EXHIBIT 10.8
SECURITIES PLEDGE AGREEMENT
Securities Pledge Agreement dated May 14, 2004 made by BST Acquisition
Ltd. (the "PURCHASER") and Steelbank Inc. (the "CORPORATION") to and in favour
of ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ (collectively, the
"VENDORS").
RECITALS:
(a) The Vendors, the Purchaser and Tarpon Industries, Inc. (the
"PRINCIPAL") have entered into a share purchase agreement dated
April 2, 2004 as amended by amending agreement dated May 5, 2004
(the "PURCHASE AGREEMENT") providing for the purchase by the
Purchaser from the Vendors of all of the issued and outstanding
shares in the capital of the Corporation (the "SHARES");
(b) As part of the consideration for such purchase, the Purchaser (i)
issued to the Vendors a promissory note dated the date hereof in the
principal amount of $800,000.00 ("NOTE A") pursuant to Section
2.3(b) of the Purchase Agreement, (ii) issued to each of the Vendors
a promissory note in the principal amount of $135,000.00
(collectively, the "NOTES B") pursuant to Section 2.3(c) of the
Purchase Agreement, and (iii) agreed to pay to the Vendors an amount
equal to $375,000.00 of the purchase price for the Shares in the
form of common shares in the capital of the Principal pursuant to
and in accordance with the provisions of Section 2.3(d) of the
Purchase Agreement (the "COVENANT");
(c) The Corporation has delivered to the Vendors a general security
agreement dated the date hereof in favour of the Vendors (the "GSA")
and a guarantee dated the date hereof in favour of the Vendors (the
"GUARANTEE"), pursuant to Section 2.3(b) of the Purchase Agreement;
(d) The Purchaser and the Corporation (individually, a "PARTY" and
collectively, the " PARTIES") have executed and delivered this
Agreement to and in favour of the Vendors as security for the
payment and performance of the Obligations (hereinafter defined) and
as an essential and necessary condition (for the exclusive benefit
of the Vendors) to the completion of the transactions contemplated
by the Purchase Agreement;
(e) All references herein to dollars or currency shall refer to lawful
currency of Canada.
In consideration of the foregoing and the payment of Ten Dollars ($10.00)
by each of the Vendors to each of the Parties, and other good and valuable
consideration (the receipt and adequacy of which are acknowledged), the Parties
covenant and agree as follows:
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1. GRANT OF SECURITY
(1) The Purchaser hereby pledges, assigns and hypothecates (the "PLEDGE") to
and in favour of the Vendors and grants to the Vendors a security interest
(to which the Personal Property Security Act (Ontario) (the "PPSA")
applies) in the securities described in Schedule "A" annexed hereto and
constituting all of the issued and outstanding shares in the capital of
the Corporation (and herewith delivers to and deposits with the Vendors
all share certificates evidencing all such securities, duly endorsed in
favour of the Vendors (one-third as to each Vendor)) (collectively,
together with the dividends, moneys, rights and claims hereinafter
referred to and the securities referred to in Section 1(2) hereof, the
"SECURITIES"), and other moneys now or hereafter received or declared in
respect of the Securities and all other rights and claims of the Purchaser
in respect of the Securities.
(2) The Securities shall also include (if applicable) any and all
substitutions, additions or proceeds arising out of any consolidation,
subdivision, reclassification, stock dividend or similar increase or
decrease in, or alteration to, the share capital of the Corporation,
including any shares issued to the Purchaser pursuant to Section 3(4)(d)
hereof.
2. OBLIGATIONS SECURED
(1) The Pledge and security interests granted hereby (the "SECURITY INTEREST")
secure (i) the performance by the Purchaser of its obligations, as and
when due, under Note A and each of Notes B; (ii) the fulfillment of the
Covenant; and the obligations of the Corporation under the Guarantee
(collectively, and together with the expenses, costs and charges set out
in Section 2(2) hereof, the "OBLIGATIONS").
(2) All expenses, costs and charges incurred by or on behalf of the Vendors in
connection with this Agreement, the Security Interest or the Securities,
including but not limited to all legal fees (on a
solicitor-and-his-own-client basis), court costs, receiver's or agent's
remuneration and other expenses incurred in taking possession of,
protecting, insuring, preparing for disposition, realizing, collecting,
selling, transferring, delivering or obtaining payment for the Securities,
and of taking, defending or participating in any action or proceeding in
connection with any of the foregoing matters or otherwise in connection
with the Vendors' interest in the Securities, or relating to the
enforcement of this Agreement, shall be added to and form a part of the
Obligations.
(3) The Purchaser acknowledges that (i) adequate and sufficient 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 Agreement.
3. RIGHTS AND OBLIGATIONS OF THE PURCHASER
(1) Until the Security Interest has become enforceable, the Purchaser shall be
entitled to exercise all rights associated with the ownership of the
Securities, including without limitation the right to receive cash
dividends, save and except as such rights may
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otherwise be restricted, limited or otherwise affected under or pursuant
to this Agreement.
(2) Whenever the Security Interest has become enforceable, all rights of the
Purchaser to vote or to receive dividends shall cease and all such rights
shall become vested solely and absolutely in the Vendors.
(3) Any dividends received by the Purchaser contrary to this Section 3 or any
other moneys or property which may be received by the Purchaser at any
time for, or in respect of, the Securities shall be received as trustee
for the Vendors and shall be immediately paid over to the Vendors.
(4) At any time prior to December 31, 2004 except with the prior written
consent of the Vendors, such consent to be at the sole and unfettered
discretion of the Vendors, the Purchaser shall not permit the Corporation
to and the Corporation shall not:
(a) alter the rights, privileges, restrictions or conditions attaching
to the Securities in any regard whatsoever, (the "SHARE CONDITIONS")
save and except as provided in Sections 3(4)(b) and (d) below;
(b) amend the articles of incorporation of the Corporation (the
"Articles") provided that if any amendment of the Articles (i) does
not alter the Share Conditions in any regard whatsoever; (ii) does
not in any manner affect any of the Vendors' rights hereunder (or
any of the Purchaser's or the Corporation's obligations, hereunder);
and (iii) no Event of Default (as hereinafter defined) has occurred,
then the Corporation may amend the Articles without requiring the
consent of the Vendors;
(c) amalgamate with another corporation;
(d) issue any shares in the capital of the Corporation or issue any
options, warrants or any other type of security relating to the
equity in the Corporation (save and except only to the Purchaser, in
which event no consent of the Vendors shall be required, provided
that any such shares, options, warrants or other type of security
issued or provided to the Purchaser automatically become pledged,
charged and assigned to the Vendors as part of the Securities);
(e) reduce or make any distribution of its capital, or redeem, purchase
or otherwise retire or pay for any shares of its present or future
capital stock; and
(f) terminate the corporate existence of the Corporation, whether by
winding-up, dissolution, surrender of charter or otherwise.
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4. ENFORCEMENT
Upon the occurrence of any of the following events (each an "EVENT OF DEFAULT")
and as of the time of any such occurrence, (i) the Obligations shall
automatically become due and payable in full and required to be fully performed
(as the case may be), (ii) the Security Interest shall become fully enforceable
against the Purchaser, and (iii) all of the rights and remedies hereby conferred
upon the Vendors (and otherwise conferred upon the Vendors as a secured party
pursuant to the PPSA) shall become fully enforceable:
(a) any of the Parties does any act in breach of, or defaults in the
observance or performance of any of the provisions of this
Agreement;
(b) a default occurs under any of the Obligations; or
(c) a default occurs under the GSA.
5. REMEDIES
Upon the occurrence of an Event of Default, the Vendors may, at any time,
in their sole and unfettered discretion (subject to compliance with applicable
law), (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 the absolute owner thereof,
all without demand of performance or other demand, advertisement or notice of
any kind to or upon the Purchaser. Any remedy may be exercised separately or in
combination and shall be in addition to, and not in substitution for, any other
rights the Vendors may have, however created. The Vendors 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 Vendors in respect of the Obligations
including but not limited to the right to claim for any deficiency.
6. APPOINTMENT OF ATTORNEY
The Purchaser hereby irrevocably appoints the Vendors or any of them as
attorney of the Purchaser (with full power of substitution) to do, make and
execute in the name of and on behalf of the Purchaser, if and when the Security
Interest has become enforceable hereunder, all such further acts, documents,
matters and things which the Vendors may deem necessary or advisable to
accomplish the purposes of this Agreement, and, if and when the Security
Interest has become enforceable hereunder, the Vendors or their 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
Purchaser would otherwise be empowered but for this Agreement. All acts of any
such attorney are 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.
7. STANDARDS OF SALE
The Vendors shall have the right, at their option, to dispose of the
Securities in any manner whatsoever that they deem appropriate (subject to
compliance with applicable law),
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and the Purchaser hereby expressly acknowledges (but without implication of any
limitation whatsoever) that:
(a) The Securities may be disposed of in whole or in part;
(b) The Securities may be disposed of by public auction, public tender
or private contract;
(c) Any assignee of such Securities may be the Vendors or any of them;
(d) Any sale conducted by the Vendors shall be at such time and place in
accordance with such procedures as the Vendors may deem
advantageous;
(e) A disposition of Securities shall be on such terms and conditions
(including but not limited to as to credit or otherwise) as the
Vendors may deem advantageous; and
(f) The Vendors may establish an upset or reserve bid or price in
respect of the Securities.
8. DEALING WITH THE SECURITIES
The Vendors shall not be obliged to pursue or exhaust its recourse against
any of Parties or against any other security or securities the Vendors may hold
before realizing upon or otherwise dealing with the Securities in such manner as
the Vendors consider advisable (subject to compliance with applicable law), and
the Vendors may (at their option) grant time, renewals, extensions, indulgences,
releases and discharges to, may take securities from and give the same and any
and all existing securities up to, may abstain from taking securities from, or
from perfecting securities of, may accept compositions from and may otherwise
deal with any or all of the Parties and all others and all other securities
(including but not limited to the Securities hereby pledged or any part
thereof), as the Vendors may see fit, all without prejudice to the right of the
Vendors to seize, hold, deal with and realize on the Securities hereby pledged
to the Vendors, in any manner whatsoever that the Vendors consider desirable
(subject to compliance with applicable law).
9. DEALINGS BY THIRD PARTIES
(1) No person dealing with the Vendors or an agent or receiver shall be
required to determine (i) the necessity or expediency of the stipulations
and conditions subject to which any sale shall be made, or (ii) how any
money paid to the Vendors has been applied.
(2) The Purchaser acknowledges, covenants and agrees that any assignee or
transferee of the Securities from the Vendors (including but not limited
to the Vendors themselves) shall hold the Securities absolutely, free from
any claim or right of whatever kind, including but not limited to any
equity of redemption, of the Purchaser, which right or equity the
Purchaser specifically waives (to the fullest extent permitted by law) as
against any such assignee or transferee together with all rights of
redemption, stay or
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appraisal which the Purchaser has or may have under any rule of law or
statute now existing or hereafter adopted.
10. SUPPLEMENTAL SECURITY
This Agreement is in addition and without prejudice to and supplemental to
any and all other security now held or which may hereafter be held by the
Vendors. The Vendors may realize upon or enforce all or part of any security
held by the Vendors in any order that the Vendors desire and any such
realization upon or enforcement by any means of any security (hereunder or
otherwise) shall not limit or affect the realization upon or enforcement of the
Security Interest or any other security.
11. NO MERGER
This Agreement shall not operate by way of merger of any of the
Obligations and no judgment recovered by the Vendors 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 held by the Vendors in respect
of the Obligations.
12. TIME OF ESSENCE
Time shall be strictly of the essence of this Agreement and of every part
thereof and no extension or variation of this Agreement shall operate as a
waiver of this provision.
13. WAIVERS, ETC.
No failure on the part of the Vendors to exercise, and no delay in
exercising, any right under any of this Agreement shall operate as a waiver of
such right; nor shall any single or partial exercise of any right under this
Agreement preclude any other or further exercise thereof or the exercise of any
other right.
14. FURTHER ASSURANCES
The Parties shall from time to time, whether before or after the Security
Interest shall have become enforceable, do all such acts and things and execute
and deliver all such transfers, assignments and instruments as the Vendors may
reasonably require for (i) protecting the Securities, (ii) perfecting the
Security Interest, and (iii) exercising all powers, authorities and discretions
hereby conferred upon the Vendors. The Purchaser shall, from time to time after
the Security Interest has become enforceable, do all such acts and things and
execute and deliver all such transfers, assignments and instruments as the
Vendors may request for facilitating the sale, transfer, or other disposition of
the Securities.
15. NOTICES
Any notices, directions and other communications provided for in this
Agreement shall be in writing and given in accordance with the provisions of the
Purchase Agreement.
16. DISCHARGE
The Security Interest shall be discharged upon, but only upon, the full
and complete payment and performance of the Obligations. Upon such discharge of
the Security Interest
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and at the request and expense of the Purchaser, the Vendors shall execute and
deliver to the Purchaser such releases and discharges of the Security Interest
as the Purchaser may reasonably require.
17. HEADINGS, ETC.
The division of this Agreement into Sections and the insertion of headings
in this Agreement are for convenience of reference only and are not to affect
the interpretation of this Agreement or any part thereof. In construing this
Agreement, all words and personal pronouns relating thereto shall be read and
construed as the number and gender of the party or parties referred to in each
case require, and the verb agreeing therewith shall be construed as agreeing
with the required word and pronoun. Words such as "hereunder", "hereto",
"hereof, "herein", and other words commencing with "here", shall, unless the
context clearly indicates the contrary, refer to the whole of this Agreement and
not to any particular Section or part thereof.
18. SEVERABILITY
If any provision of this Agreement shall be deemed by a court of competent
jurisdiction to be invalid, void or unenforceable at law, then such provision
shall be deemed to be severed from this Agreement and the remaining provisions
shall remain in full force and effect and binding.
19. GOVERNING LAW
This Agreement shall be governed by and interpreted and enforced in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein. The Parties hereby irrevocably attorn and covenant to
submit in any suit, action or other legal proceeding arising out of or related
to this Agreement to the jurisdiction of the courts of the Province of Ontario.
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20. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon the Parties and their respective
successors (including but not limited to successors by continuance or
amalgamation), and shall enure to the benefit of the Vendors and each of their
respective heirs, executors, administrators, personal legal representatives,
successors and assigns. This Agreement may not be assigned by any of the
Parties, in whole or in part, without the prior express written consent of the
Vendors.
IN WITNESS WHEREOF the Parties have duly executed this Agreement.
BSTACQUISITION LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Authorized Signing Officer
Name:
Title:
I have the authority to bind
the Purchaser
STEELBANK INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Authorized Signing Officer
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: DIRECTOR
I have the authority to
bind the Corporation