Pledge Agreement - Arabian American Development Co., American Shield Refining Co., Fahad Al-Athel, Hatem El-Khalidi, Ingrid El-Khalidi and Preston Peak
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement") is made as of the 15th day of May,
2001, by Arabian American Development Company, a Delaware corporation, and
American Shield Refining Company, a Delaware corporation (hereinafter
collectively called "Pledgor", whether one or more), in favor of Fahad Al-Athel,
Hatem El-Khalidi, Ingrid El-Khalidi and Preston Peak (hereinafter collectively
called "Secured Party", whether one or more). Pledgor hereby agrees with Secured
Party as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings indicated below:
(a) The term "Code" shall mean the Uniform Commercial
Code as in effect in the State of Texas on the date of this Agreement
or as it may hereafter be amended from time to time.
(b) The term "Collateral" shall mean all property
specifically described on Schedule "A" attached hereto and made a part
hereof. The term Collateral, as used herein, shall also include (i) all
certificates, instruments and/or other documents evidencing the
foregoing, (ii) all renewals, replacements and substitutions of all of
the foregoing, (iii) all Additional Property (as hereinafter defined),
and (iv) all PRODUCTS and PROCEEDS of all of the foregoing. The
designation of proceeds does not authorize Pledgor to sell, transfer or
otherwise convey any of the foregoing property. The delivery at any
time by Pledgor to Secured Party of any property as a pledge to secure
payment or performance of any indebtedness or obligation whatsoever
shall also constitute a pledge of such property as Collateral
hereunder.
(c) The term "Guaranty Documents" shall mean this
Agreement, all documents and instruments evidencing all deferred
compensation and retirement benefits owed by Pledgor to Hatem
El-Khalidi and all letter agreements and other loan documents
evidencing Indebtedness of Pledgor to Secured Party and all other
instruments and documents evidencing, securing, governing, guaranteeing
and/or pertaining to the Indebtedness, the aggregate principal amount
of such Indebtedness as of the date hereof being as follows: Fahad
Al-Athel, $445,000; Hatem El-Khalidi, $1,055,000; Ingrid El-Khalidi,
$100,000; and Preston Peak, $100,000.
(d) The term "Indebtedness" shall mean (i) all
indebtedness, obligations and liabilities of Pledgor to Secured Party
of any kind or character, now existing or hereafter arising, whether
direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several or joint and several, now existing or
hereafter arising under the Guaranty Documents, (ii) all accrued but
unpaid interest on any of the indebtedness described in (i) above,
(iii) all obligations of Pledgor to Secured Party under the Guaranty
Documents or any documents evidencing, securing, governing and/or
pertaining to all or any part of the indebtedness described in (i) and
(ii) above, (iv) all costs and expenses incurred by Secured Party in
connection with the collection and administration of all or any part of
the indebtedness and obligations described in (i), (ii) and (iii) above
or the protection or preservation of, or realization upon, the
collateral securing all or any part of
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such indebtedness and obligations, including, without limitation, all
reasonable attorneys' fees and (v) all renewals, extensions,
modifications and rearrangements of the indebtedness and obligations
described in (i), (ii), (iii) and (iv) above.
(e) The term "Secured Party" shall mean the persons named
in the introductory paragraph of this Agreement, their respective
successors and assigns, including, without limitation, any party to
whom a Secured Party, or its successors or assigns, may assign its
rights and interests under this Agreement.
All words and phrases used herein which are expressly defined in Section 1.201,
Chapter 8 or Chapter 9 of the Code shall have the meaning provided for therein.
Other words and phrases defined elsewhere in the Code shall have the meaning
specified therein, except to the extent such meaning is inconsistent with a
definition in Section 1.201, Chapter 8 or Chapter 9 of the Code.
2. SECURITY INTEREST. As security for the Indebtedness, Pledgor,
for value received, hereby grants to Secured Party a continuing security
interest in the Collateral.
3. ADDITIONAL PROPERTY. Collateral shall also include the
following property (collectively, the "Additional Property") which Pledgor
becomes entitled to receive or shall receive in connection with any other
Collateral: (a) any stock certificate, including, without limitation, any
certificate representing a stock dividend or any certificate in connection with
any recapitalization, reclassification, merger, consolidation, conversion, sale
of assets, combination of shares, stock split or spin-off; (b) any option,
warrant, subscription or right, whether as an addition to or in substitution of
any other Collateral; (c) any dividends or distributions of any kind whatsoever,
whether distributable in cash, stock or other property; (d) any interest,
premium or principal payments; and (e) any conversion or redemption proceeds. So
long as any Indebtedness shall remain outstanding, all rights of Pledgor to
receive and retain any dividends, distributions or interest paid in respect of
the Collateral shall cease and all such rights shall be vested in Secured Party,
who shall have the sole right to receive and hold as Collateral such dividends,
distributions and interest. All Additional Property received by Pledgor shall be
received in trust for the benefit of Secured Party and shall be segregated from
other funds and property of Pledgor. All Additional Property and all
certificates or other written instruments or documents evidencing and/or
representing the Additional Property that is received by Pledgor, together with
such instruments of transfer as Secured Party may request, shall immediately be
delivered to or deposited with Secured Party and held by Secured Party as
Collateral under the terms of this Agreement. If the Additional Property
received by Pledgor shall be shares of stock or other securities, such shares of
stock or other securities shall be duly endorsed in blank or accompanied by
proper instruments of transfer and assignment duly executed in blank with, if
requested by Secured Party, signatures guaranteed by a member or member
organization in good standing of an authorized Securities Transfer Agents
Medallion Program, all in form and substance satisfactory to Secured Party.
Secured Party shall be deemed to have possession of any Collateral in transit to
Secured Party or its agent.
4. VOTING RIGHTS. As long as no Event of Default shall have
occurred hereunder, any voting rights incident to any stock or other securities
pledged as Collateral may be exercised by Pledgor; provided, however, that
Pledgor will not exercise, or cause to be exercised, any such voting rights,
without the prior written consent of Secured Party, if the direct or indirect
effect of such vote will result in an Event of Default hereunder.
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5. MAINTENANCE OF COLLATERAL. Other than the exercise of
reasonable care to assure the safe custody of any Collateral in Secured Party's
possession from time to time, Secured Party does not have any obligation, duty
or responsibility with respect to the Collateral. Without limiting the
generality of the foregoing, Secured Party shall not have any obligation, duty
or responsibility to do any of the following: (a) ascertain any maturities,
calls, conversions, exchanges, offers, tenders or similar matters relating to
the Collateral or informing Pledgor with respect to any such matters; (b) fix,
preserve or exercise any right, privilege or option (whether conversion,
redemption or otherwise) with respect to the Collateral unless (i) Pledgor makes
written demand to Secured Party to do so, (ii) such written demand is received
by Secured Party in sufficient time to permit Secured Party to take the action
demanded in the ordinary course of its business, and (iii) Pledgor provides
additional collateral, acceptable to Secured Party in its sole discretion; (c)
collect any amounts payable in respect of the Collateral (Secured Party being
liable to account to Pledgor only for what Secured Party may actually receive or
collect thereon); (d) sell all or any portion of the Collateral to avoid market
loss; (e) sell all or any portion of the Collateral unless and until (i) Pledgor
makes written demand upon Secured Party to sell the Collateral, and (ii) Pledgor
provides additional collateral, acceptable to Secured Party in its sole
discretion; or (f) hold the Collateral for or on behalf of any party other than
Pledgor.
6. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and
warrants the following to Secured Party:
(a) Due Authorization. The execution, delivery and
performance of this Agreement and all of the other Guaranty Documents
by Pledgor have been duly authorized by all necessary corporate action
of Pledgor, to the extent Pledgor is a corporation, or by all necessary
partnership action, to the extent Pledgor is a partnership.
(b) Enforceability. This Agreement and the other Guaranty
Documents constitute legal, valid and binding obligations of Pledgor,
enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights and except
to the extent specific remedies may generally be limited by equitable
principles.
(c) Ownership and Liens. Pledgor has good and marketable
title to the Collateral, free and clear of all liens, security
interests, encumbrances or adverse claims, except for the security
interest created by this Agreement. No dispute, right of setoff,
counterclaim or defense exists with respect to all or any part of the
Collateral. Pledgor has not executed any other security agreement
currently affecting the Collateral and no financing statement or other
instrument similar in effect covering all or any part of the Collateral
is on file in any recording office, except as may have been executed or
filed in favor of Secured Party.
(d) No Conflicts or Consents. Neither the ownership, the
intended use of the Collateral by Pledgor, the grant of the security
interest by Pledgor to Secured Party herein nor the exercise by Secured
Party of its rights or remedies hereunder, will (i) conflict with any
provision of (A) any domestic or foreign law, statute, rule or
regulation, (B) the certificate of incorporation or bylaws of Pledgor
or (C) any agreement, judgment, license, order or permit applicable to
or binding upon Pledgor or otherwise affecting the Collateral or (ii)
result in or require the creation of any lien, charge or encumbrance
upon
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any assets or properties of Pledgor or of any person except as may be
expressly contemplated in the Guaranty Documents. Except as expressly
contemplated in the Guaranty Documents, no consent, approval,
authorization or order of, and no notice to or filing with, any court,
governmental authority or third party is required in connection with
the grant by Pledgor of the security interest herein or the exercise by
Secured Party of its rights and remedies hereunder.
(e) Security Interest. Pledgor has and will have at all
times full right, power and authority to grant a security interest in
the Collateral to Secured Party in the manner provided herein, free and
clear of any lien, security interest or other charge or encumbrance.
This Agreement creates a legal, valid and binding security interest in
favor of Secured Party in the Collateral.
(f) Location. Pledgor's residence or chief executive
office, as the case may be, and the office where the records concerning
the Collateral are kept is located at its address set forth on the
signature page hereof.
(g) Solvency of Pledgor. As of the date hereof, and after
giving effect to this Agreement and the completion of all other
transactions contemplated by Pledgor at the time of the execution of
this Agreement, (i) Pledgor is and will be solvent, (ii) the fair
saleable value of Pledgor's assets exceeds and will continue to exceed
Pledgor's liabilities (both fixed and contingent), (iii) Pledgor is
paying and will continue to be able to pay its debts as they mature and
(iv) if Pledgor is not an individual, Pledgor has and will have
sufficient capital to carry on Pledgor's businesses and all businesses
in which Pledgor is about to engage.
(h) Securities. Any certificates evidencing securities
pledged as Collateral are valid and genuine and have not been altered.
All securities pledged as Collateral have been duly authorized and
validly issued, are fully paid and non-assessable, and were not issued
in violation of the preemptive rights of any party or of any agreement
by which Pledgor or the issuer thereof is bound. No restrictions or
conditions exist with respect to the transfer or voting of any
securities pledged as Collateral, except as has been disclosed to
Secured Party in writing. To the best of Pledgor's knowledge, no issuer
of such securities (other than securities of a class which are publicly
traded) has any outstanding stock rights, rights to subscribe, options,
warrants or convertible securities outstanding or any other rights
outstanding entitling any party to have issued to such party capital
stock of such issuer, except as has been disclosed to Secured Party in
writing.
7. AFFIRMATIVE COVENANTS. Pledgor will comply with the covenants
contained in this Section at all times during the period of time this Agreement
is effective, unless Secured Party shall otherwise consent in writing.
(a) Ownership and Liens. Pledgor will maintain good and
marketable title to all Collateral, free and clear of all liens,
security interests, encumbrances or adverse claims, except for the
security interest created by this Agreement and the security interests
and other encumbrances expressly permitted by the other Guaranty
Documents. Pledgor will not permit any dispute, right of setoff,
counterclaim or defense to exist with respect to all or any part of the
Collateral. Pledgor will cause any financing statement or other
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security instrument with respect to the Collateral to be terminated,
except as may exist or as may have been filed in favor of Secured
Party. Pledgor will defend at its expense Secured Party's right, title
and security interest in and to the Collateral against the claims of
any third party.
(b) Inspection of Books and Records. Pledgor will keep
adequate records concerning the Collateral and will permit Secured
Party and all representatives and agents appointed by Secured Party to
inspect Pledgor's books and records of or relating to the Collateral at
any time during normal business hours, to make and take away
photocopies, photographs and printouts thereof and to write down and
record any such information.
(c) Adverse Claim. Pledgor covenants and agrees to
promptly notify Secured Party of any claim, action or proceeding
affecting title to the Collateral, or any part thereof, or the security
interest created hereunder and, at Pledgor's expense, defend Secured
Party's security interest in the Collateral against the claims of any
third party. Pledgor also covenants and agrees to promptly deliver to
Secured Party a copy of all written notices received by Pledgor with
respect to the Collateral, including, without limitation, notices
received from the issuer of any securities pledged hereunder as
Collateral.
(d) Delivery of Instruments and/or Certificates.
Contemporaneously herewith, Pledgor covenants and agrees to deliver to
Secured Party any certificates, documents or instruments representing
or evidencing the Collateral, with Pledgor's endorsement thereon and/or
accompanied by proper instruments of transfer and assignment duly
executed in blank with, if requested by Secured Party, signatures
guaranteed by a member or member organization in good standing of an
authorized Securities Transfer Agents Medallion Program, all in form
and substance satisfactory to Secured Party.
(e) Further Assurances. Pledgor will contemporaneously
with the execution hereof and from time to time thereafter at its
expense promptly execute and deliver all further instruments and
documents and take all further action necessary or appropriate or that
Secured Party may request in order (i) to perfect and protect the
security interest created or purported to be created hereby and the
first priority of such security interest, (ii) to enable Secured Party
to exercise and enforce its rights and remedies hereunder in respect of
the Collateral and (iii) to otherwise effect the purposes of this
Agreement, including, without limitation: (A) executing and filing any
financing or continuation statements, or any amendments thereto; (B)
obtaining written confirmation from the issuer of any securities
pledged as Collateral of the pledge of such securities, in form and
substance satisfactory to Secured Party; (C) cooperating with Secured
Party in registering the pledge of any securities pledged as Collateral
with the issuer of such securities; (D) delivering notice of Secured
Party's security interest in any securities pledged as Collateral to
any securities or financial intermediary, clearing corporation or other
party required by Secured Party, in form and substance satisfactory to
Secured Party; and (E) obtaining written confirmation of the pledge of
any securities constituting Collateral from any securities or financial
intermediary, clearing corporation or other party required by Secured
Party, in form and substance satisfactory to Secured Party. If all or
any part of the Collateral is securities issued by an agency or
department of the United States, Pledgor covenants and agrees, at
Secured Party's request, to cooperate in registering such
PLEDGE AGREEMENT - Page 5
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securities in Secured Party's name or with Secured Party's account
maintained with a Federal Reserve Bank. When applicable law provides
more than one method of perfection of Secured Party's security interest
in the Collateral, Secured Party may choose the method(s) to be used.
8. NEGATIVE COVENANTS. Pledgor will comply with the covenants
contained in this Section at all times during the period of time this Agreement
is effective, unless Secured Party shall otherwise consent in writing.
(a) Transfer or Encumbrance. Pledgor will not (i) sell,
assign (by operation of law or otherwise) or transfer Pledgor's rights
in any of the Collateral, (ii) grant a lien or security interest in or
execute, file or record any financing statement or other security
instrument with respect to the Collateral to any party other than
Secured Party or (iii) deliver actual or constructive possession of any
certificate, instrument or document evidencing and/or representing any
of the Collateral to any party other than Secured Party.
(b) Impairment of Security Interest. Pledgor will not
take or fail to take any action which would in any manner impair the
value or enforceability of Secured Party's security interest in any
Collateral.
(c) Dilution of Ownership. As to any securities pledged
as Collateral (other than securities of a class which are publicly
traded), Pledgor will not consent to or approve of the issuance of (i)
any additional shares of any class of securities of such issuer (unless
immediately upon issuance additional securities are pledged and
delivered to Secured Party pursuant to the terms hereof to the extent
necessary to give Secured Party a security interest after such issuance
in at least the same percentage of such issuer's outstanding securities
as Secured Party had before such issuance), (ii) any instrument
convertible voluntarily by the holder thereof or automatically upon the
occurrence or non-occurrence of any event or condition into, or
exchangeable for, any such securities or (iii) any warrants, options,
contracts or other commitments entitling any third party to purchase or
otherwise acquire any such securities.
(d) Restrictions on Securities. Pledgor will not enter
into any agreement creating, or otherwise permit to exist, any
restriction or condition upon the transfer, voting or control of any
securities pledged as Collateral, except as consented to in writing by
Secured Party.
9. RIGHTS OF SECURED PARTY. Secured Party shall have the rights
contained in this Section at all times during the period of time this Agreement
is effective.
(a) Power of Attorney. Pledgor hereby irrevocably
appoints Secured Party as Pledgor's attorney-in-fact, such power of
attorney being coupled with an interest, with full authority in the
place and stead of Pledgor and in the name of Pledgor or otherwise, to
take any action and to execute any instrument which Secured Party may
from time to time in Secured Party's discretion deem necessary or
appropriate to accomplish the purposes of this Agreement, including,
without limitation, the following action: (i) transfer any securities,
instruments, documents or certificates pledged as Collateral in the
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name of Secured Party or its nominee; (ii) use any interest, premium or
principal payments, conversion or redemption proceeds or other cash
proceeds received in connection with any Collateral to reduce any of
the Indebtedness; (iii) exchange any of the securities pledged as
Collateral for any other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof, and, in connection therewith, to deposit and deliver any and
all of such securities with any committee, depository, transfer agent,
registrar or other designated agent upon such terms and conditions as
Secured Party may deem necessary or appropriate; (iv) exercise or
comply with any conversion, exchange, redemption, subscription or any
other right, privilege or option pertaining to any securities pledged
as Collateral; provided, however, except as provided herein, Secured
Party shall not have a duty to exercise or comply with any such right,
privilege or option (whether conversion, redemption or otherwise) and
shall not be responsible for any delay or failure to do so; and (v)
file any claims or take any action or institute any proceedings which
Secured Party may deem necessary or appropriate for the collection
and/or preservation of the Collateral or otherwise to enforce the
rights of Secured Party with respect to the Collateral.
(b) Performance by Secured Party. If Pledgor fails to
perform any agreement or obligation provided herein, Secured Party may
itself perform, or cause performance of, such agreement or obligation,
and the expenses of Secured Party incurred in connection therewith
shall be a part of the Indebtedness, secured by the Collateral and
payable by Pledgor on demand.
Notwithstanding any other provision herein to the contrary, Secured Party does
not have any duty to exercise or continue to exercise any of the foregoing
rights and shall not be responsible for any failure to do so or for any delay in
doing so.
10. EVENTS OF DEFAULT. Each of the following constitutes an "Event
of Default" under this Agreement:
(a) Failure to Pay Indebtedness. The failure, refusal or
neglect of Pledgor to make any payment of principal or interest on the
Indebtedness, or any portion thereof, as the same shall become due and
payable; or
(b) Non-Performance of Covenants. The failure of Pledgor
to timely and properly observe, keep or perform any covenant,
agreement, warranty or condition required herein or in any of the other
Guaranty Documents; or
(c) Default Under other Guaranty Documents. The
occurrence of an event of default under any of the other Guaranty
Documents.
(d) False Representation. Any representation contained
herein or in any of the other Guaranty Documents made by Pledgor is
false or misleading in any material respect; or
(e) Default to Third Party. The occurrence of any event
which permits the acceleration of the maturity of any indebtedness
owing by Pledgor to any third party under any agreement or undertaking;
or
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(f) Bankruptcy or Insolvency. If Pledgor: (i) becomes
insolvent, or makes a transfer in fraud of creditors, or makes an
assignment for the benefit of creditors, or admits in writing its
inability to pay its debts as they become due; (ii) generally is not
paying its debts as such debts become due; (iii) has a receiver,
trustee or custodian appointed for, or take possession of, all or
substantially all of the assets of such party or any of the Collateral,
either in a proceeding brought by such party or in a proceeding brought
against such party and such appointment is not discharged or such
possession is not terminated within sixty (60) days after the effective
date thereof or such party consents to or acquiesces in such
appointment or possession; (iv) files a petition for relief under the
United States Bankruptcy Code or any other present or future federal or
state insolvency, bankruptcy or similar laws (all of the foregoing
hereinafter collectively called "Applicable Bankruptcy Law") or an
involuntary petition for relief is filed against such party under any
Applicable Bankruptcy Law and such involuntary petition is not
dismissed within sixty (60) days after the filing thereof, or an order
for relief naming such party is entered under any Applicable Bankruptcy
Law, or any composition, rearrangement, extension, reorganization or
other relief of debtors now or hereafter existing is requested or
consented to by such party; (v) fails to have discharged within a
period of sixty (60) days any attachment, sequestration or similar writ
levied upon any property of such party; or (vi) fails to pay within
thirty (30) days any final money judgment against such party; or
(g) Execution on Collateral. The Collateral or any
portion thereof is taken on execution or other process of law in any
action against Pledgor; or
(h) Abandonment. Pledgor abandons the Collateral or any
portion thereof; or
(i) Action by Other Lienholder. The holder of any lien or
security interest on any of the assets of Pledgor, including, without
limitation, the Collateral (without hereby implying the consent of
Secured Party to the existence or creation of any such lien or security
interest on the Collateral), declares a default thereunder or
institutes foreclosure or other proceedings for the enforcement of its
remedies thereunder; or
(j) Liquidation, Death and Related Events. If Pledgor is
an entity, the liquidation, dissolution, merger or consolidation of any
such entity or, if Pledgor is an individual, the death or legal
incapacity of any such individual; or
(k) Dilution of Ownership. The issuer of any securities
(other than securities of a class which are publicly traded)
constituting Collateral hereafter issues any shares of any class of
capital stock (unless immediately upon issuance additional securities
are pledged and delivered to Secured Party pursuant to the terms hereof
to the extent necessary to give Secured Party a security interest after
such issuance in at least the same percentage of such issuer's
outstanding securities as Secured Party had before such issuance) or
any options, warrants or other rights to purchase any such capital
stock; or
(l) Bankruptcy of Issuer. (i) The issuer of any
securities constituting Collateral files a petition for relief under
any Applicable Bankruptcy Law, (ii) an involuntary petition for relief
is filed against any such issuer under any Applicable Bankruptcy Law
and such involuntary petition is not dismissed within thirty (30) days
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after the filing thereof or (iii) an order for relief naming any such
issuer is entered under any Applicable Bankruptcy Law.
11. REMEDIES AND RELATED RIGHTS. If an Event of Default shall have
occurred, and without limiting any other rights and remedies provided herein,
under any of the other Guaranty Documents or otherwise available to Secured
Party, Secured Party may exercise one or more of the rights and remedies
provided in this Section.
(a) Remedies. Secured Party may from time to time at its
discretion, without limitation and without notice except as expressly
provided in any of the Guaranty Documents:
(i) exercise in respect of the Collateral all
the rights and remedies of a secured party under the Code
(whether or not the Code applies to the affected Collateral);
(ii) reduce its claim to judgment or foreclose or
otherwise enforce, in whole or in part, the security interest
granted hereunder by any available judicial procedure;
(iii) sell or otherwise dispose of, at its office,
on the premises of Pledgor or elsewhere, the Collateral, as a
unit or in parcels, by public or private proceedings, and by
way of one or more contracts (it being agreed that the sale or
other disposition of any part of the Collateral shall not
exhaust Secured Party's power of sale, but sales or other
dispositions may be made from time to time until all of the
Collateral has been sold or disposed of or until the
Indebtedness has been paid and performed in full), and at any
such sale or other disposition it shall not be necessary to
exhibit any of the Collateral;
(iv) buy the Collateral, or any portion thereof,
at any public sale;
(v) buy the Collateral, or any portion thereof,
at any private sale if the Collateral is of a type customarily
sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations;
(vi) apply for the appointment of a receiver for
the Collateral, and Pledgor hereby consents to any such
appointment; and
(vii) at its option, retain the Collateral in
satisfaction of the Indebtedness whenever the circumstances
are such that Secured Party is entitled to do so under the
Code or otherwise.
Pledgor agrees that in the event Pledgor is entitled to receive any
notice under the Uniform Commercial Code, as it exists in the state
governing any such notice, of the sale or other disposition of any
Collateral, reasonable notice shall be deemed given when such notice is
deposited in a depository receptacle under the care and custody of the
United States Postal Service, postage prepaid, at Pledgor's address set
forth on the signature page hereof, five (5) days prior to the date of
any public sale, or after which a private sale, of any of such
Collateral is to be held. Secured Party shall not be obligated to make
any sale of Collateral
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regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
Pledgor further acknowledges and agrees that the redemption by Secured
Party of any certificate of deposit pledged as Collateral shall be
deemed to be a commercially reasonable disposition under Section
9.504(c) of the Code.
(b) Private Sale of Securities. Pledgor recognizes that
Secured Party may be unable to effect a public sale of all or any part
of the securities pledged as Collateral because of restrictions in
applicable federal and state securities laws and that Secured Party
may, therefore, determine to make one or more private sales of any such
securities to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire such securities for their own
account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that any such private sale may be
at prices and other terms less favorable then what might have been
obtained at a public sale and, notwithstanding the foregoing, agrees
that each such private sale shall be deemed to have been made in a
commercially reasonable manner and that Secured Party shall have no
obligation to delay the sale of any such securities for the period of
time necessary to permit the issuer to register such securities for
public sale under any federal or state securities laws. Pledgor further
acknowledges and agrees that any offer to sell such securities which
has been made privately in the manner described above to not less than
five (5) bona fide offers shall be deemed to involve a "public sale"
for the purposes of Section 9.504(c) of the Code, notwithstanding that
such sale may not constitute a "public offering" under any federal or
state securities laws and that Secured Party may, in such event, bid
for the purchase of such securities.
(c) Application of Proceeds. If any Event of Default
shall have occurred, Secured Party may at its discretion apply or use
any cash held by Secured Party as Collateral, and any cash proceeds
received by Secured Party in respect of any sale or other disposition
of, collection from, or other realization upon, all or any part of the
Collateral as follows in such order and manner as Secured Party may
elect:
(i) to the repayment or reimbursement of the
reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by Secured
Party in connection with (A) the administration of the
Guaranty Documents, (B) the custody, preservation, use or
operation of, or the sale of, collection from, or other
realization upon, the Collateral and (C) the exercise or
enforcement of any of the rights and remedies of Secured Party
hereunder;
(ii) to the payment or other satisfaction of any
liens and other encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as
Collateral;
PLEDGE AGREEMENT - Page 10
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(v) to the payment of any other amounts required
by applicable law (including, without limitation, Section
9.504(a)(3) of the Code or any other applicable statutory
provision); and
(vi) by delivery to Pledgor or any other party
lawfully entitled to receive such cash or proceeds whether by
direction of a court of competent jurisdiction or otherwise.
(d) Deficiency. In the event that the proceeds of any
sale of, collection from, or other realization upon, all or any part of
the Collateral by Secured Party are insufficient to pay all amounts to
which Secured Party is legally entitled, Pledgor and any party who
guaranteed or is otherwise obligated to pay all or any portion of the
Indebtedness shall be liable for the deficiency, together with interest
thereon as provided in the Guaranty Documents.
(e) Non-Judicial Remedies. In granting to Secured Party
the power to enforce its rights hereunder without prior judicial
process or judicial hearing, Pledgor expressly waives, renounces and
knowingly relinquishes any legal right which might otherwise require
Secured Party to enforce its rights by judicial process. Pledgor
recognizes and concedes that non-judicial remedies are consistent with
the usage of trade, are responsive to commercial necessity and are the
result of a bargain at arm's-length. Nothing herein is intended to
prevent Secured Party or Pledgor from resorting to judicial process at
either party's option.
(f) Other Recourse. Pledgor waives any right to require
Secured Party to proceed against any third party, exhaust any
Collateral or other security for the Indebtedness, or to have any third
party joined with Pledgor in any suit arising out of the Indebtedness
or any of the Guaranty Documents, or pursue any other remedy available
to Secured Party. Pledgor further waives any and all notice of
acceptance of this Agreement and of the creation, modification,
rearrangement, renewal or extension of the Indebtedness. Pledgor
further waives any defense arising by reason of any disability or other
defense of any third party or by reason of the cessation from any cause
whatsoever of the liability of any third party. Until all of the
Indebtedness shall have been paid in full, Pledgor shall have no right
of subrogation and Pledgor waives the right to enforce any remedy which
Secured Party has or may hereafter have against any third party, and
waives any benefit of and any right to participate in any other
security whatsoever now or hereafter held by Secured Party. Pledgor
authorizes Secured Party, and without notice or demand and without any
reservation of rights against Pledgor and without affecting Pledgor's
liability hereunder or on the Indebtedness, to (i) take or hold any
other property of any type from any third party as security for the
Indebtedness, and exchange, enforce, waive and release any or all of
such other property, (ii) apply such other property and direct the
order or manner of sale thereof as Secured Party may in its discretion
determine, (iii) renew, extend, accelerate, modify, compromise, settle
or release any of the Indebtedness or other security for the
Indebtedness, (iv) waive, enforce or modify any of the provisions of
any of the Guaranty Documents executed by any third party, and (v)
release or substitute any third party.
PLEDGE AGREEMENT - Page 11
<PAGE>
(g) Voting Rights. Upon the occurrence of an Event of
Default, Pledgor will not exercise any voting rights with respect to
securities pledged as Collateral. Pledgor hereby irrevocably appoints
Secured Party as Pledgor's attorney-in-fact (such power of attorney
being coupled with an interest) and proxy to exercise any voting rights
with respect to Pledgor's securities pledged as Collateral upon the
occurrence of an Event of Default.
12. INDEMNITY. Pledgor hereby indemnifies and agrees to hold
harmless Secured Party, and its officers, directors, employees, agents and
representatives (each an "Indemnified Person") from and against any and all
liabilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
(collectively, the "Claims") which may be imposed on, incurred by, or asserted
against, any Indemnified Person arising in connection with the Guaranty
Documents, the Indebtedness or the Collateral (including, without limitation,
the enforcement of the Guaranty Documents and the defense of any Indemnified
Person's actions and/or inactions in connection with the Guaranty Documents).
WITHOUT LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED
PERSON WITH RESPECT TO ANY CLAIMS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF THE NEGLIGENCE OF SUCH AND/OR ANY OTHER INDEMNIFIED PERSON, except
to the limited extent the Claims against an Indemnified Person are proximately
caused by such Indemnified Person's gross negligence or willful misconduct. If
Pledgor or any third party ever alleges such gross negligence or willful
misconduct by any Indemnified Person, the indemnification provided for in this
Section shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction enters a
final judgment as to the extent and effect of the alleged gross negligence or
willful misconduct. The indemnification provided for in this Section shall
survive the termination of this Agreement and shall extend and continue to
benefit each individual or entity who is or has at any time been an Indemnified
Person hereunder.
13. MISCELLANEOUS.
(a) Entire Agreement. This Agreement contains the entire
agreement of Secured Party and Pledgor with respect to the Collateral.
If the parties hereto are parties to any prior agreement, either
written or oral, relating to the Collateral, the terms of this
Agreement shall amend and supersede the terms of such prior agreements
as to transactions on or after the effective date of this Agreement,
but all security agreements, financing statements, guaranties, other
contracts and notices for the benefit of Secured Party shall continue
in full force and effect to secure the Indebtedness unless Secured
Party specifically releases its rights thereunder by separate release.
(b) Amendment. No modification, consent or amendment of
any provision of this Agreement or any of the other Guaranty Documents
shall be valid or effective unless the same is in writing and signed by
the party against whom it is sought to be enforced.
(c) Actions by Secured Party. The lien, security interest
and other security rights of Secured Party hereunder shall not be
impaired by (i) any renewal, extension, increase or modification with
respect to the Indebtedness, (ii) any surrender, compromise, release,
renewal, extension, exchange or substitution which Secured Party may
grant with respect to the Collateral or (iii) any release or indulgence
granted to any endorser,
PLEDGE AGREEMENT - Page 12
<PAGE>
guarantor or surety of the Indebtedness. The taking of additional
security by Secured Party shall not release or impair the lien,
security interest or other security rights of Secured Party hereunder
or affect the obligations of Pledgor hereunder.
(d) Waiver by Secured Party. Secured Party may waive any
Event of Default without waiving any other prior or subsequent Event of
Default. Secured Party may remedy any default without waiving the Event
of Default remedied. Neither the failure by Secured Party to exercise,
nor the delay by Secured Party in exercising, any right or remedy upon
any Event of Default shall be construed as a waiver of such Event of
Default or as a waiver of the right to exercise any such right or
remedy at a later date. No single or partial exercise by Secured Party
of any right or remedy hereunder shall exhaust the same or shall
preclude any other or further exercise thereof, and every such right or
remedy hereunder may be exercised at any time. No waiver of any
provision hereof or consent to any departure by Pledgor therefrom shall
be effective unless the same shall be in writing and signed by Secured
Party and then such waiver or consent shall be effective only in the
specific instances, for the purpose for which given and to the extent
therein specified. No notice to or demand on Pledgor in any case shall
of itself entitle Pledgor to any other or further notice or demand in
similar or other circumstances.
(e) Costs and Expenses. Pledgor will upon demand pay to
Secured Party the amount of any and all costs and expenses (including,
without limitation, attorneys' fees and expenses), which Secured Party
may incur in connection with (i) the transactions which give rise to
the Guaranty Documents, (ii) the preparation of this Agreement and the
perfection and preservation of the security interests granted under the
Guaranty Documents, (iii) the administration of the Guaranty Documents,
(iv) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, the Collateral, (v) the
exercise or enforcement of any of the rights of Secured Party under the
Guaranty Documents or (vi) the failure by Pledgor to perform or observe
any of the provisions hereof.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND
APPLICABLE FEDERAL LAWS, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT
OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.
(g) Venue. This Agreement has been entered into in Dallas
County, Texas and it shall be performable for all purposes in such
county. Courts within the State of Texas shall have jurisdiction over
any and all disputes arising under or pertaining to this Agreement and
venue for any such disputes shall be in the county or judicial district
where this Agreement has been executed and delivered.
(h) Severability. If any provision of this Agreement is
held by a court of competent jurisdiction to be illegal, invalid or
unenforceable under present or future laws, such provision shall be
fully severable, shall not impair or invalidate the remainder of this
PLEDGE AGREEMENT - Page 13
<PAGE>
Agreement and the effect thereof shall be confined to the provision
held to be illegal, invalid or unenforceable.
(i) Notices. All notices, requests, demands or other
communications required or permitted to be given pursuant to this
Agreement shall be in writing and given by (i) personal delivery, (ii)
expedited delivery service with proof of delivery or (iii) United
States mail, postage prepaid, registered or certified mail, return
receipt requested, sent to the intended addressee at the address set
forth on the signature page hereof or to such different address as the
addressee shall have designated by written notice sent pursuant to the
terms hereof and shall be deemed to have been received either, in the
case of personal delivery, at the time of personal delivery, in the
case of expedited delivery service, as of the date of first attempted
delivery at the address and in the manner provided herein, or in the
case of mail, upon deposit in a depository receptacle under the care
and custody of the United States Postal Service. Either party shall
have the right to change its address for notice hereunder to any other
location within the continental United States by notice to the other
party of such new address at least thirty (30) days prior to the
effective date of such new address.
(j) Binding Effect and Assignment. This Agreement (i)
creates a continuing security interest in the Collateral, (ii) shall be
binding on Pledgor and the heirs, executors, administrators, personal
representatives, successors and assigns of Pledgor and (iii) shall
inure to the benefit of Secured Party and the heirs, executors,
administrators, personal representatives, successors and assigns of
Secured Party. Without limiting the generality of the foregoing,
Secured Party may pledge, assign or otherwise transfer the Indebtedness
and its rights under this Agreement and any of the other Guaranty
Documents to any other party. Pledgor's rights and obligations
hereunder may not be assigned or otherwise transferred without the
prior written consent of Secured Party.
(k) Termination. Upon the satisfaction in full of the
Indebtedness, this Agreement and the security interests created hereby
shall terminate. Upon termination of this Agreement and Pledgor's
written request, Secured Party will, at Pledgor's sole cost and
expense, return to Pledgor such of the Collateral as shall not have
been sold or otherwise disposed of or applied pursuant to the terms
hereof and execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination.
(l) Cumulative Rights. All rights and remedies of Secured
Party hereunder are cumulative of each other and of every other right
or remedy which Secured Party may otherwise have at law or in equity or
under any of the other Guaranty Documents, and the exercise of one or
more of such rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of any other rights or remedies.
(m) Gender and Number. Within this Agreement, words of
any gender shall be held and construed to include the other gender, and
words in the singular number shall be held and construed to include the
plural and words in the plural number shall be held and construed to
include the singular, unless in each instance the context requires
otherwise.
PLEDGE AGREEMENT - Page 14
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(n) Descriptive Headings. The headings in this Agreement
are for convenience only and shall in no way enlarge, limit or define
the scope or meaning of the various and several provisions hereof.
PLEDGE AGREEMENT - Page 15
<PAGE>
EXECUTED as of the date first written above.
Pledgors' Addresses: ARABIAN AMERICAN DEVELOPMENT COMPANY
10830 North Central Expressway
Suite 175
Dallas, Texas 75231
By: /s/ J. A. Crichton
---------------------------
Name: Jack Crichton
Title: Chairman
AMERICAN SHIELD REFINING COMPANY
By: /s/ J. A. Crichton
---------------------------
Name: Jack Crichton
Title: Chairman
Secured Parties Addresses:
10830 North Central Expressway
Suite 175
Dallas, Texas 75231
PLEDGE AGREEMENT - Page 16
<PAGE>
SCHEDULE "A"
The following property is a part of the Collateral as defined in Subsection
1(b):
1. All shares of stock in American Shield Refining Company, now existing
and hereafter issued, presently evidenced by stock certificate no. 1,
evidencing 100 shares of common stock.
2. All shares of stock in Texas Oil and Chemical Co. II, Inc., now
existing and hereafter issued, presently evidenced by stock certificate
no. 13, evidencing 1,836,311 shares of common stock.
SCHEDULE A - Page 1