EXHIBIT 10.5
SHARE PLEDGE AGREEMENT
Share pledge agreement dated as of this 17th day of February, 2005
made by Tarpon Industries, Inc. (the "CORPORATION") to and in favour of the
Lender (as hereinafter defined).
WHEREAS LaSalle Business Credit, a division of ABN AMRO Bank N.V.,
Canada Branch, as lender (the "LENDER") has agreed to make certain credit
facilities available to Steelbank Inc. (the "BORROWER") upon the terms and
conditions contained in a loan agreement by and among the Borrower and the
Lender dated as of the date hereof, as the same may be amended, supplemented,
revised, replace or restated from time to time (the "LOAN AGREEMENT");
AND WHEREAS pursuant to the terms and conditions contained in a
guarantee agreement given by the Corporation in favour of the Lender (the
"GUARANTEE") the Corporation has agreed to unconditionally guarantee all
obligations of the Borrower under the Loan Agreement;
AND WHEREAS the Corporation has agreed to execute and deliver this
share pledge agreement to and in favour of the Lender as security for the
payment and performance of the Borrower's obligations to the Lender under the
Loan Agreement, the Corporation's obligations under the Guarantee and the
obligations of both the Borrower and the Corporation under the Other Agreements
(as defined in the Loan Agreement) to which one or both of them is a party;
NOW THEREFORE, in consideration of the foregoing premises, the sum
of $10.00 in lawful money of Canada now paid by the Lender to the Corporation
and other good and valuable consideration, the receipt and sufficiency of which
are acknowledged by the Corporation, the Corporation agrees as follows:
ARTICLE 1
SECURITY
1.1 TERMS INCORPORATED BY REFERENCE.
Terms defined in the Personal Property Security Act (Ontario) (as amended
from time to time, the "PPSA") and used in this share pledge agreement shall
have the same meanings.
1.2 GRANT OF SECURITY.
(1) The Corporation assigns, mortgages, charges, hypothecates, pledges and
grants to the Lender a security interest in, the securities described in
Schedule "A" and deposits with the Lender any and all security certificates
evidencing such securities accompanied in each case by a duly executed stock
power of attorney (collectively, together with the dividends, moneys, rights and
claims hereinafter referred to and the securities referred to in Section 1.2(2),
the "SECURITIES"), any cash dividends or other moneys now or hereafter received
or declared in respect of the Securities and all other rights and claims of the
Corporation in respect of the Securities.
(2) The Securities shall include any substitutions, additions or proceeds
arising out of any consolidation, subdivision, reclassification, stock divided
or similar increase or decrease in, or alteration to, the capital stock
described Schedule "A".
1.3 OBLIGATIONS SECURED.
(1) The assignments, mortgages, charges, hypothecations, pledges and
security interests granted hereby (the "SECURITY INTEREST") secure the payment
and performance of all debts, liabilities and obligations present or future,
direct or indirect, absolute or contingent, matured or unmatured, at any time
due or accruing due, owing by the Corporation to the Lender, however or wherever
incurred, and in any currency, and whether incurred by the Corporation alone or
with another or others and whether as principal or surety of the Corporation to
the Lender, including without limitation, pursuant to or in connection with the
Guarantee and each of the Other Agreements to which it is a party (collectively,
and together with the expenses, costs and charges set out in Section 1.3(2), the
"OBLIGATIONS").
(2) All expenses, costs and charges incurred by or on behalf of the Lender
in connection with this share pledge agreement, the Security Interest or the
realization of the Securities including all legal fees, court costs, receiver's
or agent's remuneration and other expenses of taking possession of, repairing,
protecting, insuring, preparing for disposition, realizing, collecting, selling,
transferring, delivering or obtaining payment of the Securities shall be added
to and form a part of the Obligations.
1.4 POSSESSION OF SECURITIES
(1) Upon the deposit of any securities in pledge pursuant to this share
pledge agreement, the Corporation shall deposit with the Lender or a nominee of
the Lender (the "NOMINEE") all certificates representing such securities. All
certificates deposited pursuant to this Section shall, unless all necessary
consents and approvals are obtained, not contain any reference to restrictions
on the transfer of the shares represented thereby and shall be attached to duly
executed powers of attorney or forms of transfer. All of the Securities shall,
forthwith upon the request of the Lender, be registered as pledged, in the share
register of the Borrower, in the name of the Lender or its Nominee. If deposited
with the Nominee, the Nominee shall hold the Securities as Lender for all
purposes whatsoever in accordance with the terms of this share pledge agreement
and shall hold the Securities for and on behalf of the Lender in the same manner
and with the same effect as if the Lender held the Securities itself. It is
hereby understood and agreed that the responsibility of the Lender and any
Nominee hereunder is limited to exercising with regard to the Securities the
same degree of care which any of them gives to its valuable property at the
branch or office at which the Securities are held.
1.5 ATTACHMENT.
(1) The Corporation acknowledges that: (i) value has been given; (ii) it
has rights in the Securities; (iii) it has not agreed to postpone the time of
attachment of the Security Interest; and (iv) it has received a duplicate
original copy of this share pledge agreement.
(2) If the Securities now or at any time hereafter become evidenced, in
whole or in part, by uncertificated securities registered or recorded in records
maintained by or on behalf of
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the issuer of the Securities (the "ISSUER") in the name of a clearing agency,
the Corporation shall, at the request of the Lender, cause the Security Interest
to be entered in the records of such clearing agency.
1.6 CARE AND CUSTODY OF SECURITIES.
The Lender need not see to the collection of dividends on, or exercise any
option or right in connection with, the Securities and need not protect or
preserve them from depreciating in value or becoming worthless and is released
from all responsibility for any loss of value. The Lender shall be bound to
exercise in the physical keeping of the Securities only the same degree of care
as it would exercise with respect to its own securities kept at the same place.
1.7 NEGATIVE COVENANTS OF THE CORPORATION.
(1) The Corporation shall not, without the prior written consent of the
Lender, sell, exchange, release or abandon or otherwise dispose of, absolutely
or by way of security, any of its right, title or interest in and to the
Securities.
(2) Until such time as the Security Interest is discharged pursuant to
Section 3.1, the Corporation shall not, without the prior written consent of the
Lender, permit the Issuer to issue any further securities.
1.8 REPRESENTATIONS AND WARRANTIES
The Corporation represents and warrants to the Lender that:
(a) it is (or at the time of any future delivery, pledge, assignment or
transfer thereof will be) legal, beneficial and equitable owner of
the Securities free and clear of all liens of every description
whatsoever other than the security interest in favour of the Lender;
(b) all shares referred to in Schedule "A" hereto are duly authorized,
validly issued, fully paid and non-assessable;
(c) the shares referred to in Schedule "A" hereto represent (i) 65% of
the Corporation's shares of the Issuer, and (ii) 65% of the total
issued and outstanding shares of the Issuer; and
(d) the information contained in Schedule "A" hereto is true and
accurate in all material respects, and to the extent that such
information does not reflect the applicable share certificate, then
the Corporation shall cause Schedule "A" to be amended accordingly..
1.9 RIGHTS OF THE CORPORATION.
(1) Until the Security Interest has become enforceable, the Corporation
shall be entitled, but not required, to vote the Securities and to receive all
cash dividends. Whenever the
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Security Interest has become enforceable, all rights of the Corporation to vote
or to receive dividends shall cease and all such rights shall become vested
solely and absolutely in the Lender.
(2) Any dividends received by the Corporation contrary to Section 1.9(1)
or any other moneys or property which may be received by the Corporation at any
time for, or in respect of, the Securities shall be received as trustee for the
Lender and shall be immediately paid over to the Lender.
ARTICLE 2
ENFORCEMENT
2.1 ENFORCEMENT.
The Security Interest shall be and become enforceable against the
Corporation if and when it shall fail to repay or perform any of the Obligations
when due and payable or to be performed, as the case may be.
2.2 REMEDIES.
Whenever the Security Interest has become enforceable, the Lender may, at
any time in its sole discretion: (i) realize upon or otherwise dispose of or
contract to dispose of the Securities by sale, transfer or delivery; or (ii)
exercise and enforce all rights and remedies of a holder of the Securities as if
the Lender were their absolute owner (including, if necessary, causing the
Securities to be registered in the name of the Lender or its nominee if not
already done pursuant to Section 1.4(3)), all without demand of performance or
other demand, advertisement or notice of any kind to or upon the Corporation
(except as may be required by law). Any remedy may be exercised separately or in
combination and shall be in addition to, and not in substitution for, any other
rights the Lender may have, however created. The Lender shall not be bound to
exercise any right or remedy, and the exercise of rights and remedies shall be
without prejudice to the rights of the Lender in respect of the Obligations
including the right to claim for any deficiency.
2.3 STANDARDS OF SALE.
Without prejudice to the ability of the Lender to dispose of the
Securities in any manner which is commercially reasonable, the Corporation
acknowledges that a disposition of Securities by the Lender which takes place
substantially in accordance with the following provisions shall be deemed to be
commercially reasonable:
(a) Securities may be disposed of in whole or in part;
(b) Securities may be disposed of by public auction, public tender or
private contract, with or without advertising and without any other
formality;
(c) any sale conducted by the Lender shall be at such time and place, on
such notice and in accordance with such procedures as the Lender, in
its sole discretion, may deem advantageous;
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(d) Securities may be disposed of in any manner and on any terms
necessary to avoid violation of applicable law (including, without
limitation, compliance with such procedures as may restrict the
number of prospective bidders and purchasers, require that the
prospective bidders and purchasers have certain qualifications, and
restrict the prospective bidders and purchasers to persons who will
represent and agree that they are purchasing for their own account
for investment and not with a view to the distribution or resale of
the Securities) or in order to obtain any required approval of the
disposition (or of the resulting purchase) by any governmental or
regulatory authority or official;
(e) a disposition of Securities may be on such terms and conditions as
to credit or otherwise as the Lender, in its sole discretion, may
deem advantageous; and
(f) the Lender may establish an upset or reserve bid or price in respect
of the Securities.
2.4 DEALING WITH THE SECURITIES.
(1) The Lender shall not be obliged to exhaust their recourse against the
Borrower, the Corporation or any other person or against any other security they
may hold in respect of the Obligations before realizing upon or otherwise
dealing with the Securities in such manner as the Lender may consider desirable.
(2) The Lender may grant extensions or other indulgences, take and give up
security, accept compositions, grant releases and discharges and otherwise deal
with the Corporation and with other persons, sureties or security as they may
see fit without prejudice to the Obligations, the liability of the Corporation
or the rights of the Lender in respect of the Securities.
(3) The Lender shall not be: (i) liable or accountable for any failure to
collect, realize or obtain payment in respect of the Securities; (ii) bound to
institute proceedings for the purpose of collecting, enforcing, realizing or
obtaining payment of the Securities or for the purpose of preserving any rights
of any persons; (iii) responsible for any loss occasioned by any sale or other
dealing with the Securities or by the retention of or failure to sell or
otherwise deal with the Securities; or (iv) bound to protect the Securities from
depreciating in value or becoming worthless.
2.5 APPOINTMENT OF ATTORNEY.
The Corporation irrevocably appoints the Lender (and any of its officers)
as attorney of the Corporation (with full power of substitution) to do, make and
execute in the name of and on behalf of the Corporation upon the occurrence and
during the continuance of an Event of Default (as defined in the Loan Agreement)
all such further acts, documents, matters and things which the Lender may deem
necessary or advisable to accomplish the purposes of this share pledge agreement
including the execution, endorsement and delivery and transfer of the Securities
to the Lender or its Nominees or transferees. The Lender or its Nominees and
transferees are empowered to exercise all rights and powers and to perform all
acts of ownership with respect to the Securities to the same extent as the
Corporation might do. The powers of attorney herein granted is an addition to,
and not in substitution for any stock power of attorney delivered by the
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Corporation and such power of attorney may be relied upon by the Lender
severally or in combination. All acts of the attorney are hereby ratified and
approved, and the attorney shall not be liable for any act, failure to act or
any other matter or thing in connection therewith, except to the extent caused
by its own gross negligence or wilful misconduct.
2.6 DEALINGS BY THIRD PARTIES.
(1) No person dealing with the Lender, or an agent or receiver shall be
required to determine: (i) whether the Security Interest has become enforceable;
(ii) whether the powers which such person is purporting to exercise have become
exercisable; (iii) whether any money remains due to the Lender by the
Corporation; (iv) the necessity or expediency of the stipulations and conditions
subject to which any sale or lease shall be made; (v) the propriety or
regularity of any sale or other dealing by the Lender or any Lender with the
Securities; or (vi) how any money paid to the Lender has been applied.
(2) Any purchaser of Securities from the Lender shall hold the Securities
absolutely, free from any claim or right of whatever kind, including any equity
of redemption, of the Corporation, which it specifically waives (to the fullest
extent permitted by law) as against any such purchaser, all rights of
redemption, stay or appraisal which the Corporation has or may have under any
rule of law or statute now existing or hereafter adopted.
ARTICLE 3
GENERAL
3.1 NOTICES.
Any notices and other communications provided for in this share pledge
agreement shall be given in accordance with the provisions of the Guarantee.
3.2 DISCHARGE.
The Security Interest shall be discharged upon, but only upon, full
payment and performance of the Obligations and at the request and expense of the
Corporation. In connection therewith, the Lender shall execute and deliver to
the Corporation such releases and discharges as the Corporation may require in
its sole discretion, acting in good faith.
3.3 NO MERGER.
This share pledge agreement shall not operate by way of merger of any of
the Obligations and no judgment recovered by the Lender shall operate by way of
merger of, or in any way affect, the Security Interest, which is in addition to,
and not in substitution for, any other security now or hereafter held by the
Lender in respect of the Obligations.
3.4 FURTHER ASSURANCES.
The Corporation shall from time to time, whether before or after the
Security Interest shall have become enforceable, do all acts and things and
execute and deliver all transfers, assignments and instruments as the Lender may
reasonably require for: (i) protecting the
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Securities; (ii) perfecting the Security Interest; and (iii) exercising all
powers, authorities and discretions hereby conferred upon the Lender. The
Corporation shall, from time to time after the Security Interest has become
enforceable, do all acts and things and execute and deliver all transfers,
assignments and instruments as the Lender may require for facilitating the sale
or other disposition of the Securities in connection with their realization.
3.5 SUPPLEMENTAL SECURITY.
This share pledge agreement is in addition to and without prejudice to all
other security now held or which may hereafter be held by the Lender.
3.6 SUCCESSORS AND ASSIGNS.
This share pledge agreement shall be binding upon the Corporation, its
successors and assigns, and shall enure to the benefit of the Lender and its
successors and assigns. All rights of the Lender shall be assignable and in any
action brought by an assignee to enforce any such right, the Corporation shall
not assert against the assignee any claim or defence which the Corporation now
has or hereafter may have against the Lender.
3.7 HEADINGS, ETC.
The division of this share pledge agreement into articles, sections and
subsections and the insertion of headings are for convenience of reference only
and shall not affect its interpretation.
3.8 SEVERABILITY.
If any provision of this share pledge agreement shall be deemed by any
court of competent jurisdiction to be invalid or void, the remaining provisions
shall continue in full force and effect.
3.9 GOVERNING LAW.
This share pledge agreement shall be governed by and interpreted and
enforced in accordance with the laws of the Province of Ontario and the laws of
Canada applicable therein.
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IN WITNESS WHEREOF the Corporation has caused this share pledge agreement
to be executed by its duly authorized officers.
TARPON INDUSTRIES, INC.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: CEO.
LASALLE BUSINESS CREDIT, A DIVISION OF ABN
AMRO BANK N.V., CANADA BRANCH
Per:_____________________________________
Name:
Title:
Per:_____________________________________
Name:
Title:
IN WITNESS WHEREOF the Corporation has caused this share pledge agreement
to be executed by its duly authorized officers.
TARPON INDUSTRIES, INC.
Per:
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Name:
Title:
LASALLE BUSINESS CREDIT, A DIVISION OF ABN
AMRO BANK N.V., CANADA BRANCH
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: First Vice President
Per: /s/ ▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇
Title: First Vice President
SCHEDULE "A"
SECURITIES
NUMBER OF CERTIFICATE
ISSUER CLASS OF SECURITIES SECURITIES NUMBER
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Steelbank Inc. common shares 65 C-1