To: THE CIT GROUP/BUSINESS CREDIT, INC.
00 Xxxxx XxXxxxx
Xxxxxxx, XX 00000
December l3, 0000
XXXXX XXXXXX XXXXXXXXX - XXX
Xxxxxxxxx:
Reference is made to a certain Financing Agreement dated of even date herewith
as amended (herein called the "Financing Agreement") between you and Peerless
Chain Company (herein "PCC") and Peerless Chain of Iowa, Inc. (herein "PCII",
PCC and PCII may be referred to herein individually as a "Company" and
collectively as the "Companies"). Capitalized terms used herein and defined in
the Financing Agreement shall have the same meanings as set forth therein unless
otherwise specifically defined herein. As security for: (a) the full and
indefeasible payment and performance when due of all now existing and future
Obligations of the Companies to you, whether absolute or contingent, however
acquired by you, and whether arising under the Financing Agreement as now
written or as amended or supplemented or augmented hereafter, or by virtue of
any guaranty now or hereafter executed by the Companies in your favor, in law or
otherwise; (b) any liability or indebtedness you may incur because of any
guaranty you may issue at the request of the Companies, including, without
limitation, any Letter of Credit Guaranty; (c) the amount of all expenses
(including reasonable attorneys' fees) incurred by you in collecting or
attempting to collect any of the Company's obligations to you whether from the
Companies or any other obligor or in realizing upon collateral; and (d) any
interest from the due date at the Default Rate of Interest specified in the
Financing Agreement on all amounts payable to you hereunder (all of which are
herein called the "Secured Obligations"), PCC hereby pledges, assigns,
transfers, delivers and sets over to you all of its right, title and interest in
and to the securities listed on the attached schedule, issued as indicated on
said schedule (the "Securities").
This pledge includes all right, title and interest in and to and a continuing
lien upon and security interest in, all of said Securities together with any and
all rights, coupons, warrants or rights to subscribe, options, dividends,
liquidating dividends, splits, dividends paid in stock, dividends paid in
Securities, new or reclassified Securities, or ariy other property which PCC is
or may hereafter become entitled to receive on account of such Securities, any
and all increments, substitutions, additions or replacements thereof, and any
and all proceeds thereof (all collectively hereinafter referred to as the
"Pledged Collateral").
This Stock Pledge Agreement is executed as an inducement to you to make loans or
advances to the Companies or issue guaranties at the request of the Companies,
or otherwise to extend credit or financial accommodations to the Companies or to
enter into or continue a financing arrangement with the Companies, and is
executed in consideration of your doing or having done any of the foregoing.
PCC agrees that any of the foregoing shall be deemed to have been done or
extended by you in consideration of and in reliance upon the execution of this
Stock Pledge Agreement.
PCC shall be in default under this Pledge Agreement upon the occurrence of any
Event of Default under the Financing Agreement (herein any such default shall be
referred to as an "Event of Default").
In the event of the happening of any such Event of Default, then on ten (10)
days prior notice to PCC, without the curing of such default within such time,
you may, without demand of performance, advertisement or notice of intention to
sell, or of the time or place of sale, and without notice to redeem, or other
notice or demand whatsoever to or upon PCC (all and each of which demands,
advertisements and/or notices are hereby expressly waived), forthwith or at any
time or times thereafter, transfer to and/or register in your name, or the name
of your nominee, any or all of the Pledged Collateral and/or collect, receive,
appropriate and realize upon said Pledged Collateral. In addition, and also
without any of the aforesaid demands, advertisements, and/or notices, upon the
occurrence of any Event of Default as defined herein, you may sell, assign,
transfer and deliver the whole or any part of the Pledged Collateral then held
by you under this Stock Pledge Agreement or subject to this Stock Pledge
Agreement in one or more parcels, at public or private sale or sales, at any
Exchange Broker's Board, at your office or elsewhere, on such terms and
conditions, and at such prices as you may deem advisable, for cash, upon credit,
or for future delivery, with the right on your part to become the purchaser
thereof at any such sale or sales, free and clear of any right to equity of
redemption (which right or equity is hereby expressly waived and released). Any
notice of sale, disposition, or other intended action by you required by
applicable law and sent to PCC at least ten (10) days prior to such action
shall constitute reasonable notice to the Company. Prior to exercising your
rights contained herein you may In your discretion forward the various coupons
coming due on any bonds covered hereby directly to PCC for collection.
Net proceeds of any such disposition as aforesaid, after deduction all costs,
including reasonable attorney's fees and expenses of every kind incurred
therein, shall be applied to the payment in whole or in part, in such order as
you may elect, of any of the Secured Obligations, whether then due or not due.
You agree to pay over and return any remaining balance to PCC or to any person
entitled thereto, upon proper demand being made therefor, and if there be any
deficiency, the Companies shall continue to be fully liable for same.
Further, you are hereby expressly granted the right and irrevocable proxy, in
the event of the happening of any Event of Default (as defined herein), and on
ten (10) days prior notice to PCC, without the curing of such Event of Default
within such time, to transfer to yourself or to your nominee any or all of the
Pledged Collateral or to register same in your name on the books of the company
or entity issuing same; to receive cash dividends, coupons, and income
thereon and to hold the same as additional collateral security hereunder, or, to
apply it against the Secured Obligations and to exercise any voting rights with
respect to said Collateral for any purposes as you in your discretion deem
advisable, and to otherwise exercise as to such Pledged Collateral, all rights,
powers and remedies as the owner thereof.
PCC hereby represents and warrants that the Pledged Collateral is owned by PCC
absolutely, and is free and clear of all liens and encumbrances except for the
pledge in your favor and except for Permitted Encumbrances (as defined in the
Financing Agreement); that there are no restrictions upon the pledge or
transfer of any of the Pledged Collateral; that PCC has full right to pledge
and transfer the same in accordance with the terms and conditions of this Stock
Pledge Agreement, free of all encumbrances (except said Permitted Encumbrances)
and without the consent of any other person, firm, entity or corporation and
without the need to notify the issuing company and/or obtain their consent to
the pledge; and that said Pledged Collateral is not subject to any assessment.
PCC agrees to defend its title to the Pledged Collateral at its own cost and
expense, and to pay, satisfy and discharge and any all assessments, liens or
charges now or thereafter placed upon the Pledged Collateral.
In the event that it becomes necessary to comply with any Federal or State law
or regulation or to make or file any registration thereunder in order for you to
exercise any of your rights hereunder, PCC expressly agrees to do or will cause
to be done all acts and prepare and execute all documents necessary to affect
such compliance or registration, and to bear all reasonable costs in connection
therewith. PCC agrees to indemnify and to hold you harmless from and against any
claim or liability; and to hold you harmless from and against any claim or
liability caused by (i) any untrue statement of material fact, or omission to
state a material fact (as required in any registration or prospectus) or (ii) a
failure to register or comply with any such law or regulation.
PCC recognizes that you may be unable to effect a public sale of any or all of
the Collateral, by reason of certain prohibitions contained in the Securities
Act of 1933 and applicable state securities law or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obligated to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. PCC acknowledges and agrees that any such
private sale may result in prices and other terms less favorable to you than if
such sale were a public sale and agrees that such circumstances shall not, in
and of themselves, result in a determination that such sale was not made in a
commercially reasonable manner. You shall be under no obligation to delay a sale
of any of the Pledged Collateral for the period of time necessary to permit the
issuer to register such securities for public sale under the Securities Act of
1933, or under applicable state securities laws, even if the issuer agrees to do
so.
PCC affirms and certifies that the Secured Obligations were not, and will not
be, incurred for the purpose of providing or obtaining any credit for purchasing
or trading in registered equity securities or other marketable securities.
PCC hereby agrees at your request to execute all necessary stock powers in
blank, to have the signatures on said powers guaranteed, to execute a letter or
other form confirming that the Pledged Collateral is not being pledged to you
for the purpose of providing or obtaining any credit for purchasing or trading
in registered equity securities or other marketable securities, and to execute
any further documents or papers whatsoever in order to carry out the intent and
purpose of this Stock Pledge Agreement.
The pledge provided for herein shall be in addition to, and shall not be deemed
to affect, modify or limit any other rights, collateral, agreements or security
which you may now or hereafter hold whether granted or given to you by the
Companies or by any other person, firm or corporation.
It is understood and agreed that the rights and remedies herein enumerated are
not intended to be exhaustive but are in addition to any other rights or
remedies at law or in equity. You shall have the absolute right in your sole
discretion to determine the order in which your rights and remedies are to be
exercised, and your exercise of any right or remedy shall not preclude the
exercise of any other rights or remedies or be deemed to be a waiver thereof. No
act of forbearance, or agreement to forebear the enforcement of, or extension of
the date of maturity of, any Secured Obligation, shall in any way constitute a
release of, or a waiver or relinquishment of any of your rights or remedies.
This Stock Pledge Agreement is to be governed by the laws of the State of
Illinois and shall be binding on the heirs, administrators, executors,
successors and assigns of PCC, and shall inure to the benefit of you and your
successors and assigns.
Very truly yours,
PEERLESS,CHAIN COMPANY
By Xxxxxxx X. Xxxxx
Title: Chairman
Address: 0000 X. Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
SCHEDULE TO STOCK PLEDGE AGREEMENT BETWEEN THE CIT GROUP/BUSINESS CREDIT, INC.
AND PEERLESS CHAIN COMPANY (THE "PCC)
Issuer Owner Certificate # # of Shares
Peerless Chain of Iowa, Inc. PCC 1 1,000
PEERLESS CHAIN COMPANY
By Xxxxxxx X. Xxxxx
Title Chairman
