Document:

ex_115695.htm

Exhibit 10.4

 

 

PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT (the “Pledge Agreement”), dated as of May __, 2018, (the “Effective Date”), is entered into by and between Stratus Aero Partners, LLC, a Delaware limited liability company (the “Pledgor”), and MINNESOTA BANK & TRUST, a Minnesota state banking corporation company (the “Lender”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Loan Agreement (hereinafter defined).

 

WHEREAS, Pledgor’s wholly-owned subsidiary, worthington acquisition, LLC, a Delaware limited liability company (the “Company”) and certain subsidiaries of the Company (together with the Company, the “Borrowers”), have entered into that certain Loan Agreement dated as of May __, 2018 (the “Loan Agreement”), by and among the Borrowers and Lender, pursuant to which Lender has agreed, subject to the conditions set forth therein, to extend credit to the Borrowers;

 

WHEREAS, as set forth on Schedule I, as of the Effective Date, Pledgor owns one hundred percent (100%) of the issued limited liability company membership interests (collectively, the "Pledgor Interests"), in the Company;

 

WHEREAS, Lender has required, as a condition to entering into the Loan Agreement, that Pledgor execute and deliver this Pledge Agreement;

 

NOW, THEREFORE, for and in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgor and Lender hereby agree as follows:

 

Section 1.     Pledge. Pledgor hereby pledges and grants to Lender a security interest in the collateral described in Sections 1.1 and 1.2 below (collectively, the “Pledged Collateral”):

 

1.1     Pledged Interest.

 

(a)     The Pledgor Interests (such membership interests being identified on Schedule I attached hereto and referred to as the “Pledged Interests”) of the Company, for which Pledgor shall deliver to Lender stock powers in the form of Exhibit A attached hereto and made a part hereof (the “Powers”) duly executed in blank, and all distributions, cash, instruments, investment property and other property from time to time received, receivable or otherwise distributed in respect of, or in exchange for, any or all of the Pledged Interests.

 

(b)     All additional membership interests of the Company described in Section 1.1(a) above from time to time acquired by Pledgor in any manner (any such additional membership interests shall constitute part of the Pledged Interests and Lender is irrevocably authorized to unilaterally amend Schedule I hereto to reflect such additional membership interests and Pledgor shall promptly deliver to Lender an executed Power with respect to the additional membership interests), and all purchase options, distributions, cash, instruments, investment property and other rights and options from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such membership interests.

 

 

 

 

1.2     Proceeds. All proceeds of the Pledged Collateral described in Section 1.1 above.

 

Section 2.     Security for Obligations. The Pledged Collateral secures the prompt payment and performance of all Obligations under the Loan Documents.

 

Section 3.     Pledged Collateral Adjustments. If, during the term of this Pledge Agreement:

 

(a)     Any distribution, reclassification, readjustment or other change is declared or made in the capital structure of the Company, or any option included within the Pledged Collateral is exercised, or both, or

 

(b)     Any rights or options shall be issued in connection with the Pledged Collateral, then One Hundred Percent (100%) of all new, substituted and additional, membership interests, rights, options, investment property or other securities, issued to Pledgor by reason of any of the foregoing, shall be immediately delivered to and held by Lender under the terms of this Pledge Agreement and shall constitute Pledged Collateral hereunder; provided, however, that nothing contained in this Section 3 shall be deemed to permit any distribution, or membership interests, rights or options, reclassification, readjustment or other change in the capital structure of the Company which is not expressly permitted by the Loan Agreement. Pledgor shall promptly deliver an executed Power to Lender with respect to any new membership interest obtained by Pledgor.

 

Section 4.    Subsequent Changes Affecting Pledged Collateral. Pledgor represents and warrants that it has made its own arrangements for keeping itself informed of changes or potential changes affecting the Pledged Collateral (including, but not limited to, rights to convert, rights to subscribe, payment of cash distributions or other distributions, reorganization or other exchanges, tender offers and voting rights), and Pledgor agrees that Lender shall not have any obligation to inform Pledgor of any such changes or potential changes or to take any action or omit to take any action with respect thereto. Lender may, during the continuance of an Event of Default, in connection with the exercise of its remedies hereunder, without notice and at its option, transfer or register the Pledged Collateral or any part thereof into its or its nominee’s name with or without any indication that such Pledged Collateral is subject to the security interest hereunder.

 

Section 5.     Representations and Warranties. Pledgor represents and warrants as follows as of the Effective Date and as of each date on which representations and warranties under the Loan Agreement shall be made:

 

(a)     Pledgor is the sole legal and beneficial owner of the membership interests of the Company, as set forth on Schedule I hereto, and the Pledged Interests comprise one hundred percent (100%) of the limited liability membership interests of the Company;

 

(b)     Pledgor has full limited liability company power and authority to enter into this Pledge Agreement;

 

 

 

 

(c)     There are no restrictions upon the voting rights associated with, or upon the transfer of, any of the Pledged Collateral;

 

(d)     Pledgor has the right to vote, pledge and grant a security interest in or otherwise transfer such Pledged Collateral free of any Liens, except for any Liens permitted hereunder or under the terms of the Loan Agreement, and the Liens created by this Pledge Agreement;

 

(e)     Pledgor owns the Pledged Collateral free and clear of any pledge, mortgage, hypothecation, lien, charge, encumbrance or any security interest therein, except for the pledge and security interest granted to Lender hereunder;

 

(f)     The pledge of the Pledged Collateral does not violate (1) the Articles of Organization or Limited Liability Agreement of the Company, or any indenture, mortgage, bank loan or credit agreement to which Pledgor or Company is a party or by which any of their respective properties or assets may be bound; or (2) any restriction on such transfer or encumbrance of such Pledged Collateral;

 

(g)     Pledgor hereby authorizes Lender to file financing statements pursuant to the UCC as Lender may request to perfect the security interest granted hereby;

 

(h)     No authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body that has not been obtained is required either (i) for the pledge of the Pledged Collateral pursuant to this Pledge Agreement or for the execution, delivery or performance of this Pledge Agreement by Pledgor or (ii) for the exercise by Lender of the voting or other rights provided for in this Pledge Agreement or the remedies in respect of the Pledged Collateral pursuant to this Pledge Agreement (except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally or other applicable law);

 

(i)     Upon the taking of possession of the Pledged Collateral or the filing of the appropriate UCC filing statements, the pledge of the Pledged Collateral pursuant to this Pledge Agreement will create a valid and perfected first priority security interest in the Pledged Collateral, in favor of Lender for the benefit of Lender, securing the payment and performance of Pledgor’s obligations under the Loan Documents;

 

(j)     The Powers are duly executed and to Pledgor’s knowledge, give Lender the authority they purport to confer;

 

(k)     Pledgor has no obligation to make further capital contributions or make any other payments to the Company with respect to its interest therein other than as specifically set forth in the Company Formation Documents (as defined in the Loan Agreement);

 

(l)     The Pledged Interests have been validly issued, are fully paid and non-assessable;

 

(m)     Company owns all right, title and interest in and to the Collateral (as defined in the Security Agreement); and

 

(o)     The Acknowledgment and Consent (in the form attached hereto as Exhibit B) has been duly executed by Company.

 

 

 

 

Section 6.     Voting Rights. During the term of this Pledge Agreement, and except as provided in this Section 6 below, Pledgor shall have the right to vote the Pledged Interests on all governing questions in a manner not inconsistent with the terms of this Pledge Agreement, the Loan Agreement and any other agreement, instrument or document executed pursuant thereto or in connection therewith. During the continuation of an Event of Default, Lender or Lender’s nominee may, at Lender’s or such nominee’s option and following written notice from Lender to Pledgor, exercise all voting powers pertaining to the Pledged Collateral, including, if allowed by the terms of the Company Formation Documents, the right to take action by written consent, and as such (x) exercise, or direct Pledgor as to the exercise of all voting, consent, managerial, election and other rights to the applicable Pledged Collateral and (y) exercise, or direct Pledgor as to the exercise of any and all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to the applicable Pledged Collateral, as if Lender were the absolute owner thereof, all without liability except to account for property actually received by it, but Lender shall have no duty to exercise any of the aforesaid rights, privileges or options and shall not be responsible for any failure so to do or delay in so doing. Such authorization shall constitute an irrevocable voting proxy, coupled with an interest, from Pledgor to Lender or, at Lender’s option, to Lender’s nominee.

 

Section 7.     Distributions.

 

(a)     So long as no Event of Default shall have occurred and is continuing:

 

(i)     Pledgor shall be entitled to receive and retain any and all distributions and interest paid in respect of the Pledged Collateral to the extent such distributions are not prohibited by the Loan Agreement, provided, however, that any and all

 

(A) distributions and interest paid or payable other than in cash with respect to, and instruments and other property received, receivable or otherwise distributed with respect to, or in exchange for, any of the Pledged Collateral;

 

(B) distributions paid or payable in cash with respect to any of the Pledged Collateral on account of a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in surplus; and

 

(C) cash paid, payable or otherwise distributed with respect to principal of, or in redemption of, or in exchange for, any of the Pledged Collateral;

 

shall be Pledged Collateral, and shall be forthwith delivered to Lender to hold as Pledged Collateral and shall, if received by Pledgor, be received in trust for Lender, be segregated from the other property or funds of Pledgor, and be delivered immediately to Lender as Pledged Collateral in the same form as so received (with any necessary endorsement); and

 

(b)     Upon the occurrence and during the continuance of an Event of Default:

 

(i)     All rights of Pledgor to receive the distributions and interest payments which it would otherwise be authorized to receive and retain pursuant to Section 7(a)(i) hereof shall cease, and all such rights shall thereupon become vested in Lender, which shall thereupon have the sole right to receive and hold as Pledged Collateral such distributions and interest payments;

 

 

 

 

(ii)     All distributions and interest payments which are received by Pledgor contrary to the provisions of clause (i) of this Section 7(b) shall be received in trust for Lender, shall be segregated from other funds of Pledgor and shall be paid over immediately to Lender as Pledged Collateral in the same form as so received (with any necessary endorsements);

 

(iii)     Pledgor shall, upon the request of Lender, at Pledgor’s expense, execute and deliver all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the reasonable opinion of Lender, Pledgor or their respective counsel, advisable to register the applicable Pledged Collateral under the provisions of the Securities Act of 1933, as amended (the “Securities Act”) and to exercise its best efforts to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in the opinion of Lender, Pledgor or their respective counsel, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto;

 

(iv)     Pledgor shall, upon the request of Lender, at Pledgor’s expense, use its reasonable efforts to qualify the Pledged Collateral under state securities or “Blue Sky” laws and to obtain all necessary governmental approvals for the sale of the Pledged Collateral, as requested by Lender;

 

(v)     Pledgor shall, upon the request of Lender, at Pledgor’s expense, cause the Company to make available to the holders of its securities, as soon as practicable, earnings statements which will satisfy the provisions of Section 11(a) of the Securities Act to the extent such provisions are applicable to the Company; and

 

(vi)     Pledgor shall, upon the request of Lender, at Pledgor’s expense, do or cause to be done all such other reasonable acts and things as may be necessary to make such sale of the Pledged Collateral or any part thereof valid and binding and in compliance with applicable law.

 

Pledgor will reimburse Lender for all reasonable expenses incurred by Lender, including, without limitation, reasonable attorneys’ and accountants’ fees and expenses in connection with the foregoing. Upon or at any time after the occurrence of an Event of Default, if Lender determines that, prior to any public offering of any securities constituting part of the Pledged Collateral, such securities should be registered under the Securities Act and/or registered or qualified under any other federal or state law and such registration and/or qualification is not practicable, then Pledgor agrees that it will be commercially reasonable if a private sale, upon at least five (5) Business Days’ notice to Pledgor, is arranged so as to avoid a public offering, even though the sales price established and/or obtained at such private sale may be substantially less than prices which could have been obtained for such security on any market or exchange or in any other public sale. Pledgor hereby indemnifies Lender for any and all liabilities incurred by Lender as a result of becoming a member of the Company, except to the extent caused by Lender’s gross negligence or willful misconduct.

 

 

 

 

Section 8.     Transfers and Other Liens; Issuance. Pledgor agrees that it will not (i) sell or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral without the prior written consent of Lender, except as permitted under the Loan Agreement, (ii) create or permit to exist any Lien upon or with respect to any of the Pledged Collateral, except for the security interest under this Pledge Agreement, and except for any Permitted Lien, or (iii) issue or permit the issuance or grant of any membership interests not currently issued in the Company.

 

Section 9.     Remedies.

 

(a)     Lender shall have, in addition to any other rights given under this Pledge Agreement or by applicable law, all of the rights and remedies with respect to the Pledged Collateral of a secured party under the Uniform Commercial Code of the State of Minnesota. Lender (personally or through an agent) is hereby authorized and empowered to transfer and register in its name or in the name of its nominee the whole or any part of the Pledged Collateral for the purpose of exercise of rights and remedies available hereunder and under applicable law, to exercise all voting rights with respect thereto, to collect and receive all cash distributions and other distributions made thereon, and to otherwise act with respect to the Pledged Collateral as though Lender were the outright owner thereof, Pledgor hereby irrevocably constituting and appointing Lender as the proxy and attorney-in-fact of Pledgor, with full power of substitution to do so; provided, however, that Lender shall have no duty to exercise any such right or to preserve the same and shall not be liable for any failure to do so or for any delay in doing so; provided, further, however, that Lender agrees to exercise such proxy and other rights and remedies described in this sentence only so long as an Event of Default shall have occurred and is continuing and following written notice thereof to Pledgor. In addition, after the occurrence of an Event of Default and during the continuation thereof, Lender shall have such powers of sale and other powers as may be conferred by applicable law. With respect to the Pledged Collateral or any part thereof which shall then be in or shall thereafter come into the possession or custody of Lender or which Lender shall otherwise have the ability to transfer under this Pledge Agreement and applicable law, Lender may, in its sole discretion, without notice except as specified herein or by applicable law, upon the occurrence and during the continuation of an Event of Default, sell or cause the same to be sold in accordance with applicable law at any exchange, broker’s board or at public or private sale, in one or more sales or lots, at such price as Lender may deem best, for cash or on credit on commercially reasonable terms or for future delivery, without assumption of any credit risk, and the purchaser of any or all of the Pledged Collateral so sold shall thereafter own the same, absolutely free from any claim, encumbrance or right of any kind whatsoever. Lender may, in its own name, or in the name of a designee or nominee, buy the Pledged Collateral at any public sale and, if permitted by applicable law, buy the Pledged Collateral at any private sale. Pledgor will pay to Lender all reasonable expenses (including, without limitation, court costs and reasonable attorneys’ and paralegals’ fees and expenses) of, or incidental to, the enforcement of any of the provisions hereof. Lender agrees to distribute any proceeds of the sale of the Pledged Collateral in accordance with the Loan Agreement and applicable law and Pledgor shall remain liable for any deficiency and shall be entitled to any surplus following the sale of the Pledged Collateral.

 

 

 

 

(b)     Unless any of the Pledged Collateral threatens to decline speedily in value or is or becomes of a type sold on a recognized market, Lender will give Pledgor reasonable notice of the time and place of any public sale thereof, or of the time after which any private sale or other intended disposition is to be made. Any sale of the Pledged Collateral conducted in conformity with reasonable commercial practices of banks, commercial finance companies, insurance companies or other financial institutions disposing of property similar to the Pledged Collateral shall be deemed to be commercially reasonable. Notwithstanding any provision to the contrary contained herein, Pledgor agrees that any requirements of reasonable notice shall be met if such notice is received by Pledgor as provided in Section 19 below at least ten (10) Business Days before the time of the sale or disposition; provided, however, that Lender may give any shorter notice that is commercially reasonable under the circumstances. Any other requirement of notice, demand or advertisement for sale is waived, to the extent permitted by law.

 

(c)     In view of the fact that federal and state securities laws may impose certain restrictions on the method by which a sale of the Pledged Collateral may be effected after an Event of Default, Pledgor agrees that after the occurrence and during the continuation of an Event of Default, Lender may, from time to time, attempt to sell all or any part of the Pledged Collateral by means of a private placement restricting the bidders and prospective purchasers to those who are qualified and will represent and agree that they are purchasing for investment only and not for distribution. If it elects to sell the Pledged Collateral by means of a private placement, Lender shall offer to sell or solicit offers to buy, and shall sell and transfer, the Pledged Collateral, or any part of it, in accordance with applicable law including without limitation to a limited number of sophisticated investors qualified to purchase the Pledged Collateral. If Lender solicits such offers from not less than four (4) such investors, then the acceptance by Lender of the highest offer obtained therefrom shall be deemed to be a commercially reasonable method of disposing of such Pledged Collateral; provided, however, that this Section does not impose a requirement that Lender solicit offers from four or more investors in order for the sale to be commercially reasonable.

 

Section 10.     Lender Appointed Attorney-in-Fact.

 

(a)     Pledgor hereby appoints Lender its attorney-in-fact, coupled with an interest, with full authority, in the name of Pledgor or otherwise, from time to time in Lender’s sole discretion, to take any action and to execute any instrument which Lender may deem necessary or advisable to accomplish the purposes of this Pledge Agreement, including, without limitation, to receive, endorse and collect all instruments made payable to Pledgor representing any distribution, interest payment or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same and to arrange for the transfer of all or any part of the Pledged Collateral on the books of the Company to the name of Lender or Lender’s nominee; provided, however, that Lender agrees to exercise such powers only so long as an Event of Default shall have occurred and is continuing.

 

(b)     Upon the indefeasible payment in full of all Obligations in cash and the termination of any commitment on the part of Lender to lend to the Borrowers, all Pledged Collateral (and all stock or other powers delivered in connection therewith) shall be returned to Pledgor and all rights with respect to the Pledged Collateral or the Company vested in Lender pursuant to this Pledged Agreement shall expire, terminate and be of no further effect whatsoever and Lender shall provide any release or other instruments required to effect such release or as reasonably requested by Pledgor to evidence such release.

 

 

 

 

Section 11.     Waivers.

 

(a)     Pledgor waives presentment and demand for payment of any of Pledgor’s obligations under the Loan Documents, protest and notice of dishonor or Event of Default with respect to any of Pledgor’s obligations under the Loan Documents and all other notices to which Pledgor might otherwise be entitled except as otherwise expressly provided herein or in the Loan Agreement except to the extent that applicable law shall prohibit such waiver, protest or notice.

 

(b)     Pledgor understands and agrees that its obligations and liabilities under this Pledge Agreement shall remain in full force and effect, notwithstanding foreclosure of any property securing all or any part of the Obligations under the Loan Documents by trustee sale or any other reason impairing the right of Pledgor or Lender to proceed against any of the Borrowers, any guarantor or any such Person’s property. Pledgor agrees that all of its obligations under this Pledge Agreement shall remain in full force and effect without defense, offset or counterclaim of any kind, notwithstanding that Pledgor’s rights against the Borrowers may be impaired, destroyed or otherwise affected by reason of any action or omission on the part of Lender other than actions or omissions that are determined to constitute gross negligence or willful misconduct on the part of Lender.

 

 

(c)     Pledgor hereby expressly waives the benefits of any law in any jurisdiction purporting to allow a guarantor or pledgor to revoke a continuing guaranty or pledge with respect to any transactions occurring after the date of the guaranty or pledge.

 

Section 12.     Term. This Pledge Agreement shall remain in full force and effect until all Obligations under the Loan Documents have been fully and indefeasibly paid in cash and any commitment on the part of Lender to provide credit has been terminated.

 

Section 13.     Definitions. The singular shall include the plural and vice versa and any gender shall include any other gender as the context may require.

 

Section 14.     Successors and Assigns. This Pledge Agreement shall be binding upon and inure to the benefit of Pledgor, Lender, and their respective successors and assigns. Pledgor’s successors and assigns shall include, without limitation, a receiver, trustee or debtor-in-possession of or for Pledgor.

 

Section 15.   GOVERNING LAW. ANY DISPUTE BETWEEN PLEDGOR AND LENDER OR ANY OTHER HOLDER OF SECURED OBLIGATIONS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS PLEDGE AGREEMENT, OR ANY OF THE OTHER LOAN DOCUMENTS, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF MINNESOTA, WHERE APPLICABLE, (EXCEPT TO THE EXTENT THAT THE UCC PROVIDES FOR THE APPLICATION OF LAWS OF ANOTHER STATE). THE PARTIES TO THIS PLEDGE AGREEMENT HAVE VOLUNTARILY ELECTED THAT THIS PLEDGE AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL LOANS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MINNESOTA.

 

 

 

 

Section 16.     CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.

 

(A) NON-EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH OF THE PARTIES HERETO AGREES AND ACCEPTS FOR ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS PLEDGE AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS THE NON-EXCLUSIVE JURISDICTION OF the courts of the State of MINNESOTA sitting in the County of HENNEPIN and of the United States District Court of the District of MINNESOTA, and any appellate court from any thereof. EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.

 

(B) OTHER JURISDICTIONS. PLEDGOR AGREES THAT LENDER, OR ANY HOLDER OF SECURED OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST PLEDGOR OR ITS RESPECTIVE PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER PLEDGOR OR (2) REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS OR (3) IN ORDER TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING THAT IS SEPARATE FROM ANY PROCEEDING BROUGHT UNDER CLAUSE (A) ABOVE AND THAT IS BROUGHT BY SUCH PERSON SOLELY TO REALIZE ON ANY SECURITY FOR THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON. PLEDGOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION (B).

 

(C) SERVICE OF PROCESS. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF LENDER TO SERVE ANY WRITS, SERVICE OF PROCESS OR SUMMONSES IN ANY SUIT, ACTION OR PROCEEDING ISSUED BY ANY COURT REFERRED TO IN THIS SECTION 16 IN ANY MANNER PERMITTED BY APPLICABLE LAW.

 

 

 

 

(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THIS PLEDGE AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS PLEDGE AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

Section 17.     Further Assurances. Pledgor agrees that it will cooperate with Lender and will execute and deliver, or cause to be executed and delivered, all such other stock powers, proxies, instruments and documents, and will take all such other actions, including, without limitation, the authorization and filing of financing statements, as Lender may reasonably request from time to time in order to carry out the provisions and purposes of this Pledge Agreement.

 

Section 18.     Lender’s Duty of Care. Lender shall not be liable for any acts, omissions, errors of judgment or mistakes of fact or law including, without limitation, acts, omissions, errors or mistakes with respect to the Pledged Collateral, except for those arising out of or in connection with Lender’s (i) gross negligence or willful misconduct, (ii) failure to use reasonable care with respect to the safe custody of the Pledged Collateral in Lender’s possession or (iii) breach of its express obligations under this Pledge Agreement. Without limiting the generality of the foregoing, Lender shall be under no obligation to take any steps necessary to preserve rights in the Pledged Collateral against any other parties but may do so at its option. All reasonable expenses incurred in connection therewith shall be for the sole account of Pledgor, and shall constitute part of Pledgor’s obligations under the Loan Documents secured hereby.

 

Section 19.     Notices. Any notices or demands required or contemplated hereunder shall be written and shall be effective two days after the placing thereof in the United States mails postage prepaid or with a nationally-recognized courier service such as Federal Express, addressed to the relevant party at its address set forth on the signature page below.

 

Section 20.     Amendments, Waivers and Consents. No amendment or waiver of any provision of this Pledge Agreement nor consent to any departure by Pledgor herefrom, shall in any event be effective unless the same shall be in writing and signed by Lender pursuant to the terms of the Loan Agreement, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

Section 21.     Section Headings. The section headings herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof.

 

Section 22.     Execution in Counterparts. This Pledge Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall together constitute one and the same agreement.

 

 

 

 

Section 23.     Merger. This Pledge Agreement and the other Loan Documents embody the final and entire agreement and understanding among Pledgor and Lender and supersede all prior agreements and understandings among Pledgor and Lender relating to the subject matter thereof. This Pledge Agreement and the other Loan Documents 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 hereto.

 

Section 24.     Irrevocable Proxy. Solely with respect to Article 8 Matters, Pledgor hereby irrevocably grants and appoints Lender, from the date of this Agreement until the termination of this Agreement in accordance with its terms, as Pledgor’s true and lawful proxy, for and in Pledgor’s name, place and stead to vote the Pledged Interest in the Company by Pledgor, whether directly or indirectly, beneficially or of record, now owned or hereafter acquired, with respect to such Article 8 Matters. The proxy granted and appointed in this Section 24 shall include the right to sign Pledgor’s name (as a member of the Company) to any consent, certificate or other document relating to an Article 8 Matter and the Pledged Interests that applicable law may permit or require, to cause the Pledged Interest to be voted in accordance with the preceding sentence. Pledgor hereby represents and warrants that there are no other proxies and powers of attorney with respect to an Article 8 Matter and the Pledged Interest that Pledgor may have granted or appointed. Pledgor will not give a subsequent proxy or power of attorney or enter into any other voting agreement with respect to the Pledged Interest with respect to any Article 8 Matter and any attempt to do so with respect to an Article 8 Matter shall be void and of no effect.

 

As used herein, “Article 8 Matter” means any action, decision, determination or election by the Company or its members that their membership interests or other equity interests, or any of them, be, or cease to be, a “security” as defined in and governed by Article 8 of the Uniform Commercial Code, and all other matters related to any such action, decision, determination or election.

 

The proxies and powers granted by the Pledgor pursuant to this Agreement are coupled with an interest and are given to secure the performance of the Pledgor’s obligations.

 

 

 

(Signature Page Follows)

 

 

 

 

IN WITNESS WHEREOF, Pledgor and Lender have executed this Pledge Agreement as of the date set forth above.

 

	 	
			Stratus Aero Partners, LLC, a Delaware limited liability company

			 

			By:                                                          

			 

			Its: Chief Executive Officer

			 

			Address for Notices:

			 

			Stratus Aero Partners, LLC

			5930 Balsom Ridge Road

			Denver, North Carolina 28037

			

 

 

 

With a copy to (which shall not constitute notice or service of process):

 

	 	
			Winthrop & Weinstine, P.A.

			225 S. 6th Street

			Minneapolis, MN 55402

			Attention: David Moran, Esq.

			

 

 

[Signature page to Pledge Agreement]

 

 

 

 

IN WITNESS WHEREOF, Pledgor and Lender have executed this Pledge Agreement as of the date set forth above.

 

	 	
			MINNESOTA BANK & TRUST, a Minnesota state banking corporation

			 

			By: _____________________________________

			Name: Eric P. Gundersen

			Its:      Senior Vice President

			

 

Address for Notices:

	 	
			7701 France Avenue South, Suite 110

			Edina, MN 55435

			Attention: Mr. Eric P. Gundersen, SVP

			Telephone No.: (952) 841-9331

			

 

With a copy to (which shall not constitute notice or service of process):

 

	 	
			Fabyanske, Westra, Hart & Thomson, P.A

			333 South Seventh Street, Suite 2600

			Attention: Frederick H. Ladner, Esq.

			

 

 

[Signature page to Pledge Agreement]

 

 

 

 

SCHEDULE I

 

to

 

PLEDGE AGREEMENT

 

dated as of May __, 2018

 

PLEDGED SUBSIDIARIES

 

 

 

Pledged Membership Interests

 

 

	
			Name

				 	
			Membership Interests of Pledgor

			Subject to Pledge

				 
	 	 	 	 	 
	
			WORTHINGTON ACQUISITION, LLC

				 	 	100%	 

 

 

 

 

EXHIBIT A

 

to

 

PLEDGE AGREEMENT

 

STOCK POWER

 

FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer to _____________________________ one hundred percent (100%) of the limited liability company membership interests of WORTHINGTON ACQUISITION, LLC, a North Carolina limited liability company (the “Membership Interests”), standing in the name of the undersigned on the books of said limited liability company and does hereby irrevocably constitute and appoint ___________________________________ as the undersigned’s true and lawful attorney, for it and in its name and stead, to sell, assign and transfer all or any of the Membership Interests, and for that purpose to make and execute all necessary acts of assignment and transfer thereof; and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney or substitute or substitutes shall lawfully do by virtue hereof.

 

Dated: _______________

 

 

	 	 	 	 	
			STRATUS AERO PARTNERS, LLC,

			a Delaware limited liability company

				 
	 	 	 	 	 	 	 	 
	 	 	 	 	
			By:

				
			_____________________________

			Name: _______________________

			Its: __________________________

				 

 

 

 

 

EXHIBIT B

 

to

 

PLEDGE AGREEMENT

 

FORM OF ACKNOWLEDGEMENT AND CONSENT

 

 

The undersigned hereby acknowledges receipt of a copy of the Pledge Agreement dated as of May __, 2018, made by STRATUS AERO PARTNERS, LLC, a Delaware limited liability company ("Company") for the benefit of MINNESOTA BANK & TRUST, a Minnesota state banking corporation company, as Lender (the “Pledge Agreement”). The undersigned agrees for the benefit of Lender that:

 

	 	
			1.

				
			The undersigned will be bound by the terms of the Pledge Agreement and will comply with such terms insofar as such terms are applicable to the undersigned.

			

 

	 	
			2.

				
			The undersigned will notify Lender promptly in writing of the occurrence of any events which may result in the Company receiving any of the interests or rights described in Section 1.1(b) of the Pledge Agreement.

			

 

	 	
			3.

				
			The terms of Section 7(b)(vi) of the Pledge Agreement shall apply to it, mutatis mutandis, with respect to all actions that may be required of it under or pursuant to or arising out of Section 7 of the Pledge Agreement.

			

 

	 	
			4.

				
			This Acknowledgement and Consent shall be considered the written approval of the undersigned, if required by its articles of organization, operating agreement or similar document, for all matters referred to in the Pledge Agreement that may require the consent of the undersigned.

			

 

 

	 	
			Worthington Acquisition, LLC, 

			a Delaware limited liability company

			 

			By:                                                                      

			Its:     Presidentex_115698.htm

Exhibit 10.5

 

 

LIMITED GUARANTY

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce Minnesota Bank & Trust, a Minnesota state banking corporation (the “Lender”), at its option at any time or from time to time to make loans or extend other accommodations to or for the account of Worthington Acquisition, LLC, a North Carolina limited liability company (together with its successors and assigns, “Acquisition”), Worthington Aviation, LLC, a North Carolina limited liability company (together with its successors and assigns, “Aviation”), Worthington MRO, LLC, a North Carolina limited liability company (together with its successors and assigns, “MRO”; and together with Acquisition and Aviation being sometimes collectively referred to herein as, the “Borrowers” and individually as, a “Borrower”), the undersigned hereby absolutely and unconditionally guarantees to the Lender the full and prompt payment and performance when due, whether at maturity or earlier by reason of acceleration or otherwise, of each and every debt, liability and obligation of every type which Borrowers may now or at any time hereafter owe to the Lender, whether such debt, liability or obligation now exists or is hereafter created or incurred, and whether it is or may be direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or joint, several or joint and several (all such debts, liabilities and obligations are hereinafter collectively referred to as the “Indebtedness”).

 

The undersigned further acknowledges and agrees with the Lender that:

 

1.     No act or thing need occur to establish the liability of the undersigned hereunder and no act or thing except full payment and discharge of all Indebtedness shall in any way exonerate the undersigned or modify, reduce, limit or release the liability of the undersigned hereunder.

 

2.     This is an absolute, unconditional and continuing guaranty of payment of the Indebtedness and shall continue to be in force and be binding upon the undersigned, whether or not all Indebtedness is paid in full, until this guaranty is revoked as to future transactions by written notice actually received by the Lender. Such revocation shall not be effective as to Indebtedness existing or committed for at the time of actual receipt of such notice by the Lender, or as to any renewals, extensions and refinancings thereof. If there be more than one guarantor hereunder, such revocation shall be effective only as to the one so revoking. The dissolution or adjudication of bankruptcy of the undersigned shall not revoke this guaranty, except upon actual receipt of written notice thereof by the Lender and only prospectively, as to future transactions, as herein set forth.

 

3.     The undersigned represents and warrants to the Lender that: (a) the undersigned is a corporation duly organized and existing in good standing under the laws of the State of Delaware and has full power and authority to make and deliver this guaranty; (b) the execution, delivery and performance of this guaranty by the undersigned have been duly authorized by all necessary action of its directors and shareholders and do not and will not violate the provisions of, or constitute a default under, any presently applicable law or its articles of incorporation or bylaws or any agreement presently binding on it; (c) this guaranty has been duly executed and delivered by the authorized officers of the undersigned and constitutes its lawful, binding and legally enforceable obligation; (d) the authorization, execution, delivery and performance of this guaranty do not require notification to, registration with, or consent or approval by, any federal, state or local regulatory body or administrative agency; (e) each of the representations and warranties contained in that certain Loan Agreement dated as of the date hereof (such Loan Agreement as amended, modified, supplemented or restated from time to time being the “Loan Agreement;” capitalized terms not otherwise defined herein being used herein as therein defined) by and among the Borrowers and the Lender pertaining to the undersigned as “Guarantor”, or as a “Loan Party” are true and correct; and (f) (i) the Borrowers and the undersigned are members of a related organization of various entities constituting a single economic and business enterprise so that the Borrowers and the undersigned share an identity of interests such that any benefit received by either one of them benefits the other; (ii) the Borrowers and the undersigned render services for the benefit of the one another, purchase or sell and supplies goods to or from or for the benefit of one another, makes loans, advances and provides other financial accommodations to or for the benefit of one another; (iii) in some cases, the Borrowers and the undersigned have centralized accounting and legal service and common officers and directors; and (iv) while the Borrowers and the undersigned operate as a single economic enterprise, nothing contained in this Section 3(f) should be construed or imply that the Borrowers and the undersigned are not separate legal entities.

 

 

 

 

4.     Notwithstanding any term set forth herein to the contrary, the liability of the Guarantor hereunder shall be shall be limited to the sum of:

 

a.     the principal amount of the Indebtedness equal to the Guaranty Amount (as such term is defined in the Loan Agreement); plus

 

b.     interest on such Guaranty Amount of principal; plus

 

c.     all expenses, including attorneys’ fees and legal expenses, paid or incurred by the Lender in endeavoring to collect the Indebtedness, or any part thereof, and in enforcing this guaranty prior to Guarantor’s payment of this Guaranty in full, which attorneys’ fees and legal expenses shall include, but not be limited to, any attorneys’ fees and legal expenses incurred in connection with any appeal of a lower court’s judgment or order;

 

provided, however, that no payment on the Indebtedness shall reduce the Guarantor’s liability under this Guaranty unless such payment is made by Guarantor and is accompanied by an advice received by the Lender advising the Lender that such payment is made under this guaranty.

 

5.     The undersigned hereby waives any right of contribution, reimbursement, recourse or subrogation available to the undersigned against each Borrower, any other person liable to payment of the Indebtedness, or as to any collateral security therefor, until the Indebtedness has been paid in full in cash.

 

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6.     The undersigned will pay or reimburse the Lender for all reasonable costs and expenses (including reasonable attorneys' fees and legal expenses) incurred by the Lender in connection with the protection, defense or enforcement of this guaranty, whether or not suit is commenced, which attorneys' fees and legal expenses shall include, but not be limited to, any attorneys' fees and legal expenses incurred in connection with any appeal of a lower court's judgment or order.

 

7.     Whether or not any existing relationship between the undersigned and Borrowers has been changed or ended and whether or not this guaranty has been revoked, the Lender may, but shall not be obligated to, enter into transactions resulting in the creation or continuance of Indebtedness, without any consent or approval by the undersigned and without any notice to the undersigned. The liability of the undersigned shall not be affected or impaired by any of the following acts or things: (i) any acceptance of collateral security, guarantors, accommodation parties or sureties for any or all Indebtedness; (ii) any one or more extensions or renewals of Indebtedness (whether or not for longer than the original period) or any modification of the interest rates, maturities or other contractual terms applicable to any Indebtedness; (iii) any waiver or forbearance granted to Borrowers, any delay or lack of diligence in the enforcement of Indebtedness, or any failure to institute proceedings, file a claim, give any required notices or otherwise protect any Indebtedness; (iv) any full or partial release of, settlement with, or agreement not to sue, Borrowers or any other guarantor or other person liable in respect of any Indebtedness; (v) any discharge of any evidence of Indebtedness or the acceptance of any instrument in renewal thereof or substitution therefor; (vi) any failure to obtain collateral security (including rights of setoff) for Indebtedness, or to see to the proper or sufficient creation and perfection thereof, or to establish the priority thereof, or to protect, insure, or enforce any collateral security; or any modification, substitution, discharge, impairment, or loss of any collateral security; (vii) any foreclosure or enforcement of any collateral security; (viii) any transfer of any Indebtedness or any evidence thereof; (ix) any order of application of any payments or credits upon Indebtedness; (x) any election by the Lender under § 1111(b)(2) of the United States Bankruptcy Code.

 

8.     The undersigned waives any and all defenses and claims of Borrowers, or any other obligor pertaining to Indebtedness, except the defense of discharge by payment in full. Without limiting the generality of the foregoing, the undersigned will not assert, plead or enforce against the Lender any defense of waiver, release, discharge in bankruptcy, statute of limitations, res judicata, statute of frauds, anti-deficiency statute, fraud, incapacity, minority, usury, illegality or unenforceability which may be available to Borrowers or to any other person liable for any Indebtedness. The undersigned expressly agrees that the undersigned shall be and remain liable for any deficiency remaining after foreclosure of any mortgage or security interest securing Indebtedness, whether or not the liability of Borrowers or any other obligor for such deficiency is discharged pursuant to statute or judicial decision.

 

9.     The undersigned waives presentment, demand for payment, notice of dishonor or nonpayment and protest of any instrument evidencing Indebtedness. The Lender shall not be required first to resort for payment of the Indebtedness to Borrowers or other persons or their properties or first to enforce, realize upon or exhaust any collateral security for indebtedness, before enforcing the guaranty.

 

3

 

 

10.     If any payment applied by the Lender to Indebtedness is thereafter set aside. recovered, rescinded or required to be returned for any reason (including, without limitation, the bankruptcy, insolvency or reorganization of any Borrower or any other obligor), the Indebtedness to which such payment was applied shall for the purposes of this guaranty be deemed to have continued in existence, notwithstanding such application, and this guaranty shall be enforceable as to such Indebtedness as fully as if such application had never been made.

 

11.     The undersigned acknowledges and agrees that the Lender (a) has not made any representations or warranties with respect to, (b) does not assume any responsibility to the undersigned for, and (c) has no duty to provide information to the undersigned regarding, the enforceability of any of the Indebtedness or the financial condition of the Borrowers or any guarantor. The undersigned has independently determined the creditworthiness of the Borrowers and the enforceability of the Indebtedness and until the Indebtedness is paid in full will independently and without reliance on the Lender continue to make such determinations.

 

12.     The liability of the undersigned under this guaranty is in addition to and shall be cumulative with all other liabilities of the undersigned to the Lender as guarantor or otherwise, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

 

13.     The undersigned agrees that any and all present and future debts and obligations of Borrowers to the undersigned are hereby subordinated to the claims of the Lender and are hereby assigned by such undersigned to Lender as security for the Indebtedness and the undersigned’s obligations under this Guaranty.

 

14.     If there be more than one guarantor of the Indebtedness, all agreements and promises herein shall be construed to be joint and several with all other guarantors of the Indebtedness, whether pursuant to this guaranty or separate guaranties and shall be fully binding upon and enforceable against any or all of the undersigned and the other guarantors. This guaranty shall be binding upon the undersigned and the successors and assigns of the undersigned and shall inure to the benefit of the Lender and its participants, successors and assigns. Any invalidity or unenforceability of any provision or application of this guaranty shall not affect other lawful provisions and application hereof, and to this end the provisions of this guaranty are declared to be severable. This guaranty may not be waived, modified, amended, terminated, released or otherwise changed except by a writing signed by the undersigned and the Lender. This guaranty shall be governed by the internal laws of the State of Minnesota, without giving effect to conflict of laws principles thereof. The undersigned waives notice of the Lender's acceptance hereof.

 

15.     AT THE OPTION OF THE LENDER, THIS GUARANTY AND EACH OTHER LOAN DOCUMENT TO WHICH THE UNDERSIGNED IS A PARTY MAY BE ENFORCED IN ANY FEDERAL OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE UNDERSIGNED CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE UNDERSIGNED COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, THE LENDER, AT ITS OPTION, SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

 

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16.     Wherever possible, each provision of this guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this guaranty. In any action or proceeding involving any state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of the undersigned hereunder would otherwise be held or determined to be void, invalid or unenforceable on account of the amount of the undersigned's liability under this guaranty, then, notwithstanding any other provision of this guaranty to the contrary, the amount of such liability shall, without any further action by the undersigned, the Lender or any other person, be automatically limited and reduced to the highest amount which is valid and enforceable as determined in such action or proceeding.

 

17.     THE UNDERSIGNED HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS GUARANTY OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR (b) ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY, AND AGREEs THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

5

 

 

IN WITNESS WHEREOF, this guaranty has been duly executed by the undersigned to be effective as of May __, 2018.

 

	 	
			AIR T, INC., a Delaware corporation

			 

			By:                                                                    

			Name:  Nicholas J. Swenson

			Its:        Chief Executive Officer

			

 

 

 

Address for Guarantor:

 

5930 Balsom Ridge Road

Denver, NC 28037

 

 

[Signature page to Guaranty of Air T, Inc.]

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