and all
cash proceeds received by Trustee in respect of any sale of,
collection from, or other realization upon all or any part of the
Pledged Collateral may, in the discretion of Trustee, be held by
Trustee as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to Trustee pursuant
to Section 15) in whole or in part by Trustee against all or any
part of the Secured Obligations in accordance with the provisions
of Section 14. Any surplus of such cash or cash proceeds held by
Trustee and remaining after payment in full of all the Secured
Obligations shall be paid over to Pledgor or to whomsoever may be
lawfully entitled to receive such surplus or as a court of
competent jurisdiction may direct; provided, that in the event
that all of the conditions to the termination of this Agreement
pursuant to Section 16 shall not have been fulfilled, such balance
shall be held and applied from time to time as provided in this
subsection 11(b) until all such conditions shall have been
fulfilled.
(c) Pledgor recognizes that Trustee may be unable to effect a
public sale of all or part of the Pledged Collateral and may be
compelled to resort to one or more private sales to a restricted
group of purchasers who will be obligated to agree, among other
things, to acquire such Pledged Collateral for their own account,
for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that any such private sales may be
at prices and on terms less favorable to the seller than if sold
at public sales and agrees that such private sales shall be deemed
to have been made in a commercially reasonable manner, and that
Trustee has no obligation to delay sale of any such Pledged
Collateral for the period of time necessary to permit the issuer
of such Pledged Collateral to register such Pledged Collateral for
public sale under the Securities Act.
13. Remedies Cumulative. No failure on the part of Trustee to
exercise, and no delay in exercising and no course of dealing with respect
to, any power, privilege or right under the Indentures, the Security
Agreement, the Other Agreements or this Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise by Trustee of any power,
privilege or right under any of the Indentures, the Security Agreement, and
the Other Agreements or this Agreement preclude any other or further
exercise thereof or the exercise of any other such power, privilege or
right. The powers, privileges and rights in this Agreement, the Indentures,
the Security Agreement and the Other Agreements are cumulative and are not
exclusive of any other remedies provided by law.
14. Application of Proceeds. Upon the occurrence of an Event of
Default, the proceeds of any sale of, or other realization upon, all or any
part of the Pledged Collateral shall be applied: first to all fees, costs
and expenses incurred by Trustee with respect to the Indentures, the
Security Agreement, the Other Agreements or the Pledged Collateral,
including, without limitation, those described in Section 16 herein;
second, to accrued and unpaid interest on the Secured Obligations
(including any interest which but for the provisions of Title 11 of the
United States Code entitled "Bankruptcy", would have accrued on such
amounts); third, to the principal amounts of the Secured Obligations
outstanding; fourth, to any other Secured Obligations; and fifth, any
remaining proceeds to Pledgor.
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15. Expenses. Pledgor shall promptly pay to Agent all costs and
expenses of Trustee (both before and after the execution hereof) in
connection with protecting or perfecting the security interest of Trustee
security interest in the Pledged Collateral or in connection with any
matters contemplated by or arising out of this Agreement, the Indentures,
the Security Agreement or any of the Other Agreements.
16. Termination of Security Interests; Release of Collateral. Upon
payment and performance in full of all Secured Obligations and the
termination of the Indentures and the Guarantor Security Agreement executed
by Pledgor in accordance with their terms, the security interests granted
herein shall terminate and all rights to the Pledged Collateral shall
revert to Pledgor. Upon such termination of the security interests or
release of any Pledged Collateral, Trustee will, at the expense of Pledgor,
and subject to Section 21 herein, promptly execute and deliver to Pledgor
such documents as Pledgor shall reasonably request to evidence the
termination of the security interests or the release of such Pledged
Collateral which has not yet theretofore been sold or otherwise applied or
released. Such release shall be without recourse or warranty to Trustee,
except as to the absence of any prior assignments by Trustee of its
interest in the Pledged Collateral.
17. Amendments, Waivers and Consents. No amendment, modification or
supplement or waiver of any provision of this Agreement nor consent to any
departure by the Trustee therefrom, shall in any event be effective unless
the same shall be in writing and signed by Trustee and the Guarantor, and
approved or consented to by the Majority Holders and then such amendment,
modification or supplement or waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given;
provided, that no amendment, modification, supplement, waiver or consent
shall be effective, unless in writing and signed by each Holder, do any of
the following: (1) amend any provision of this Agreement that requires the
consent of all Holders or consent to or waive any breach thereof, (2) amend
the definition of the term "Majority Holders", (3) amend this Section 17 or
(4) release any substantial portion of the Collateral. If a fee is to be
paid by Guarantor in connection with any waiver or amendment hereunder, the
agreement evidencing such amendment or waiver may provide that only Holders
executing such agreement by a specified date may share in such fee (and in
such case, such fee shall be divided among the applicable Holders on a pro
rata basis without including the interests of any Holders who have not
timely executed such agreement).
18. Notices. Any notice, approval, request, demand, consent or other
communication hereunder, including any notice of default or notice of sale,
shall be given to Pledgor or Trustee at the applicable address set forth
above (or to such other address previously designated by written notice to
the serving party) in accordance with the notice provision of the Security
Agreement.
19. Continuing Security Interest; Successors and Assigns. This
Agreement shall create a continuing security interest in the Pledged
Collateral and shall (i) remain in full force and effect until payment and
performance in full of all Secured Obligations and termination of the
Indentures and the Guarantor Security Agreement executed by Pledgor, (ii)
be binding upon Pledgor, its successors and assigns, and (iii) inure,
together with the rights and remedies of Trustee hereunder, to the benefit
of Trustee and its successors and assigns. Pledgor may not assign or
transfer any of its interests or obligations hereunder without the prior
consent of Trustee and the Majority Holders.
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20. Waiver.
(a) In addition to any other waivers herein, Pledgor waives
to the greatest extent it may lawfully do so, and agrees that it
shall not at any time insist upon, plead or in any manner whatever
claim or take the benefit or advantage of, any appraisal,
valuation, stay, extension, marshalling of assets, redemption or
similar law, or exemption, whether now or at any time hereafter in
force, which may delay, prevent or otherwise affect the
performance by Pledgor of its obligations under, or the
enforcement by Trustee of, this Agreement. Pledgor hereby waives
diligence, presentment and demand (whether for nonpayment or
protest or of acceptance, maturity, extension of time, change in
nature or form of the Secured Obligations, acceptance of further
security, release of further security, composition or agreement
arrived at as to the amount of, or the terms of the Secured
Obligations, notice of adverse change in any Issuer's or any other
Person's financial condition or any other fact which might
materially increase the risk to Pledgor) with respect to any of
the Secured Obligations or all other demands whatsoever and waives
the benefit of all provisions of law which are or might be in
conflict with the terms of this Agreement.
(b) If Trustee may, under applicable law, proceed to realize
its benefits under any of the Other Agreements giving Trustee a
Lien upon any Collateral (as such term is defined in the Guarantor
Security Agreement executed by Pledgor), whether owned by any
Entity or by any other Person, either by judicial foreclosure or
by non judicial sale or enforcement, Trustee may, at its sole
option, determine which of its remedies or rights it may pursue
without affecting any of the rights and remedies of Trustee under
this Agreement.
21. Reinstatement. This Agreement shall continue to be effective or
be reinstated, as the case may be, if at any time any amount received by
Trustee in respect of the Secured Obligations is rescinded or must
otherwise be restored or returned by Trustee upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of Pledgor or upon
the appointment of any intervenor or conservator of, or trustee or similar
official for, Pledgor or any substantial part of its assets; or otherwise,
all as though such payments had not been made.
22. Severability. The provisions of this Agreement are severable,
and if any clause or provision shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part
thereof, in such jurisdiction and shall not in any manner affect such
clause or provision in any other jurisdiction, or any other clause or
provision of this Agreement in any jurisdiction.
23. Interpretation. Time is of the essence of each provision of this
Agreement of which time is an element. All terms not defined herein or in
the Security Agreement shall have the meanings set forth in the UCC, except
where the context otherwise requires. To the extent any term or provision
of this Agreement conflicts with the provisions of the Security Agreement
and is not dealt with more specifically herein, such Security Agreement
shall control with respect to such term or provision.
10
24. Survival of Provisions. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement and the Indentures and the Security Agreement and the execution
and delivery of the Notes. Notwithstanding anything in this Agreement or
implied by law to the contrary, the agreements, representations and
warranties of Pledgor set forth herein shall terminate only upon payment of
the Secured Obligations and the termination of this Agreement in accordance
with its terms.
25. Statute of Limitations. Pledgor hereby waives the right to
plead any statute of limitations as a defense to any indebtedness or
obligation hereunder or secured hereby to the full extent permitted by law.
26. Headings Descriptive. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
27. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
shall together constitute one and the same agreement.
28. GOVERNING LAW. THIS AGREEMENT IS GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
29. WAIVER OF JURY TRIAL; JURISDICTION. PLEDGOR AND TRUSTEE EACH
HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY. NOTHING
CONTAINED HEREIN SHALL AFFECT THE RIGHT OF TRUSTEE TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF AGENT TO BRING
ANY ACTION OR PROCEEDING AGAINST PLEDGOR OR ITS PROPERTY IN THE COURTS OF
ANY JURISDICTION.
11
IN WITNESS WHEREOF, Pledgor has caused this Pledge Agreement to be
duly executed and delivered as of the day and year first above written.
KINETEK INDUSTRIES, INC.
By /s/ Xxxxxx X. Xxxxxx, Xx.
--------------------------------------
Its Vice President
--------------------------------------
By acceptance hereof as of this 12th day of April, 2002, Trustee
agrees to be bound by the provisions hereof.
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Its Vice President
----------------------------------------
12
SCHEDULE I
TO PLEDGE AGREEMENT
Kinetek Industries, Inc.
Issuer of Pledge Stock Type and Class of Stock Certificate Par Value Number of Percentage
Stock Numbers Shares
=======================================================================================================================
Xxxxxx-Xxxxx Industries, Common Stock 4 $0.01 par 100 100%
Inc. value
=======================================================================================================================
Issuer of Pledge Stock Type and Class of Stock Certificate Par Value Number of Percentage
Stock Numbers Shares
=======================================================================================================================
The Imperial Electric Common Stock 1 $1.00 par 100 100%
Company value
=======================================================================================================================
Issuer of Pledge Stock Type and Class of Stock Certificate Par Value Number of Percentage
Stock Numbers Shares
=======================================================================================================================
FIR Group Holdings, Inc. Common Stock 1, 2 $1.00 par 100 100%
value
=======================================================================================================================
Issuer of Pledge Stock Type and Class of Stock Certificate Par Value Number of Percentage
Stock Numbers Shares
=======================================================================================================================
Electrical Design and Common Stock 1 $1.00 par 100 100%
Control Company value
=======================================================================================================================
Issuer of Pledge Stock Type and Class of Stock Certificate Par Value Number of Percentage
Stock Numbers Shares
=======================================================================================================================
Motion Holdings, Inc. Common Stock 2 $1.00 par 100 100%
value
=======================================================================================================================
Issuer of Pledge Stock Type and Class of Stock Certificate Par Value Number of Percentage
Stock Numbers Shares
=======================================================================================================================
Advanced D.C. Holdings, Inc. Common Stock 2 $1.00 par 100 100%
value
=======================================================================================================================
EXHIBIT A
Irrevocable Proxy
The undersigned hereby appoints U.S. BANK NATIONAL ASSOCIATION, as
Trustee ("Trustee") as proxy with full power of substitution, and hereby
authorizes Trustee to represent and vote all of the shares of the capital
stock of Xxxxxx-Xxxxx Industries, Inc., held of record by the undersigned
on the date of exercise hereof or at any meeting or at any other time
chosen by Trustee in its sole discretion, but only at the times provided in
that certain Pledge Agreement dated as of April 12, 2002, executed by the
undersigned in favor of Trustee.
Dated: April ___, 2002.
KINETEK INDUSTRIES, INC.
By
--------------------------------------
Its
-------------------------------------
Irrevocable Proxy
The undersigned hereby appoints U.S. BANK NATIONAL ASSOCIATION, as
Trustee ("Trustee") as proxy with full power of substitution, and hereby
authorizes Trustee to represent and vote all of the shares of the capital
stock of The Imperial Electric Company, held of record by the undersigned
on the date of exercise hereof or at any meeting or at any other time
chosen by Trustee in its sole discretion, but only at the times provided in
that certain Pledge Agreement dated as of April 12, 2002 executed by the
undersigned in favor of Trustee.
Dated: April ___, 2002
KINETEK INDUSTRIES, INC.
By
--------------------------------------
Its
-------------------------------------
Irrevocable Proxy
The undersigned hereby appoints U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee ("Trustee") as proxy with full power of
substitution, and hereby authorizes Trustee to represent and vote all of
the shares of the capital stock of Electrical Design and Control Company,
held of record by the undersigned on the date of exercise hereof or at any
meeting or at any other time chosen by Trustee in its sole discretion, but
only at the times provided in that certain Pledge Agreement dated as of
April ___, 2002, executed by the undersigned in favor of Trustee.
Dated: April ___, 2002
KINETEK INDUSTRIES, INC.
By
--------------------------------------
Its
-------------------------------------
Irrevocable Proxy
The undersigned hereby appoints U.S. BANK NATIONAL ASSOCIATION, as
Trustee ("Trustee") as proxy with full power of substitution, and hereby
authorizes Trustee to represent and vote all of the shares of the capital
stock of Motion Holdings, Inc., held of record by the undersigned on the
date of exercise hereof or at any meeting or at any other time chosen by
Trustee in its sole discretion, but only at the times provided in that
certain Pledge Agreement dated as of April __, 2002, executed by the
undersigned in favor of Trustee.
Dated: April __, 2002
KINETEK INDUSTRIES, INC.
By
--------------------------------------
Its
-------------------------------------
Irrevocable Proxy
The undersigned hereby appoints U.S. BANK NATIONAL ASSOCIATION, as
Trustee ("Trustee") as proxy with full power of substitution, and hereby
authorizes Trustee to represent and vote all of the shares of the capital
stock of Advanced D.C. Holdings, Inc., held of record by the undersigned on
the date of exercise hereof or at any meeting or at any other time chosen
by Trustee in its sole discretion, but only at the times provided in that
certain Pledge Agreement dated as of April ___, 2002, executed by the
undersigned in favor of Trustee.
Dated: April __, 2002
KINETEK INDUSTRIES, INC.
By
--------------------------------------
Its
-------------------------------------
Irrevocable Proxy
The undersigned hereby appoints U.S. BANK NATIONAL ASSOCIATION, as
Trustee ("Trustee") as proxy with full power of substitution, and hereby
authorizes Trustee to represent and vote all of the shares of the capital
stock of FIR Group Holdings, Inc., held of record by the undersigned on the
date of exercise hereof or at any meeting or at any other time chosen by
Trustee in its sole discretion, but only at the times provided in that
certain Pledge Agreement dated as of April ___, 2002 executed by the
undersigned in favor of Trustee.
Dated: April __, 2002
KINETEK INDUSTRIES, INC.
By
--------------------------------------
Its
-------------------------------------
EXHIBIT B
Pledge Amendment
This Pledge Amendment, dated _______________ is delivered pursuant
to Section 5(c) of the Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge
Agreement, dated as of April ___, 2002, between the undersigned and U.S.
Bank National Association, as Trustee (the "Pledge Agreement"; capitalized
terms defined therein being used herein as therein defined) and that the
shares listed on this Pledge Amendment shall be deemed to be part of the
Pledged Collateral and shall secure all Secured Obligations.
Dated: April ___, 2002
KINETEK INDUSTRIES, INC.
By
--------------------------------------
Its
-------------------------------------
=====================================================================================================
Stock Issuer Class of Stock Stock Certificate No(s). Par Value Number of Shares
=====================================================================================================
=====================================================================================================
=====================================================================================================
=====================================================================================================
=====================================================================================================
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, _________________________, a _________________
corporation, hereby sells, assigns and transfers unto U.S. Bank National
Association, as Trustee __________ (_____) Shares of the common stock of
_________________________, a __________ corporation (the "Corporation"),
standing in its name on the books of the Corporation represented by
Certificate(s) No. __________ herewith and does hereby irrevocably
constitute and appoint ___________________________ attorney to transfer the
said stock on the books of the Corporation with full power of substitution
in the premises.
Dated:
KINETEK INDUSTRIES, INC.
By
--------------------------------------
Its
-------------------------------------