STOCK PLEDGE AGREEMENT
THIS AGREEMENT, made this _____ day of January, 1997, by and between the
following parties:
I. EA Industries, Inc. ("Pledgor"), 000 Xxxxxxxx Xxxxxxx, Xxxx Xxxx
Xxxxxx, XX 00000.
II. Ace Foundation, Inc. ("Pledgee"), 0000 00xx Xxxxxx, Xxxxxxxx, XX
00000.
W I T N E S S E T H:
Pledgor has borrowed from Pledgee, and has agreed to repay, the sum of $1
million, plus interest thereon, in accordance with the terms of a Note (the
"Note") attached hereto as Exhibit "A" (all of which liabilities and obligations
of Pledgor are herein collectively called the "Obligations").
NOW, THEREFORE, for good and valuable consideration, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Pledge. To secure the payment and performance, when due, of the
Obligations, Pledgor hereby pledges and assigns to Pledgee and grants Pledgee a
security interest in the following stock, which stock is currently evidenced by
certificates as follows:
Name of Issuer
(each a "Corporation") No. of Shares Certificate No.
---------------------- ------------- ---------------
Aydin Corporation 3,750 S 00000
Xxxxx Corporation 593,177 S 24019
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(which shares of stock of Corporation are referred to as the "Pledged Shares"
and which certificates are referred to as the "Certificates"), together with all
rights of Pledgor in and to any dividends or other distributions made on or with
respect to the Pledged Shares, or in exchange therefore, whether as dividends in
cash or property, stock dividends, stock splits, as a result of any
recapitalization, reorganization, merger, exchange of shares, or otherwise
(collectively, the "Pledged Fund"). After Closing, Pledgor shall request
transfer of 298,463 of the Pledged Shares into Pledgor's name as a separate
certificate. Pledgee agrees to release such shares to Pledgor and shall retain
only the remaining shares as Pledged Shares.
2. Delivery of Pledged Shares. Pledgor has delivered, and by these presents
does hereby deliver to Pledgee all of the Certificates, together with stock
powers for each Certificate duly executed in blank for transfer by the
registered owner of the Pledged Shares evidenced by each Certificate. Pledgee
shall retain such Certificates and stock powers in its possession in pledge
subject to the terms of this Agreement. Pledgee shall have the right to have the
Pledged Shares reissued in the name of Pledgee.
3. Additional Obligations. In addition to the Obligations, as defined in
the recitals hereto, the security interests and pledges created hereby shall
secure reimbursement of Pledgee for all reasonable costs and expenses incurred
in collection of all amounts due to Pledgee.
4. Representations. The Pledgor warrants and represents that it owns the
Pledged Shares, that with the exception of restrictions under the Securities Act
of 1933, as amended, and rules and regulations thereunder, there are no
restrictions upon the transfer of the Pledged Shares, and that the Pledgor has
the right to transfer the Pledged Shares to Pledgee free of any liens,
encumbrances or restrictions and without obtaining the consent of any person,
corporation, or other legal entity.
5. Capital Structure. In the event that during the term of this Agreement
any stock dividend, reclassification,
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readjustment, or other change is declared or made in the capital structure of
the Corporation, Pledgor shall, immediately after receipt thereof, deliver to
Pledgee, all new, substituted or additional shares, or other securities of any
kind, issued by reason of any such change, to be held by Pledgee under the terms
of this Agreement and in the same manner as the Pledged Shares originally
pledged hereunder.
6. Pledgor's Covenants. Until the termination of this Agreement and the
pledge created hereby, and subject to the provisions of paragraph 11 hereof:
Pledgor shall not, and shall not permit, without the prior written consent of
Pledgee, the sale, transfer, pledge, hypothecation or other encumbrance or the
execution of an agreement contemplating any of the foregoing for all or any part
of the Pledged Shares.
7. Further Assurances. Pledgor will, upon Pledgee's request, and in
confirmation of the security interest hereby created, execute and deliver to
Pledgee such further deeds, transfers, assurances, financing and continuation
statements, and agreements, and take such other action, as Pledgee may
reasonably request.
8. Defaults. There shall be an "Event of Default" for purposes of this
Agreement if Pledgor shall fail to pay when due any amount due under the Note or
any other portion of the Obligations or there shall have occurred an Event of
Default under the Note.
9. Remedies. In the event that Pledgee claims that an Event of Default
shall have occurred, Pledgee shall so notify Pledgor which notice shall be in
writing and specify the basis upon which Pledgee claims that an Event of Default
shall have occurred. Thereafter, the Pledgee shall be entitled to exercise all
of the rights and remedies available to a secured party under the Uniform
Commercial Code as in effect in New York and all other applicable laws.
If, in the enforcement of the foregoing rights and remedies, Pledgee
shall propose to dispose of all or any portion of the Pledged Shares, Pledgor
agrees that ten (10) calendar days prior written notice, sent to Pledgor shall
be adequate and reasonable notice.
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Pledgor acknowledges and agrees that Pledgee may be unable to effect a
public sale of the Pledged Shares, or any part thereof, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended, or state
securities laws and that private sales made at prices and other terms less
favorable than those which might be obtainable at public sales shall not for
that reason be deemed to have not been made in a commercially reasonable manner
and that Pledgee has no obligation to delay any such private sale to permit the
registration of any of the Pledged Shares under said Act or other laws.
10. Rights of Pledgor in Pledged Shares. For so long as there is no Event
of Default, Pledgor shall retain and may exercise all rights of or incident to
the ownership of the Pledged Shares, including voting rights, which are not
inconsistent with the terms of this Agreement. Until an Event of Default shall
have occurred, Pledgor shall retain the rights to receive cash dividends and
have the right to vote or consent with respect to the Pledged Shares in a manner
consistent with the covenants of Pledgor herein, and Pledgee, upon written
request, will execute one or more proxies in favor of Pledgor to enable it to so
vote or consent.
11. Termination. This Agreement and the security interest and pledge
created hereby shall terminate on the payment and performance in full by Pledgor
of all the Obligations. Upon termination, Pledgee shall deliver to Pledgor all
the Certificates, with all stock powers therefor, and the balance of the Pledged
Fund.
Pledgor shall have the right to sell any or all of the Pledged Shares
and Pledgee agrees to deliver certificates to the purchaser of such shares
promptly after prepayment of the Note in an amount equal to $5.00 for each of
the Pledged Shares which have been sold. In addition, Pledgor shall have the
right to grant a right of first refusal to Aydin Corporation to repurchase the
Pledged Shares if the shares are to be sold in a private transaction and the
pledge of the Pledged Shares hereunder shall be subject to such rights.
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12. Waivers. Pledgee shall at all times have the right to enforce the
provisions of this Agreement in strict accordance with the terms hereof,
notwithstanding any conduct or custom to the contrary. The failure of Pledgee at
any time to enforce its rights hereunder shall not be construed as having
created a custom contrary to the provisions of this Agreement, as having
modified in any manner the terms hereof, or as preventing Pledgee from
thereafter enforcing strict compliance. All rights and remedies of Pledgee are
cumulative and concurrent and the exercise of one right or remedy shall not be
deemed a waiver or release of any other right or remedy.
13. Miscellaneous.
(a) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Pledgor : Copy to: Xxxxxxx X. Xxxxx, Esquire
000 Xxxxxxxx Xxxxxxx Xxxxxxx Xxxxxx Xxxxx
Xxxx Xxxx Xxxxxx, XX 00000 Xxxxxx & Xxxxxxxx
ATTN: President 0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
If to Pledgee : Copy to: Xxxxx Xxxxxxxx, Esquire
Ace Foundation, Inc. Singer, Xxxxxxxx
0000 00xx Xxxxxx 00 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
Any party hereto may give any notice, request, demand, claim or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any party hereto
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be
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delivered by giving the other parties hereto notice in the manner herein set
forth.
(b) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, and may not be
changed, nor any rights or remedies waived, except in writing, signed by the
party sought to be bound by such change or waiver.
(c) Headings. The headings of sections and paragraphs of this
Agreement are for convenience of reference only, and in case of any conflict the
text of this Agreement, rather than such headings, shall control.
(d) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the State
of New York.
(e) Counterparts. This Agreement may be executed in any number of
copies, and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement, under seal,
the day and year first above written.
EA Industries, Inc.
By:__________________________ (PLEDGOR) (SEAL)
Ace Foundation, Inc.
By:__________________________ (PLEDGEE) (SEAL)
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Notes to Draftsman
(1) This form of Agreement includes provisions for possible utilization of
an Escrow Agent to hold the pledged securities. If an Escrow Agent is used, the
Agreement provides that the Escrow Agent is holding the securities on behalf of
the Pledgee, which is necessary to assure perfection of the security interest.
If the Pledgee is to hold the securities directly, then all references to the
Escrow Agent should be deleted.
(2) The Agreement contains provisions which are relevant only if
obligations of one of the Corporations, as defined, are being secured by the
Pledgor. Those references to the Corporation should be deleted if Corporation
debt is not being secured. Those references appear, for example, in Paragraph 3,
clauses (iii) and (iv); Xxxxxxxxx 0, xxxxxxx (x), (xxx), (xx); and Paragraph 14.
(3) At certain locations within the Agreement references are made to "the
Note" on the assumption that the Obligation, as defined, or a principal portion
of the Obligation, consists of a Note. The references should be deleted if there
is no Note.
(4) Paragraph 5A (which, of course, will be renumbered if the clause is
retained) grants the Pledgee the right to transfer the pledged securities to its
own name or the name of a nominee. It will be an unusual situation in which the
Pledgor will agree to this, unless, at least, the Pledgee is an institution, and
frequently not even in that case. It is worth considering, however, because the
transfer of record assures that all dividends and other distributions and
notices with respect to the pledged shares will be received by the Pledgee or
the Escrow Agent.
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