EXHIBIT 10-19
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of July 6, 1998, by and between Xxxxxxx X.
Xxxxxx (the "Executive") and Xxxxxxxxx Technologies Inc. (the "Company").
W I T N E S S E T H:
WHEREAS, the Company has loaned to the Executive the sum of $500,000;
such loan being evidenced by a non-recourse secured promissory note (the "Note")
in the principal amount of $500,000 made by the Executive in favor of the
Company; and
WHEREAS, the loan to the Executive is to be secured by a pledge by the
Executive to the Company of 49,000 shares of common stock, $0.01 par value per
share, of the Company owned by the Executive and the other Collateral (as
defined below) referenced herein; and
WHEREAS, the parties hereto desire to set forth the terms of and to
evidence the Executive's grant to the Company of a security interest in the
Collateral.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Executive hereby agrees with
the Company as follows:
Section 1. Definitions. The following terms, when used in this
Agreement, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Default" means the failure to make any payment of principal of or
interest on, or any other amounts due under, the Note when due, whether at
maturity, upon acceleration or otherwise.
"Distributions" means all stock dividends, liquidating dividends,
shares of stock resulting from stock splits, reclassifications, warrants,
options, non-cash dividends and other distributions on or with respect to the
Shares, whether similar or dissimilar to the foregoing, but shall not include
Dividends.
"Dividends" means regular dividends declared with respect to the
Shares.
"Liabilities" means the Note, and all amounts becoming due thereunder,
and all other payment obligations of the Executive hereunder or thereunder or
any instrument executed pursuant hereto or thereto.
Section 2. Grant of Security Interest. As security for payment of all
Liabilities, the Executive hereby pledges, assigns and transfers to the Company,
and grants to the Company
a continuing security interest in and to, the Shares, together with all
Dividends and Distributions, interest and other payments and rights with respect
thereto, together with all proceeds thereof (collectively, the "Collateral").
The Executive further pledges, assigns and transfers to the Company, and grants
to the Company a continuing security interest in and to, and agrees to duly
endorse to the order of the Company, any additional Collateral, together with
all proceeds thereof, delivered by the Executive to the Company for the purposes
of pledge under this Agreement. Any Collateral delivered by the Executive to the
Company may be endorsed by the Company, in its own name or in the name of the
Executive, on behalf of the Executive to the order of the Company.
Section 3. Stock Powers, Endorsements, Etc. The Executive shall, from
time to time, upon request of the Company, promptly execute such endorsements
and deliver to the Company such stock powers and similar documents, satisfactory
in form and substance to the Company, with respect to the Collateral as the
Company may reasonably request and shall, from time to time, upon request of the
Company, promptly transfer any securities which are part of the Collateral into
the name of any nominee designated by the Company on the books of the
corporation or other entity issuing such securities; provided, however, that the
Company shall not be entitled to effect or demand a transfer of the Collateral
into the name of the Company or the Company's nominee without the consent of the
Executive unless and until a Default shall have occurred.
Section 4. Certain Other Agreements Regarding Collateral. The
Executive shall deliver (properly endorsed where necessary) to the Company:
(a) after a Default shall have occurred and be continuing, promptly
upon receipt thereof by the Executive and without any request therefor by the
Company, all Dividends and Distributions, and other proceeds of the Collateral,
all of which shall be held by the Company as additional Collateral; and
(b) at any time after a Default shall have occurred and be continuing,
promptly upon request of the Company, such consents or proxies and other
documents as may be necessary to allow the Company to exercise any voting power
or other right with respect to any securities included in the Collateral;
provided, however, that unless a Default shall have occurred and be continuing,
the Executive shall be entitled:
(i) to exercise, as the Executive shall deem appropriate, all
voting or other powers with respect to securities pledged hereunder
(including but not limited to the Shares); and
(ii) to receive and retain for the Executive's own account any
and all Dividends paid in cash.
Section 5. Actions Upon Default. Whenever a Default shall have
occurred and be continuing, the Company may exercise from time to time any and
all rights and remedies available to it under applicable law, including but not
limited to all rights of a secured party
available to it under the Uniform Commercial Code. Without limiting the above,
the Company may from time to time, whether before or after any of the
Liabilities shall become due and payable, but only if a Default shall have
occurred, without notice to the Executive, take any or all of the following
actions:
(a) transfer all or any part of the Collateral into the name of the
Company or its nominee; and
(b) execute (in the name, place and stead of the Executive) any or all
endorsements, assignments, stock powers and other instruments of conveyance or
transfer with respect to all or any of the Collateral.
The Executive understands that compliance with the Federal securities
laws, applicable blue sky or other state securities laws or similar laws
analogous in purpose or effect may strictly limit the course of conduct of the
Company if the Company were to attempt to dispose of all or any part of the
Collateral and may also limit the extent to which or the manner in which any
subsequent transferee of the Collateral may dispose of the same. Accordingly,
the Executive agrees that IF ANY COLLATERAL IS SOLD AT ANY PUBLIC OR PRIVATE
SALE, THE COMPANY MAY ELECT TO SELL ONLY TO A BUYER WHO WILL GIVE FURTHER
ASSURANCES, SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY, RESPECTING
COMPLIANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
ANY AND ALL APPLICABLE STATE SECURITIES LAWS; AND A SALE SUBJECT TO SUCH
CONDITION SHALL BE DEEMED COMMERCIALLY REASONABLE. The Company shall have the
right to bid upon or purchase the Shares, or any other part of the Collateral,
or all of the foregoing, at any such sale, less any and all amounts owing to the
Company by the Executive under the Note, this Agreement or otherwise, and that
any such purchase is commercially reasonable.
Section 6. Application of Moneys. Any moneys received by the Company
upon payment to it of any Collateral held by it or as proceeds of any of the
Collateral may be applied by the Company first to the payment of any expenses
incurred by it in connection with the Collateral, including, without limitation,
reasonable attorneys' fees and legal expenses, and all other amounts payable to
the Company by the Executive, and any balance of such moneys so received by the
Company may be applied to all Liabilities of the Executive (including, without
limitation, the principal amount of the Note outstanding whether or not such
principal amount is at that time due and payable) in such order of application
as the Company in its sole discretion may determine. Any amounts remaining after
payment of the Liabilities may be applied by the Company to the payment of any
and all other amounts owing, whether or not then due, to the Company from the
Executive and any remaining balance thereafter shall be paid to the Executive.
Section 7. Release of Collateral. Upon the indefeasible payment in
full of the Liabilities, the Company shall, upon the request of the Executive,
promptly reassign and redeliver to the Executive the Collateral which has not
been sold, disposed of, retained or applied by the Company in accordance with
the terms hereof, together with such endorsements, stock powers and similar
documents as the Executive may reasonably request. Such reassignment and
redelivery shall be without warranty by or recourse to the Company, except as to
the absence of any prior assignments by the Company of its interest in the
Collateral. In the event that the Executive proposes to sell, transfer or
otherwise dispose of all or a portion of the Shares, upon the request of the
Executive, the Company shall release from its security interest the Shares to be
sold by the Executive and, at the sole expense of the Executive, shall deliver
such Shares as directed by the Executive, free and clear of any security
interest hereunder, upon receipt from or on behalf of the Executive of the net
proceeds of such sale, transfer or other disposition in cash in next day or
immediately available funds.
Section 8. Non-Recourse Nature of Liabilities. The Company's sole
recourse for the payment of the Liabilities shall be limited to the Collateral
securing the Note. THE COMPANY SHALL NOT HAVE THE RIGHT TO ENFORCE THE
LIABILITIES AGAINST THE EXECUTIVE OR ANY OF THE EXECUTIVE'S OTHER ASSETS OR
PROPERTY.
Section 9. Miscellaneous.
(a) To the fullest extent permitted by applicable law, this Agreement
shall continue to be effective or be reinstated, as the case may be, if at any
time any amount received by the Company in respect of the Liabilities is
rescinded or must otherwise be restored or returned by the Company upon the
insolvency or bankruptcy of the Executive or upon the appointment of any
receiver, intervenor, conservator, trustee or similar official for the Executive
or any substantial part of his assets, or otherwise, all as though such payments
had not been made.
(b) No remedy herein conferred is intended to be exclusive of any
other remedy herein conferred or otherwise available to the Company, but every
such remedy shall be cumulative and in addition to every other remedy herein
conferred, or conferred on the Company by any other agreement or instrument or
now or hereafter existing at law, in equity or by statute.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction, shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(d) Except as otherwise expressly provided herein, no term or
provision of this Agreement may be amended, waived, discharged or terminated
orally, but only by an instrument in writing signed by the parties.
(e) THIS AGREEMENT AND ALL RIGHTS HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW JERSEY WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF. THE EXECUTIVE HEREBY
CONSENTS AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE
COURTS LOCATED IN THE STATE OF NEW JERSEY HAVING SUBJECT MATTER JURISDICTION IN
CONNECTION WITH ANY AND ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH THIS
Agreement, THE NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. FURTHER,
THE EXECUTIVE HEREBY CONSENTS AND AGREES THAT SERVICE OF PROCESS BY THE COMPANY,
OR ANY PARTY ACTING ON BEHALF OF THE COMPANY, SHALL BE DEEMED VALIDLY AND
PROPERLY EFFECTED AGAINST THE EXECUTIVE UPON THE MAILING OF A COPY OF SUCH
PROCESS BY CERTIFIED MAIL, POSTAGE PREPAID, TO THE EXECUTIVE AT ITS ADDRESS SET
FORTH ABOVE.
(f) No course of dealing and no delay on the part of any party hereto
in exercising any right, power, or remedy conferred by this Agreement shall
operate as a waiver thereof or otherwise prejudice such party's rights, powers
and remedies hereunder or in connection herewith. No single or partial exercise
of any power or remedy conferred by this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
(g) This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors, assigns and legal
representatives.
(h) This Agreement constitutes the entire agreement among the parties
with respect to the matters covered hereby and supersedes all previous written,
oral or implied agreements and understandings among the parties with respect to
such matters.
(i) All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, by facsimile or
sent by certified, registered or express air mail, postage prepaid, and shall be
deemed given which so delivered personally, or by facsimile, or if mailed, five
days after the date of mailing, as follows:
If to the Company: 000 Xxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chairman of the Executive Compensation
Committee of the Board of Directors
If to the Executive: 00 Xxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other addresses as shall be furnished in writing to the other party
hereto.
(j) The headings in this Agreement are for reference purposes only,
and shall not in any way affect the meaning or interpretation
(k) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original agreement, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first written above.
Witness:
/s/Xxxxx Xxxxxx /s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
XXXXXXXXX TECHNOLOGIES INC.
By: /s/Xxxxxxx X. Xxxxxxxxx
Name:
Title:
