EXHIBIT 10.7
STOCK PLEDGE AGREEMENT
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STOCK PLEDGE AGREEMENT, dated as of April 22, 1998, by and between XXXXXXX
PRODUCTS, INC., a Delaware corporation (the "Pledgor"), and BANKBOSTON, N.A., a
national banking association, as agent (hereinafter, in such capacity, the
"Agent") for itself and the other lending institutions (hereinafter,
collectively, the "Banks") which are or may become parties to a Revolving Credit
and Acquisition Loan Agreement, dated as of April 22, 1998 (as amended and in
effect from time to time, the "Credit Agreement"), among the Pledgor, the Banks,
the Agent and Mercantile Bank National Association, as Co-Agent.
WHEREAS, the Pledgor is the direct legal and beneficial owner of all of the
issued and outstanding shares of each class of the capital stock of each of the
corporations described on Annex A (the "Subsidiaries"); and
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WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Pledgor under the Credit Agreement that the
Pledgor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a pledge agreement in substantially the form hereof; and
WHEREAS, the Pledgor wishes to grant pledges and security interests in
favor of the Agent, for the benefit of the Banks and the Agent, 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:
1. PLEDGE OF STOCK, ETC.
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1.1. PLEDGE OF STOCK. The Pledgor hereby pledges, assigns, grants a
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security interest in, and delivers to the Agent, for the benefit of the
Banks and the Agent, (a) 100% of the shares of capital stock of each of its
Domestic Subsidiaries of every class owned by the Pledgor, as more fully
described on Annex A hereto, and (b) not less than 66% of the shares of
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capital stock of each of its Foreign Subsidiaries of every class owned by
the Pledgor, as more fully described on Annex A hereto, to be held by the
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Agent, for the benefit of the Banks and the Agent, 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 Pledgor, have been delivered to the
Agent.
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1.2. ADDITIONAL STOCK. In case the Pledgor shall acquire any
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additional shares of the capital stock of any Subsidiary or 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, stock dividend, stock split or otherwise, then the
Pledgor shall forthwith deliver to and pledge such shares or other
securities to the Agent, for the benefit of the Banks and the Agent, under
this Agreement and shall deliver to the Agent forthwith any certificates
therefor, accompanied by stock powers or other appropriate instruments of
assignment duly executed by the Pledgor in blank. The Pledgor agrees that
the Agent may from time to time attach as Annex A hereto an updated list of
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the shares of capital stock or securities at the time pledged with the
Agent hereunder.
2. DEFINITIONS. The term "Obligations" and all other capitalized terms
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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
Massachusetts UCC have such defined meanings herein, unless the context
otherwise indicates or requires, and the following terms shall have the
following meanings:
Stock. Includes the shares of stock described in Annex A attached hereto
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and any additional shares of stock at the time pledged with the Agent hereunder.
Stock Collateral. The property at any time pledged to the Agent hereunder
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(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 Pledgor to the extent
expressly permitted by (S)6.
3. SECURITY FOR OBLIGATIONS. This Agreement and the security interest in
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and pledge of the Stock Collateral hereunder are made with and granted to the
Agent, for the benefit of the Banks and the Agent, as security for the payment
and performance in full of all the Obligations.
4. LIQUIDATION, RECAPITALIZATION, ETC. Any sums or other property paid or
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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, shall, except to the limited extent provided in (S)6, be paid over
and delivered to the Agent to be held by the Agent, for the benefit of the Banks
and the Agent, 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 Agent, for the benefit of the
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Banks and the Agent, to be held by it as security for the Obligations. Except to
the limited extent provided in (S)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 Pledgor shall, until paid or delivered to the Agent, be
held in trust for the Agent, for the benefit of the Banks and the Agent, as
security for the payment and performance in full of all of the Obligations.
5. WARRANTY OF TITLE; AUTHORITY. The Pledgor hereby represents and
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warrants that: (a) the Pledgor is the sole record and beneficial owner of, the
Stock described in (S)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) all of the Stock described in
(S)1 is validly issued, fully paid and non-assessable, (c) the Pledgor 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 Pledgor'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
Pledgor is a party or by which it or any of its property is bound or affected or
constitute a default thereunder, and (d) the information set forth in Annex A
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hereto relating to the Stock is true, correct and complete in all respects. The
Pledgor covenants that it will defend the rights of the Banks and the Agent and
security interest of the Agent, for the benefit of the Banks and the Agent, in
such Stock against the claims and demands of all other persons whomsoever. The
Pledgor 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 Agent hereunder and will
likewise defend the rights, pledge and security interest thereof and therein of
the Banks and the Agent.
6. DIVIDENDS, VOTING, ETC., PRIOR TO MATURITY. So long as no Event of
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Default shall have occurred and be continuing, the Pledgor shall be entitled to
receive all cash dividends paid in respect of the Stock, and absent receipt of
an election from the Agent as provided below, to vote the Stock and to give
consents, waivers and ratifications in respect of the Stock; provided, however,
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that no vote shall be cast or consent, waiver or ratification given by the
Pledgor if the effect thereof would in the reasonable judgment of the Agent
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 Pledgor to receive cash
dividends shall cease in case an Event of Default shall have occurred and be
continuing. All such rights of the Pledgor to vote and give consents, waivers
and ratifications with respect to the Stock shall, at the Agent's option, as
evidenced by the Agent's
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notifying the Pledgor of such election, cease in case an Event of Default shall
have occurred and be continuing.
7. REMEDIES.
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7.1. IN GENERAL. If an Event of Default shall have occurred and be
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continuing, the Agent 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 Massachusetts UCC, all
such rights and remedies being cumulative, not exclusive, and enforceable
alternatively, successively or concurrently, at such time or times as the
Agent deems expedient:
(a) if the Agent so elects and gives notice of such election to
the Pledgor, the Agent 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 Agent 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 Pledgor hereby irrevocably constituting and
appointing the Agent the proxy and attorney-in-fact of the Pledgor,
with full power of substitution, to do so);
(b) the Agent may demand, xxx for, collect or make any
compromise or settlement the Agent deems suitable in respect of any
Stock Collateral;
(c) the Agent 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 Agent
thinks expedient, all without demand for performance by the Pledgor or
any notice or advertisement whatsoever except as expressly provided
herein or as may otherwise be required by law;
(d) the Agent 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
7.2. SALE OF STOCK COLLATERAL. In the event of any disposition of
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the Stock Collateral as provided in clause (c) of (S)7.1, the Agent shall
give to the Pledgor at least five (5) 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 Pledgor hereby acknowledges that five (5) Business Days prior
written notice of such sale or sales shall be reasonable notice. The
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Agent 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 Pledgor, to the fullest extent permitted by law). The Agent 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 Agent may buy at private sale
and may make payments thereof by any means. The Agent 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 Agent 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 such order or preference as the Agent may determine
after proper allowance for Obligations not then due. Only after such
applications, and after payment by the Agent of any amount required by
(S)9-504(1)(c) of the Massachusetts UCC, need the Agent account to the
Pledgor for any surplus. To the extent that any of the Obligations are to
be paid or performed by a person other than the Pledgor, the Pledgor waives
and agrees not to assert any rights or privileges which it may have under
(S)9-112 of the Massachusetts UCC
7.3. PRIVATE SALES. The Pledgor recognizes that the Agent may be
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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 Pledgor
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 Agent shall be under no obligation to
delay a sale of any of 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 Agent agrees that any sale of the Stock shall be made in a commercially
reasonable manner, and the Pledgor 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 Pledgor's expense, all such instruments and documents,
and to do or cause to be done all such other acts and things as may
reasonably be necessary or, in the reasonable opinion of the Agent,
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 Agent, are
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reasonably 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 Pledgor 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 Agent 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.
7.4. PLEDGOR'S AGREEMENTS, ETC. The Pledgor further agrees to do or
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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 (S)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 Pledgor's expense. The Pledgor
further agrees that a breach of any of the covenants contained in this (S)7
will cause irreparable injury to the Agent and the Banks, that the Agent
and the Banks have no adequate remedy at law in respect of such breach and,
as a consequence, agrees that each and every covenant contained in this
(S)7 shall be specifically enforceable against the Pledgor by the Agent and
the Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants.
8. MARSHALLING. Neither the Agent nor any Bank shall be required to
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marshal any present or future collateral 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 collateral security or
other assurances of payment in any particular order. All of the Agent's rights
hereunder and of the Banks and the Agent in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, the
Pledgor hereby agrees that it will not invoke any law relating to the
marshalling of collateral that might cause delay in or impede the enforcement of
the Agent'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 Pledgor hereby irrevocably
waives the benefits of all such laws.
9. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of the Pledgor
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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 Agent or
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any 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,
including, without limitation, any of the Security Documents; 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 Pledgor shall have notice or knowledge of any of the foregoing.
10. TRANSFER, ETC., BY PLEDGOR. Without the prior written consent of the
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Agent (which consent will not be unreasonably withheld), the Pledgor 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.
11. FURTHER ASSURANCES. The Pledgor will do all such acts, and will
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furnish to the Agent 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 Agent may
reasonably request from time to time in order to give full effect to this
Agreement and to secure the rights of the Banks and the Agent hereunder, all
without any cost or expense to the Agent or any Bank. If the Agent so elects, a
photocopy of this Agreement may at any time and from time to time be filed by
the Agent as a financing statement in any recording office in any jurisdiction.
12. AGENT'S EXONERATION. Under no circumstances shall the Agent be deemed
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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 continuing to act in a
commercially reasonable manner. Neither the Agent nor any Bank shall be required
to take any action of any kind to collect, preserve or protect its or the
Pledgor's rights in the Stock Collateral or against other parties thereto. The
Agent'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.
13. NO WAIVER, ETC. Neither this Agreement nor any term hereof may be
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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 Agent, with the consent of the Majority Banks, and
the Pledgor. No act, failure or delay by the Agent shall constitute a waiver of
its rights and remedies hereunder or otherwise. No single or partial waiver by
the Agent of any default or right or remedy that it may have shall operate as a
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waiver of any other default, right or remedy or of the same default, right or
remedy on a future occasion. The Pledgor 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).
14. NOTICE, ETC. All notices, requests and other communications hereunder
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shall be made in the manner set forth in (S)20 of the Credit Agreement.
15. TERMINATION. Upon final payment and performance in full of the
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Obligations, this Agreement shall terminate and the Agent shall, at the
Pledgor's request and expense, return, free from any lien, all Stock Collateral
in the possession or control of the Agent 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 Agent hereunder unless the Agent is required by
any agreement, instrument, law, regulation or order to turn such Stock
Collateral over to another party. The Agent, at the written request and expense
of the Pledgor, will promptly execute and deliver to the Pledgor the proper
instruments acknowledging the satisfaction and termination of this Agreement,
and will promptly duly assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) free from any lien granted
hereunder all of the Stock Collateral pledged and/or assigned by it hereunder
which has previously been delivered to the Agent except for any Stock Collateral
which has theretofore been sold or otherwise applied or released pursuant to
this Agreement.
16. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
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Pledgor hereunder shall be a debt secured by the Stock Collateral and shall
bear, whether before or after judgment, interest at the rate of interest for
overdue principal set forth in the Credit Agreement.
17. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
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TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The Pledgor
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 Pledgor by mail at the
address specified in (S)20 of the Credit Agreement. The Pledgor 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.
18. WAIVER OF JURY TRIAL. THE PLEDGOR WAIVES ITS RIGHT TO A JURY TRIAL
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WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH
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RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Pledgor waives any right
which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. The Pledgor (a)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
the Agent or any Bank would not, in the event of litigation, seek to enforce the
foregoing waivers and (b) acknowledges that, in entering into the Credit
Agreement and the other Loan Documents to which the Agent is a party, the Agent
and the Banks are relying upon, among other things, the waivers and
certifications contained in this (S)18.
19. MISCELLANEOUS. The headings of each section of this Agreement are for
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convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Pledgor and its respective successors and assigns, and shall inure to the
benefit of the Agent and the Banks and their respective 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
Pledgor acknowledges receipt of a copy of this Agreement.
IN WITNESS WHEREOF, intending to be legally bound, the Pledgor and the
Agent have caused this Agreement to be executed as of the date first above
written.
XXXXXXX PRODUCTS, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
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Name:
Title:
BANKBOSTON, N.A., AS AGENT
By: /s/ Xxxxx van der Xxxxx
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Xxxxx van der Xxxxx, Vice President
The undersigned Subsidiaries hereby join in the above Agreement for the
sole purpose of consenting to and being bound by the provisions of (S)(S)4.1, 6
and 7 thereof, the undersigned hereby agreeing to cooperate fully and in good
faith with the Agent and the Pledgor in carrying out such provisions.
OSD ENVIZION, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
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Name:
Title:
FLEX-O-LITE, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
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Name:
Title:
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CRYSTALOID TECHNOLOGIES, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
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Name:
Title:
XXXXXXX ACQUISITION, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
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Name:
Title:
ANNEX A TO PLEDGE AGREEMENT
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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.
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Number of Number of Number of Par or
Record Class of Authorized Issued Outstanding Liquidation
Issuer Owner Shares Shares Shares Shares Value
------ -------- -------- ---------- --------- ----------- -----------
OSD Envizion, Inc. Xxxxxxx Products, Common 1,000 1,000 1,000 $ .01
Inc.
Xxxxxxx Acquisition, Xxxxxxx Products, Common 1,000 1,000 1,000 $ .01
Inc. Inc.
Crystaloid Xxxxxxx Products, Common 1,000 1,000 1,000 $ .01
Technologies, Inc. Inc.
Flex-O-Lite, Inc. Xxxxxxx Products, Common 3,000 100 100 $10.00
Inc.
