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EXHIBIT 10.12
STOCK PLEDGE AGREEMENT
of
▇▇▇▇▇▇▇▇▇ ENTERPRISES, INC.
THIS PLEDGE AGREEMENT (this "Agreement") is made as of November 11,
1997, by ▇▇▇▇▇▇▇▇▇ Enterprises, Inc. (herein called "Debtor") in favor of
NationsBank of Texas, N.A., a national banking association, in its capacity as
agent for itself and certain other Lenders from time to time parties to the
Credit Agreement described herein (herein called "Secured Party").
RECITALS:
1. AEI Holding Company, Inc., a Delaware corporation ("Borrower"), has
executed in favor of Secured Party certain Notes (as defined in the Credit
Agreement) of even date herewith, payable to the order of Lenders (such Notes,
as from time to time amended, and all promissory notes given in substitution,
renewal or extension therefor or thereof, in whole or in part, being herein
collectively called the "Notes").
2. The Notes were executed pursuant to a Credit Agreement of even date
herewith (herein, as from time to time amended, supplemented or restated, called
the "Credit Agreement"), by and between Borrower, and Secured Party,
individually and as agent, and the other Lenders from time to time parties
thereto, pursuant to which Secured Party has agreed to advance funds to Borrower
under the Notes.
3. It is a condition precedent to Secured Party's obligation to advance
funds pursuant to the Credit Agreement that Debtor shall execute and deliver
this Agreement to Secured Party.
4. Debtor owns fifty percent (50%) of the outstanding capital stock of
Borrower.
NOW, THEREFORE, in consideration of the premises, of the benefits which
will inure to Debtor from Secured Party's extensions of credit under the Credit
Agreement, and of Ten Dollars and other good and valuable consideration, the
receipt and sufficiency of all of which are hereby acknowledged, and in order to
induce Secured Party to extend credit under the Credit Agreement, Debtor hereby
agrees with Secured Party as follows:
AGREEMENTS:
ARTICLE I -- Definitions and References
Section 1.1. General Definitions. As used herein, the terms
"Agreement", "Debtor", "Secured Party", "Notes", "Borrower", "Guaranty," and
"Credit Agreement" shall have the meanings indicated above, and the following
terms shall have the following meanings:
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"Collateral" means all property, of whatever type, which is described
in Section 2.1 as being at any time subject to a security interest granted
hereunder to Secured Party.
"Commitment" means the agreement or commitment by Secured Party to make
loans or otherwise extend credit to Debtor under the Credit Agreement, and any
other agreement, commitment, statement of terms or other document contemplating
the making of loans or advances or other extension of credit by Secured Party to
or for the account of Debtor which is now or at any time hereafter intended to
be secured by the Collateral under this Agreement.
"Issuer" means any issuer of Pledged Shares and any successor of such
Issuer.
"Obligation Documents" means the Credit Agreement, all other Loan
Documents, and all other documents and instruments under, by reason of which, or
pursuant to which any or all of the Secured Obligations are evidenced, governed,
secured, guarantied, or otherwise dealt with, and all other agreements,
certificates, and other documents, instruments and writings heretofore or
hereafter delivered in connection herewith or therewith.
"Other Liable Party" means any Person, other than Debtor, but including
Borrower, who may now or may at any time hereafter be primarily or secondarily
liable for any of the Secured Obligations or who may now or may at any time
hereafter have granted to Secured Party a Lien upon any property as security for
the Secured Obligations.
"Pledged Shares" has the meaning given it in Section 2.1(a).
"Related Person" means Debtor and each Other Liable Party.
"Secured Obligations" shall have the meaning given it in Section 2.2.
"UCC" means the Uniform Commercial Code in effect in the State of Texas
on the date hereof.
Section 1.2. Incorporation of Other Definitions. Reference is hereby
made to the Credit Agreement for a statement of the terms thereof. All
capitalized terms used in this Agreement which are defined in the Credit
Agreement and not otherwise defined herein shall have the same meanings herein
as set forth therein. All terms used in this Agreement which are defined in the
UCC and not otherwise defined herein or in the Credit Agreement shall have the
same meanings herein as set forth therein, except where the context otherwise
requires.
Section 1.3. Attachments. All exhibits or schedules which may be
attached to this Agreement are a part hereof for all purposes.
Section 1.4. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein, references in this
Agreement to a particular agreement, instrument or document (including, but not
limited to, references in Section 2.1) also refer to and
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include all renewals, extensions, amendments, modifications, supplements or
restatements of any such agreement, instrument or document, provided that
nothing contained in this Section shall be construed to authorize any Person to
execute or enter into any such renewal, extension, amendment, modification,
supplement or restatement.
Section 1.5. References and Titles. All references in this Agreement to
Exhibits, Articles, Sections, subsections, and other subdivisions refer to the
Exhibits, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of any subdivision are for convenience only and do not constitute any part of
any such subdivision and shall be disregarded in construing the language
contained in this Agreement. The words "this Agreement", "herein", "hereof",
"hereby", "hereunder" and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited. The
phrases "this Section" and "this subsection" and similar phrases refer only to
the Sections or subsections hereof in which the phrase occurs. The word "or" is
not exclusive, and the word "including" (in all of its forms) means "including
without limitation". Pronouns in masculine, feminine and neuter gender shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa unless the context otherwise
requires.
ARTICLE II -- Security Interest
Section 2.1. Grant of Security Interest. As collateral security for all
of the Secured Obligations, Debtor hereby pledges and assigns to Secured Party
and grants to Secured Party a continuing security interest in and to all right,
title and interest of the following:
(a) Pledged Shares. All of the following, whether now or hereafter
existing, which are owned by Debtor or in which Debtor otherwise has any rights:
all shares of stock of AEI Holding Company, Inc. including but not limited to
the shares described on Exhibit A hereto, all certificates representing any such
shares, all options and other rights, contractual or otherwise, at any time
existing with respect to such shares, and all dividends, cash, instruments and
other property now or hereafter received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares (any and all such
shares, certificates, options, rights, dividends, cash, instruments and other
property being herein called the "Pledged Shares").
(b) Proceeds. All proceeds of any and all of the foregoing Collateral
and, to the extent not otherwise included, all payments under insurance (whether
or not Secured Party is the loss payee thereof) or under any indemnity, warranty
or guaranty by reason of loss to or otherwise with respect to any of the
foregoing Collateral.
In each case, the foregoing shall be covered by this Agreement, whether Debtor's
ownership or other rights therein are presently held or hereafter acquired and
however Debtor's interests therein may arise or appear (whether by ownership,
security interest, claim or otherwise).
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Section 2.2. Secured Obligations Secured. The security interest created
hereby in the Collateral constitutes continuing collateral security for all of
the following obligations, indebtedness and liabilities, whether now existing or
hereafter incurred or arising:
(a) Credit Agreement Indebtedness. The payment by Borrower, as and when
due and payable, of the "Obligations", as defined in the Credit Agreement, and
of all amounts from time to time owing by Borrower under or in respect of the
Credit Agreement, or any of the other Obligation Documents to which Borrower is
a party, and the due performance by Borrower of all of its other respective
obligations under or in respect of the various Obligation Documents.
(b) Other Indebtedness. All loans and future advances made by Secured
Party to Borrower or Debtor and all other debts, obligations and liabilities of
every kind and character of Borrower or Debtor now or hereafter existing in
favor of Secured Party, whether such debts, obligations or liabilities be direct
or indirect, primary or secondary, joint or several, fixed or contingent, and
whether originally payable to Secured Party or to a third party and subsequently
acquired by Secured Party and whether such debts, obligations or liabilities are
evidenced by notes, open account, overdraft, endorsement, security agreement,
guaranty or otherwise (it being contemplated that Borrower or Debtor may
hereafter become indebted to Secured Party in further sum or sums but Secured
Party shall have no obligation to extend further indebtedness by reason of this
Agreement).
(c) Renewals. All renewals, extensions, amendments, modifications,
supplements, or restatements of or substitutions for any of the foregoing.
As used herein, the term "Secured Obligations" refers to all present
and future indebtedness, obligations, and liabilities of whatever type which are
described above in this section, including any interest which accrues after the
commencement of any case, proceeding, or other action relating to the
bankruptcy, insolvency, or reorganization of the Borrower or the Debtor.
ARTICLE III -- Representations, Warranties and Covenants
Section 3.1. Representations and Warranties. Debtor represents and
warrants to Secured Party as follows:
(a) Ownership Free of Liens. Debtor has good and marketable title to
the Collateral free and clear of all Liens, encumbrances or adverse claims,
except for the security interest created by this Agreement. No dispute, right of
setoff, counterclaim or defense exists with respect to all or any part of the
Collateral. No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office except any which have been filed in favor of Secured Party relating to
this Agreement.
(b) No Conflicts or Consents. Neither the ownership or the intended use
of the Collateral by Debtor, nor the grant of the security interest by Debtor to
Secured Party herein, nor
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the exercise by Secured Party of its rights or remedies hereunder, will (i)
conflict with any provision of (a) any domestic or foreign law, statute, rule or
regulation, (b) the certificate of incorporation or bylaws of any Issuer, or (c)
any agreement, judgment, license, order or permit applicable to or binding upon
Debtor or any Issuer, or (ii) result in or require the creation of any Lien,
charge or encumbrance upon any assets or properties of Debtor or of any Issuer
or Related Person except as expressly contemplated in the Obligation Documents.
Except as expressly contemplated in the Obligation Documents, no consent,
approval, authorization or order of, and no notice to or filing with, any court,
governmental authority, Issuer or third party is required in connection with the
grant by Debtor of the security interest herein, or the exercise by Secured
Party of its rights and remedies hereunder.
(c) Security Interest. Debtor has and will have at all times full
right, power and authority to grant a security interest in the Collateral to
Secured Party as provided herein, free and clear of any Lien, adverse claim, or
encumbrance. This Agreement creates a valid and binding first priority security
interest in favor of Secured Party in the Collateral, which security interest
secures all of the Secured Obligations. The taking possession by Secured Party
of all certificates constituting Collateral from time to time and the filing of
the financing statements delivered concurrently herewith by Debtor to Secured
Party will perfect, and establish the first priority of, Secured Party's
security interest hereunder in the Collateral securing the Secured Obligations.
No further or subsequent filing, recording, registration, other public notice or
other action is necessary or desirable to perfect or otherwise continue,
preserve or protect such security interest except for continuation statements or
filings described in Section 3.3(d).
(d) Location of Debtor and Records. Debtor's principal executive office
and the place where the records concerning the Collateral are kept is its
address set forth on the signature page hereto.
(e) Pledged Shares. Debtor has delivered to Secured Party all
certificates evidencing Pledged Shares. All such certificates are valid and
genuine and have not been altered. All shares and other securities constituting
the Pledged Shares have been duly authorized and validly issued, are fully paid
and non-assessable, and were not issued in violation of the preemptive rights of
any Person or of any agreement by which Debtor or the Issuer thereof is bound.
All documentary, stamp or other taxes or fees owing in connection with the
issuance, transfer or pledge of Pledged Shares (or rights in respect thereof)
have been paid. No restrictions or conditions exists with respect to the
transfer, voting or capital of any Pledged Shares. The Pledged Shares constitute
the percentage of the class of issued shares of capital stock which is indicated
on Exhibit A. No Issuer of any Pledged Shares has any outstanding stock rights,
rights to subscribe, options, warrants or convertible securities outstanding or
any other rights outstanding whereby any Person would be entitled to have issued
to him capital stock of such Issuer, except as described on Exhibit A.
(f) Duly Authorized. Debtor is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of Kentucky;
Debtor has all requisite power and authority to execute, deliver and perform
this Agreement; and the execution, delivery and
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performance by Debtor of this Agreement have been duly authorized by all
necessary corporate action and do not and will not contravene its certificate or
articles of incorporation or bylaws.
Section 3.2. Affirmative Covenants. Unless Secured Party shall
otherwise consent in writing, Debtor will at all times comply with the covenants
contained in this Section 3.2 from the date hereof and so long as any part of
the Secured Obligations or the Commitment is outstanding.
(a) Ownership and Liens. Debtor will maintain good and marketable title
to all Collateral free and clear of all Liens, encumbrances or adverse claims,
except for the security interest created by this Agreement. Debtor will not
permit any dispute, right of setoff, counterclaim or defense to exist with
respect to all or any part of the Collateral. Debtor will cause to be terminated
any financing statement or other registration or instrument similar in effect
covering all or any part of the Collateral, except any which have been filed in
favor of Secured Party relating to this Agreement. Debtor will defend Secured
Party's right, title and special property and security interest in and to the
Collateral against the claims of any Person.
(b) Further Assurances. Debtor will, at its expense and at any time and
from time to time, promptly execute and deliver all further instruments and
documents and take all further action that may be necessary or desirable or that
Secured Party may request in order (i) to perfect and protect the security
interest created or purported to be created hereby and the first priority of
such security interest; (ii) to enable Secured Party to exercise and enforce its
rights and remedies hereunder in respect of the Collateral; or (iii) to
otherwise effect the purposes of this Agreement, including but not limited to:
(A) executing and filing such financing or continuation statements, or
amendments thereto, as may be necessary or desirable or that Secured Party may
request in order to perfect and preserve the security interest created or
purported to be created hereby; (B) delivering to Secured Party (upon request,
to the extent not otherwise required hereunder to be delivered without request)
all originals of chattel paper, documents or instruments which are from time to
time included in the Collateral; and (C) furnishing to Secured Party from time
to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as Secured
Party may reasonably request, all in reasonable detail.
(c) Inspection and Information. Debtor will keep adequate records
concerning the Collateral and will permit Secured Party and all representatives
appointed by Secured Party, including independent accountants, agents,
attorneys, appraisers and any other persons, to inspect any of the Collateral
and the books and records of or relating to the Collateral at any time during
normal business hours, and to make photocopies and photographs thereof, and to
write down and record any information as such representatives shall obtain.
Debtor will furnish to Secured Party any information which Secured Party may
from time to time request concerning any covenant, provision or representation
contained herein or any other matter in connection with the Collateral or
Debtor's business, properties, or financial condition.
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(d) Delivery of Pledged Shares. All instruments and writings evidencing
the Pledged Shares shall be delivered to Secured Party on or prior to the
execution and delivery of this Agreement. All other instruments and writings
hereafter evidencing or constituting Pledged Shares shall be delivered to
Secured Party promptly upon the receipt thereof by or on behalf of Debtor. All
such Pledged Shares shall be held by or on behalf of Secured Party pursuant
hereto and shall be delivered in suitable form for transfer by delivery with any
necessary endorsement or shall be accompanied by fully executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Secured Party.
(e) Proceeds of Pledged Shares. If Debtor shall receive, by virtue of
its being or having been an owner of any Pledged Shares, any (i) stock
certificate (including any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reorganization, reclassification, merger, consolidation, sale of assets,
combination of shares, stock split, spinoff or split-off), promissory note or
other instrument or writing; (ii) option or right, whether as an addition to,
substitution for, or in exchange for, any Pledged Shares, or otherwise; (iii)
dividends payable in cash (except such dividends permitted to be retained by
Debtor pursuant to Section 4.8 hereof) or in securities or other property, or
(iv) dividends or other distributions in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, Debtor shall receive the same in trust for the
benefit of Secured Party, shall segregate it from Debtor's other property, and
shall promptly deliver it to Secured Party in the exact form received, with any
necessary endorsement or appropriate stock powers duly executed in blank, to be
held by Secured Party as Collateral.
(f) Status of Pledged Shares. The certificates evidencing the Pledged
Shares shall at all times be valid and genuine and shall not be altered. The
Pledged Shares at all times shall be duly authorized, validly issued, fully
paid, and non-assessable, and shall not be issued in violation of the
pre-emptive rights of any Person or of any agreement by which Debtor or the
Issuer thereof is bound and shall not be subject to any restrictions with
respect to transfer, voting or Capital of such Pledged Shares.
(g) Notices from Issuer. Debtor will promptly deliver to Secured Party
a copy of each notice or other communication received by Debtor from any Issuer
in respect of any Pledged Shares.
Section 3.3. Negative Covenants. Unless Secured Party shall otherwise
consent in writing, Debtor will at all times comply with the covenants contained
in this Section 3.3 from the date hereof and so long as any part of the Secured
Obligations or the Commitment is outstanding.
(a) Transfer or Encumbrance. Debtor will not sell, assign (by operation
of law or otherwise), transfer, exchange or otherwise dispose of any of the
Collateral, nor will Debtor ▇▇▇▇▇ ▇ ▇▇▇▇ upon or execute, file or record any
financing statement or other registration with respect to the Collateral, nor
will Debtor allow any such Lien, financing statement, or other
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registration to exist or deliver actual or constructive possession of the
Collateral to any other Person, other than Liens in favor of Secured Party or
expressly permitted by the Credit Agreement.
(b) Impairment of Security Interest. Debtor will not take or fail to
take any action which would in any manner impair the value or enforceability of
Secured Party's first priority security interest in any Collateral.
(c) Compromise of Collateral. Debtor will not adjust, settle,
compromise, amend or modify any of its rights in the Collateral.
(d) Financing Statement Filings. Debtor recognizes that financing
statements pertaining to the Collateral have been or may be filed where Debtor
maintains any Collateral, has its records concerning any Collateral or has its
principal executive office. Without limitation of any other covenant herein,
Debtor will cause or permit any change to be made in its name or identity or any
change to be made to a jurisdiction other than as represented in Section 3.1
hereof in (i) the location of any records concerning any Collateral or (ii) its
principal executive office, unless Debtor shall have notified Secured Party of
such change at least thirty (30) days prior to the effective date of such
change, and shall have first taken all action required by Secured Party for the
purpose of further perfecting or protecting the security interest in favor of
Secured Party in the Collateral. In any notice furnished pursuant to this
subsection, Debtor will expressly state that the notice is required by this
Agreement and contains facts that may require additional filings of financing
statements or other notices for the purposes of continuing perfection of Secured
Party's security interest in the Collateral.
(e) Dilution of Shareholdings. Debtor will not permit the issuance of
(i) any additional shares of any class of capital stock of any Issuer (unless
immediately upon issuance the same are pledged and delivered to Secured Party
pursuant to the terms hereof to the extent necessary to give Secured Party a
first priority security interest after such issue in at least the same
percentage of such Issuer's outstanding shares as Debtor had before such issue),
(ii) any securities convertible voluntarily by the holder thereof or
automatically upon the occurrence or non-occurrence of any event or condition
into, or exchangeable for, any such shares of capital stock, or (iii) any
warrants, options, contracts or other commitments entitling any Person to
purchase or otherwise acquire any such shares of capital stock not outstanding
as of the date of this Agreement.
(f) Restrictions on Pledged Shares. Debtor will not enter into any
agreement creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any Pledged Shares.
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ARTICLE IV -- Remedies, Powers and Authorizations
Section 4.1. Provisions Concerning the Collateral.
(a) Additional Filings. Debtor hereby authorizes Secured Party to file,
without the signature of Debtor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Collateral.
Debtor further agrees that a carbon, photographic or other reproduction of this
Security Agreement or of any financing statement describing any Collateral is
sufficient as a financing statement and may be filed in any jurisdiction by
Secured Party may deem appropriate.
(b) Power of Attorney. Debtor hereby irrevocably appoints Secured Party
as Debtor's attorney-in-fact and proxy, with full authority in the place and
stead of Debtor and in the name of Debtor or otherwise, from time to time in
Secured Party's discretion, to take any action, and to execute or indorse any
instrument, certificate or notice, which Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement including any action or
instrument: (i) to request or instruct each Issuer (and each registrar, transfer
agent, or similar Person acting on behalf of each Issuer) to register the pledge
or transfer of the Collateral to Secured Party; (ii) to otherwise give
notification to any Issuer, registrar, transfer agent, financial intermediary,
or other Person of Secured Party's security interests hereunder; (iii) to ask,
demand, collect, ▇▇▇ for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral; (iv) to receive, indorse and collect any drafts or other instruments
or documents; (v) to enforce any obligations included among the Collateral; and
(vi) to file any claims or take any action or institute any proceedings which
Secured Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce, perfect, or establish the priority of the
rights of Secured Party with respect to any of the Collateral. Debtor hereby
acknowledges that such power of attorney and proxy are coupled with an interest,
and are irrevocable.
(c) Performance by Secured Party. If Debtor fails to perform any
agreement or obligation contained herein, Secured Party may itself perform, or
cause performance of, such agreement or obligation, and the expenses of Secured
Party incurred in connection therewith shall be payable by Debtor under Section
4.5.
(d) Collection Rights. Secured Party shall have the right at any time,
either before or after the occurrence of a Default or of an Event of Default, to
notify (or require Debtor to notify) any or all Persons (including any Issuer)
obligated to make payments which are included among the Collateral (whether
accounts, general intangibles, dividends, or otherwise) of the assignment
thereof to Secured Party under this Agreement and to direct such obligors to
make payment of all amounts due or to become due to Debtor thereunder directly
to Secured Party and, upon such notification and at the expense of Debtor and to
the extent permitted by law, to enforce collection thereof and to adjust, settle
or compromise the amount or payment thereof, in the same manner and to the same
extent as Debtor could have done. After Debtor receives notice that Secured
Party has given (and after Secured Party has required Debtor to give) any notice
referred to above in this subsection:
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(i) all amounts and proceeds (including instruments and writings)
received by Debtor in respect of such rights to payments, accounts, or
general intangibles shall be received in trust for the benefit of
Secured Party hereunder, shall be segregated from other funds of Debtor
and shall be forthwith paid over to Secured Party in the same form as
so received (with any necessary indorsement) to be, at Secured Party's
discretion, either (A) held as cash collateral and released to Debtor
upon the remedy of all Defaults or Events of Default, or (B) if any
Event of Default shall have occurred and be continuing, applied as
specified in Section 4.3, and
(ii) Debtor will not adjust, settle or compromise the amount or payment
of any such account or general intangible or release wholly or partly
any account debtor or obligor thereof (including any Issuer) or allow
any credit or discount thereon.
Section 4.2. Event of Default Remedies. If an Event of Default shall
have occurred and be continuing, Secured Party may from time to time in its
discretion, without limitation and without notice except as expressly provided
below:
(a) exercise in respect of the Collateral, in addition to any other
rights and remedies provided for herein, under the other Obligation Documents or
otherwise available to it, all the rights and remedies of a secured party on
default under the UCC (whether or not the UCC applies to the affected
Collateral);
(b) require Debtor to, and Debtor hereby agrees that he will at its
expense and upon request of Secured Party, promptly assemble all or part of the
Collateral as directed by Secured Party and make it (together with all books,
records and information of Debtor relating thereto) available to Secured Party
at a place to be designated by Secured Party which is reasonably convenient to
both parties;
(c) reduce its claim to judgment or foreclose or otherwise enforce, in
whole or in part, the security interest created hereby by any available judicial
procedure;
(d) dispose of, at its office, on the premises of Debtor or elsewhere,
all or any part of the Collateral, as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
of any part of the Collateral shall not exhaust Secured Party's power of sale,
but sales may be made from time to time, and at any time, until all of the
Collateral has been sold or until the Secured Obligations have been paid and
performed in full), and at any such sale it shall not be necessary to exhibit
any of the Collateral;
(e) buy the Collateral, or any part thereof, at any public sale;
(f) buy the Collateral, or any part thereof, at any private sale if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations;
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(g) apply by appropriate judicial proceedings for appointment of a
receiver for the Collateral, or any part thereof, and Debtor hereby consents to
any such appointment; and
(h) at its discretion, retain the Collateral in satisfaction of the
Secured Obligations whenever the circumstances are such that Secured Party is
entitled to do so under the UCC or otherwise (provided that Secured Party shall
in no circumstances be deemed to have retained the Collateral in satisfaction of
the Secured Obligations in the absence of an express notice by Secured Party to
Debtor that Secured Party has either done so or intends to do so).
Debtor agrees that, to the extent notice of sale shall be required by law, at
least seven (7) days' notice to Debtor 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. Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. 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.
Section 4.3. Application of Proceeds. If any Event of Default shall
have occurred and be continuing, Secured Party may in its discretion apply any
cash held by Secured Party as Collateral, and any cash proceeds received by
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral, to any or all of the following in such
order as Secured Party may elect:
(a) To the repayment of all costs and expenses, including reasonable
attorneys' fees and legal expenses, incurred by Secured Party in connection with
(i) the administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral, (iii) the exercise or enforcement of any of the rights of Secured
Party hereunder, or (iv) the failure of Debtor to perform or observe any of the
provisions hereof;
(b) To the payment or other satisfaction of any Liens, encumbrances, or
adverse claims upon or against any of the Collateral;
(c) To the reimbursement of Secured Party for the amount of any
obligations of Debtor or any Other Liable Party paid or discharged by Secured
Party pursuant to the provisions of this Agreement or the other Obligation
Documents, and of any expenses of Secured Party payable by Debtor hereunder or
under the other Obligation Documents;
(d) To the satisfaction of any other Secured Obligations;
(e) By holding the same as Collateral;
(f) To the payment of any other amounts required by applicable law
(including any provision of the UCC); and
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(g) By delivery to Debtor or to whomever shall be lawfully entitled to
receive the same or as a court of competent jurisdiction shall direct.
Section 4.4. Deficiency. In the event that the proceeds of any sale,
collection or realization of or upon Collateral by Secured Party are
insufficient to pay all Secured Obligations and any other amounts to which
Secured Party is legally entitled, Debtor shall be liable for the deficiency,
together with interest thereon as provided in the governing Obligation Documents
or (if no interest is so provided) at such other rate as shall be fixed by
applicable law, together with the costs of collection and the reasonable fees of
any attorneys employed by Secured Party to collect such deficiency.
Section 4.5. Indemnity and Expenses. In addition to, but not in
qualification or limitation of, any similar obligations under other Obligation
Documents:
(a) DEBTOR WILL INDEMNIFY SECURED PARTY AND EACH LENDER FROM AND
AGAINST ANY AND ALL CLAIMS, LOSSES AND LIABILITIES GROWING OUT OF OR RESULTING
FROM THIS AGREEMENT (INCLUDING ENFORCEMENT OF THIS AGREEMENT), WHETHER OR NOT
SUCH CLAIMS, LOSSES AND LIABILITIES ARE IN ANY WAY OR TO ANY EXTENT CAUSED BY OR
ARISING OUT OF SUCH INDEMNIFIED PARTY'S OWN NEGLIGENCE, EXCEPT TO THE EXTENT
SUCH CLAIMS, LOSSES OR LIABILITIES ARE PROXIMATELY CAUSED BY SUCH INDEMNIFIED
PARTY'S INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(b) Debtor will upon demand pay to Secured Party the amount of any and
all costs and expenses, including the fees and disbursements of Secured Party's
counsel and of any experts and agents, which Secured Party may incur in
connection with (i) the transactions which give rise to this Agreement, (ii) the
preparation of this Agreement and the perfection and preservation of this
security interest created under this Agreement, (iii) the administration of this
Agreement; (iv) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any Collateral; (v) the exercise or
enforcement of any of the rights of Secured Party hereunder; or (vi) the failure
by Debtor to perform or observe any of the provisions hereof, except expenses
resulting from Secured Party's individual gross negligence or willful
misconduct.
Section 4.6. Non-Judicial Remedies. In granting to Secured Party the
power to enforce its rights hereunder without prior judicial process or judicial
hearing, Debtor expressly waives, renounces and knowingly relinquishes any legal
right which might otherwise require Secured Party to enforce its rights by
judicial process. In so providing for non-judicial remedies, Debtor recognizes
and concedes that such remedies are consistent with the usage of trade, are
responsive to commercial necessity, and are the result of a bargain at arm's
length. Nothing herein is intended, however, to prevent Secured Party or Debtor
from resorting to judicial process at its option.
Section 4.7. Other Recourse. Debtor waives any right to require Secured
Party to proceed against any other Person, to exhaust any Collateral or other
security for the Secured
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Obligations, or to have any Other Liable Party joined with Debtor in any suit
arising out of the Secured Obligations or this Agreement, or pursue any other
remedy in Secured Party's power. Debtor further waives any and all notice of
acceptance of this Agreement and of the creation, modification, rearrangement,
renewal or extension for any period of any of the Secured Obligations of any
Other Liable Party from time to time. Debtor further waives any defense arising
by reason of any disability or other defense of any Other Liable Party or by
reason of the cessation from any cause whatsoever of the liability of any Other
Liable Party. This Agreement shall continue irrespective of the fact that the
liability of any Other Liable Party may have ceased and irrespective of the
validity or enforceability of any other Obligation Document to which Debtor or
any Other Liable Party may be a party, and notwithstanding any death,
incapacity, reorganization, or bankruptcy of any Other Liable Party or any other
event or proceeding affecting any Other Liable Party. Until all of the Secured
Obligations shall have been paid in full, Debtor shall have no right to
subrogation and Debtor waives the right to enforce any remedy which Secured
Party has or may hereafter have against any Other Liable Party, and waives any
benefit of and any right to participate in any other security whatsoever now or
hereafter held by Secured Party. Debtor authorizes Secured Party, without notice
or demand, without any reservation of rights against Debtor, and without in any
way affecting Debtor's liability hereunder or on the Secured Obligations, from
time to time to (a) take or hold any other property of any type from any other
Person as security for the Secured Obligations, and exchange, enforce, waive and
release any or all of such other property, (b) apply the Collateral or such
other property and direct the order or manner of sale thereof as Secured Party
may in its discretion determine, (c) renew, extend for any period, accelerate,
modify, compromise, settle or release any of the obligations of any Other Liable
Party in respect to any or all of the Secured Obligations or other security for
the Secured Obligations, (d) waive, enforce, modify, amend, restate or
supplement any of the provisions of any Obligation Document with any Person
other than Debtor, and (e) release or substitute any Other Liable Party.
Section 4.8. Voting Rights, Dividends, Etc. in Respect of Pledged
Shares.
(a) So long as no Default or Event of Default shall have occurred and
be continuing Debtor may receive and retain any and all dividends or interest
paid in respect of the Pledged Shares; provided, however, that any and all
(i) dividends and interest paid or payable other than in
cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of or in exchange for,
any Pledged Shares,
(ii) dividends and other distributions paid or payable in
cash in respect of any Pledged Shares in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, and
(iii) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Shares,
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shall be, and shall forthwith be delivered to Secured Party to hold as, Pledged
Shares and shall, if received by Debtor, be received in trust for the benefit of
Secured Party, be segregated from the other property or funds of Debtor, and be
forthwith delivered to Secured Party in the exact form received with any
necessary indorsement or appropriate stock powers duly executed in blank, to be
held by Secured Party as Collateral.
(b) Upon the occurrence and during the continuance of a Default or an
Event of Default:
(i) all rights of Debtor to receive and retain the dividends
and interest payments which it would otherwise be authorized to receive
and retain pursuant to subsection (a) of this section shall
automatically cease, and all such rights shall thereupon become vested
in Secured Party which shall thereupon have the sole right to receive
and hold as Pledged Shares such dividends and interest payments;
(ii) without limiting the generality of the foregoing,
Secured Party may at its option exercise any and all rights of
conversion, exchange, subscription or any other rights, privileges or
options pertaining to any of the Pledged Shares as if it were the
absolute owner thereof, including, without limitation, the right to
exchange, in its discretion, any and all of the Pledged Shares upon the
merger, consolidation, reorganization, recapitalization or other
adjustment of any Issuer, or upon the exercise by any Issuer of any
right, privilege or option pertaining to any Pledged Shares, and, in
connection therewith, to deposit and deliver any and all of the Pledged
Shares with any committee, depository, transfer, agent, registrar or
other designated agent upon such terms and conditions as it may
determine; and
(iii) all dividends and interest payments which are received
by Debtor contrary to the provisions of subsection (b)(i) of this
section shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of Debtor, and shall be forthwith
paid over to Secured Party as Pledged Shares in the exact form
received, to be held by Secured Party as Collateral.
Anything herein to the contrary notwithstanding, Debtor may at all times
exercise any and all voting rights pertaining to the Pledged Shares or any part
thereof for any purpose not inconsistent with the terms of this Agreement or any
other Obligation Document.
Section 4.9. Private Sale of Pledged Shares. Debtor recognizes that
Secured Party may deem it impracticable to effect a public sale of all or any
part of the Pledged Shares and that Secured Party may, therefore, determine to
make one or more private sales of any such securities to a restricted group of
purchasers who 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. Debtor acknowledges that any such private sale
may be at prices and on terms less favorable to the seller than the prices and
other terms which might have been obtained at a public sale and, notwithstanding
the foregoing, agrees that such private sales shall be deemed to have been made
in a commercially reasonable manner and that Secured Party shall have no
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obligation to delay sale of any such securities for the period of time necessary
to permit the Issuer of such securities to register such securities for public
sale under the Securities Act of 1933, as amended. Debtor further acknowledges
and agrees that any offer to sell such securities which has been (a) publicly
advertised on a bona fide basis in a newspaper or other publication of general
circulation in the financial community of Dallas, Texas (to the extent that such
an offer may be so advertised without prior registration under the Securities
Act), or (b) made privately in the manner described above to not less than
fifteen (15) bona fide offerees shall be deemed to involve a "public sale" for
the purposes of Section 9.504(c) of the UCC (or any successor or similar,
applicable statutory provision) as then in effect in the State of Texas,
notwithstanding that such sale may not constitute a "public offering" under the
Securities Act of 1933, as amended, and that Secured Party may, in such event,
bid for the purchase of such securities.
ARTICLE V. -- Miscellaneous
Section 5.1. Notices. Any notice or communication required or permitted
hereunder shall be given as provided in the Credit Agreement.
Section 5.2. Amendments. No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by Debtor and
Secured Party, and no waiver of any provision of this Agreement, and no consent
to any departure by Debtor therefrom, shall be effective unless it is in writing
and signed by Secured Party, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given and
to the extent specified in such writing.
Section 5.3. Preservation of Rights. No failure on the part of Secured
Party to exercise, and no delay in exercising, any right hereunder or under any
other Obligation Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. Neither the execution nor
the delivery of this Agreement shall in any manner impair or affect any other
security for the Secured Obligations. The rights and remedies of Secured Party
provided herein and in the other Obligation Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law. The
rights of Secured Party under any Obligation Document against any party thereto
are not conditional or contingent on any attempt by Secured Party to exercise
any of its rights under any other Obligation Document against such party or
against any other Person.
Section 5.4. Unenforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
Section 5.5. Survival of Agreements. All representations and warranties
of Debtor herein, and all covenants and agreements herein shall survive the
execution and delivery of this
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Agreement, the execution and delivery of any other Obligation Documents and the
creation of the Secured Obligations.
Section 5.6. Other Liable Party. Neither this Agreement nor the
exercise by Secured Party or the failure of Secured Party to exercise any right,
power or remedy conferred herein or by law shall be construed as relieving any
Other Liable Party from liability on the Secured Obligations or any deficiency
thereon. This Agreement shall continue irrespective of the fact that the
liability of any Other Liable Party may have ceased or irrespective of the
validity or enforceability of any other Obligation Document to which Debtor or
any Other Liable Party may be a party, and notwithstanding the reorganization,
death, incapacity or bankruptcy of any Other Liable Party, and notwithstanding
the reorganization or bankruptcy or other event or proceeding affecting any
Other Liable Party.
Section 5.7. Binding Effect and Assignment. This Agreement creates a
continuing security interest in the Collateral and (a) shall be binding on
Debtor and its successors and permitted assigns and (b) shall inure, together
with all rights and remedies of Secured Party hereunder, to the benefit of
Secured Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing, Secured Party may (except as otherwise provided in
the Credit Agreement) pledge, assign or otherwise transfer any or all of its
rights under any or all of the Obligation Documents to any other Person, and
such other Person shall thereupon become vested with all of the benefits in
respect thereof granted to Secured Party, herein or otherwise. None of the
rights or duties of Debtor hereunder may be assigned or otherwise transferred
without the prior written consent of Secured Party.
Section 5.8. Termination. It is contemplated by the parties hereto that
there may be times when no Secured Obligations are outstanding, but
notwithstanding such occurrences, this Agreement shall remain valid and shall be
in full force and effect as to subsequent outstanding Secured Obligations. Upon
the satisfaction in full of the Secured Obligations, upon the termination or
expiration of the Credit Agreement and any other commitment of Secured Party to
extend credit to Debtor, and upon written request for the termination hereof
delivered by Debtor to Secured Party, this Agreement and the security interest
created hereby shall terminate and all rights to the Collateral shall revert to
Debtor. Secured Party will, upon Debtor's request and at Debtor's expense, (a)
return to Debtor such of the Collateral as shall not have been sold or otherwise
disposed of or applied pursuant to the terms hereof; and (b) execute and deliver
to Debtor such documents as Debtor shall reasonably request to evidence such
termination.
SECTION 5.9. GOVERNING LAW; SUBMISSION TO PROCESS. (I) THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE
EXTENT THAT THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE
SECURITY INTEREST CREATED HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL,
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. DEBTOR HEREBY
AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST DEBTOR WITH RESPECT TO THIS
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AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED
STATES OF AMERICA FOR THE NORTHERN DISTRICT OF TEXAS AS SECURED PARTY MAY ELECT,
AND, BY EXECUTION AND DELIVERY HEREOF, DEBTOR ACCEPTS AND CONSENTS FOR HIMSELF
AND IN RESPECT TO HIS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS, AND FURTHER AGREES TO A TRANSFER OF ANY SUCH PROCEEDING
TO A FEDERAL COURT SITTING IN THE STATE OF TEXAS TO THE EXTENT THAT IT HAS
SUBJECT MATTER JURISDICTION, AND OTHERWISE TO A STATE COURT IN TEXAS. DEBTOR
WAIVES ANY RIGHT TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE
SAID COURTS ON THE BASIS OF FORUM NON CONVENIENS. IN FURTHERANCE OF THE
FOREGOING, DEBTOR HEREBY DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, ▇▇▇
▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, AS AGENT OF DEBTOR TO RECEIVE
SERVICE OF ALL PROCESS BROUGHT AGAINST DEBTOR WITH RESPECT TO ANY SUCH
PROCEEDING IN ANY SUCH COURT IN TEXAS, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY
DEBTOR TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. COPIES OF ANY SUCH
PROCESS SO SERVED SHALL ALSO, IF PERMITTED BY LAW, BE SENT BY REGISTERED MAIL TO
DEBTOR AT HIS ADDRESS SET FORTH ABOVE, BUT THE FAILURE OF DEBTOR TO RECEIVE SUCH
COPIES SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS AS AFORESAID.
DEBTOR SHALL FURNISH TO SECURED PARTY A CONSENT OF CT CORPORATION SYSTEM
AGREEING TO ACT HEREUNDER PRIOR TO THE EFFECTIVE DATE OF THE CREDIT AGREEMENT.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF SECURED PARTY TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF SECURED PARTY TO BRING
PROCEEDINGS AGAINST DEBTOR IN THE COURTS OF ANY OTHER JURISDICTION. DEBTOR SHALL
NOT REVOKE SUCH APPOINTMENT BUT IF FOR ANY REASON CT CORPORATION SYSTEM SHALL
RESIGN OR OTHERWISE CEASE TO ACT AS DEBTOR'S AGENT, DEBTOR HEREBY IRREVOCABLY
AGREES TO (A) IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT ACCEPTABLE TO AGENT
TO SERVE IN SUCH CAPACITY AND, IN SUCH EVENT, SUCH NEW AGENT SHALL BE DEEMED TO
BE SUBSTITUTED FOR CT CORPORATION SYSTEM FOR ALL PURPOSES HEREOF AND (B)
PROMPTLY DELIVER TO SECURED PARTY THE WRITTEN CONSENT (IN FORM AND SUBSTANCE
SATISFACTORY TO AGENT) OF SUCH NEW AGENT AGREEING TO SERVE IN SUCH CAPACITY.
Section 5.10. Counterparts. This Agreement may be separately executed
in any number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.
Section 5.11. "Loan Document." This Agreement is a "Loan Document", as
defined in the Credit Agreement, and, except as expressly provided herein to the
contrary, this Agreement is subject to all provisions of the Credit Agreement
governing such Loan Documents.
Section 5.12. Final Agreement.
THIS WRITTEN STOCK PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
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AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, Debtor has caused this Agreement to be executed and
delivered as of the date first above written.
Address of Debtor: DEBTOR:
▇▇▇▇▇▇▇▇▇ ENTERPRISES, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: V.P.
Address of Records
Concerning Collateral:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
20
EXHIBIT A
Description of Interests in Issuers
Name of Issuer Certificate No. No. of Shares Percentage Interest
-------------- --------------- ------------- -------------------
AEI Holding 2 1 1
Company, Inc.
AEI Holding 4 49 49
Company, Inc.
1
