Exhibit 10.17
STOCK PLEDGE AGREEMENT
FOR VALUE RECEIVED, Xxxxx X. Xxxxxxx, St., residing at 00000 Xxxxxxx Xxxxx,
Xxxxxxxxxxxx, Xxxxxxx 00000 ("Pledgor"), hereby transfers, assigns delivers,
sets over, hypothecates and pledges to Multi-Link Telecommunications, Inc., a
Colorado corporation ("Pledgee"), and grants a security interest to Pledgee in
all of Pledgor's right, title and interest in, to those 150,000 shares of the
capital stock of Pledgee owned by Pledgor and represented by stock certificate
numbers _____ and _____ (the "Pledged Stock"), together with all certificates
representing the Pledged Stock and all cash, securities, dividends, interest and
other property at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Pledged
Stock, and all securities hereafter delivered to Pledgor in substitution for or
in addition to any of the foregoing, all certificates and instruments
representing or evidencing such securities, together with all cash, securities,
interest, dividends and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the foregoing, and any and all "proceeds" (as such terms is
defined in Section 9-306 of the Colorado Uniform Commercial Code, as amended
(the "Code")) thereof (all of the foregoing being referred to herein
collectively as the "Collateral"), to secure the performance and payment when
due of all of Pledgor's obligations owing Pledgee under the Promissory Note (the
"Note") of even date herewith in the original principal amount of Three Hundred
Thousand Dollars ($300,000), including, without limitation, all obligations of
Pledgor for the payment of principal and interest on (including, without
limitation, interest accruing after the Maturity Date, as defined in the Note,
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
Pledgor whether a claim for post-filing or post-petition interest is allowed in
such proceeding) the Note and all other obligations and liabilities of Pledgor
to Pledgee, whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Note, this Agreement and any other document made,
delivered, or given in connection therewith or herewith (including, without
limitation, a Loan Agreement of even date herewith between the parties hereto)
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including, without limitation, all reasonable fees
and disbursements of counsel to Pledgee that are required to be paid by Pledgor
to Pledgee pursuant to the Note, the Loan Agreement or this Agreement) or
otherwise (the "Obligations").
1. Delivery of Share Certificates. Concurrently herewith, and subject to
the terms and conditions of this Agreement, Pledgor shall deliver to Pledgee (a)
the original share certificates or other instruments or documents evidencing the
Pledged Stock, together with appropriate stock powers or other instruments of
assignment endorsed in blank, and (b) an Irrevocable Proxy, duly executed by
Pledgor, with respect to the Pledged Stock in the form attached hereto as
Exhibit A (the "Proxy").
2. Representations and Warranties. Pledgor represents and warrants to
Pledgee that:
(a) Pledgor has the right to transfer the Pledged Stock to Pledgee as
collateral pursuant to the terms of this Agreement, free of any
encumbrances.
(b) Pledgor owns no securities issued directly or indirectly by Pledgee
excepting only the Pledged Stock;
(c) The pledge of and the grant of the security interest in the
Collateral, as provided for in this Agreement, and the delivery of the
certificates evidencing the Pledged Stock are effective to vest in
Pledgee a valid and perfected first priority security interest,
superior to the rights of any other party, in, to and under the
Collateral as set forth herein;
(d) Pledgor has and will maintain at all times full and absolute title to
and ownership of the Collateral, free of all security interests,
liens, encumbrances, charges, claims of third parties and rights of
set-off or recoupment, excepting only the security interest granted
pursuant to this Agreement, and has good right to pledge the
Collateral and to subject the Collateral to the pledge and security
interest herein granted.
3. Voting. So long as there has occurred no Event of Default (as such term
is hereinafter defined), Pledgor will have the right to exercise all voting
rights with respect to the Pledged Stock, if any. Upon and during the
continuance of an Event of Default, Pledgee may vote the Pledged Stock pursuant
to the Proxy.
4. Stock Dividends. In the event any additional shares are issued to
Pledgor as a stock dividend on any of the Pledged Stock, as a result of any
split of the Pledged Stock by reclassification or otherwise, such additional
shares will be immediately delivered to Pledgee and will be subject to this
Agreement as a part of the Collateral to the same extent as the original
Collateral.
5. Covenants. Pledgor covenants and agrees that from and after the date
hereof and until the Obligations are fully satisfied, or the Collateral is
otherwise released and delivered to Pledgor:
(a) Without the prior written consent of Pledgee, Pledgor will not: (i)
sell, assign, transfer, exchange, convert or otherwise dispose of, or
grant any option with respect to, the Collateral, unless concurrently
therewith the transferee in any such instance acknowledges this pledge
and subjects its interest in the Collateral or in any new or
substitute securities issued in exchange therefor to the interest of
Pledgee created by this Agreement; or (ii) take any other action with
respect to any of the Collateral that would impair the interest or
rights of Pledgee or Pledgor in, to or under any of the Collateral;
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(b) Without the prior written consent of Pledgee, Pledgor will not vote to
enable the Company to, or will not otherwise permit the Company to,
nor shall the Company issue any stock or other securities of any
nature in addition to or in exchange or substitution for the Pledged
Stock;
(c) Without the prior written consent of Pledgee, Pledgor will not create,
incur or permit to exist any lien with respect to any of the
Collateral, or any interest therein, except for the lien provided
under this Agreement, and Pledgor will pay prior to delinquency all
taxes and assessments against any of the Collateral and will take any
and all action necessary to remove any such lien; and
(d) Pledgor will, at Pledgor's expense, duly and promptly execute and
delivery any and all further instruments and documents and take such
further action as Pledgee may deem reasonably necessary to perfect and
continue perfected the lien created by this Agreement, including,
without limitation, the filing of any financing or continuation
statements under the Uniform Commercial Code, and Pledgor also hereby
authorizes Pledgee to fileany such financing statement or continuation
statement without the signature of Pledgor to the extent permitted by
applicable law.
6. Pledgee Appointed Attorney-in-Fact. Pledgor hereby appoints Pledgee
Pledgor's attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to time in Pledgee's
discretion, reasonably exercised, upon the occurrence of an Event of Default, to
take any action and to execute any instrument which Pledgee reasonably may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation, to receive, endorse and collect all instruments made payable
to Pledgor representing any dividend or other distribution in respect of the
Collateral or any part thereof and to give full discharge for the same. This
appointment is coupled with an interest and shall be irrevocable until payment
in full and performance of the Obligations.
7. Reasonable Care. Pledgee shall be deemed to have exercised reasonable
care in the custody of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which Pledgee accords its own
property; it being understood that, so long as Pledgee exercises reasonable care
in the custody of the Pledged Stock as above noted, Pledgee shall not have any
responsibility for: (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not Pledgee has or is deemed to have knowledge of such
matters; (b) taking any necessary steps to preserve rights against any parties
with respect to any Collateral; or (c) failing to perform any act pursuant to a
discretionary power with respect to the Collateral conferred upon Pledgee under
this Agreement.
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8. Private Sales.
(a) Pledgor recognizes that Pledgee may be unable to effect a public sale
of any or all of the Pledged Stock by reason of certain prohibitions
contained in applicable federal and state securities laws or
otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged 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 and agrees that any such private
sale may result in prices and other terms less favorable than if such
sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in
a commercially reasonable manner. Pledgee shall be under no obligation
to delay a sale of any of the Pledged Stock for the period of time
necessary to permit Pledgee to register such securities for public
sale under applicable federal or state securities laws, even if
Pledgee would agree to do so.
(b) Any sale by Pledgee of any of the Pledged Stock shall require five (5)
business days' prior notice to Pledgor providing reasonable details
with respect to such sale or, as the case may be, the procedures for
such sale (it being agreed that such notice may run concurrently with
any other notice required by law or hereunder).
(c) Pledgor further agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Pledged Stock pursuant to this
Section 8 valid and binding and in compliance with any and all other
applicable requirements of law.
9. Limitation on Duties Regarding Collateral. Pledgee's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the Code or otherwise, shall be to
deal with it in the same manner as the Pledgee deals with similar securities and
property for its own account. Neither Pledgee nor any of its directors, officer,
employees or agents shall be liable for failure to demand, collect or realize
upon any of the Collateral upon the request of Pledgor or otherwise.
10. Events of Default/Remedies. Default in the payment when due or
performance of the Obligations, or breach by Pledgor of any covenant, provision
or term of this Agreement shall constitute a breach by Pledgor of, and a default
under, this Agreement ("Event of Default").
Upon the occurrence of an Event of Default, Pledgee may, itself or through
one or more nominees, at its option:
(a) Exercise all rights and remedies of a Pledgee and secured party
allowed by applicable law;
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(b) Cause the Pledged Stock to be registered in the name of Pledgee or its
nominee or cause new certificates evidencing the Pledged Stock to be
issued; and
(c) Exercise all voting and corporate rights at any meeting of Pledgee, or
otherwise, and exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to
any Pledged Stock as if it were the absolute owner thereof.
11. Waiver: Amendment. All rights and remedies of Pledgee expressed herein
are in addition to all other rights and remedies possessed by it. No delay on
the part of Pledgee in the exercise of any right or remedy shall operate as a
waiver thereof, and no single or partial exercise of any right or remedy shall
preclude other or further exercise thereof or the exercise of any other right or
remedy. No action of Pledgee permitted hereunder shall impair or affect the
rights of Pledgee in, to and under the Collateral.
None of the terms or provisions of this Agreement may be waived, altered,
modified or amended except by an instrument in writing, duly executed by
Pledgee.
12. Termination. Upon full satisfaction of the Obligation and the other
obligations of Pledgor hereunder, or on such earlier date that Pledgee
voluntarily releases the Collateral to Pledgor, Pledgee shall promptly cause to
be redelivered to Pledgor certificates representing the Pledged Stock and this
Agreement shall terminate forthwith.
13. Successors and Assigns. This Agreement and all obligations of Pledgor
hereunder shall be binding upon Pledgor and its successors and assigns and shall
inure to the benefit of Pledgee and its successors and assigns.
14. General. This Agreement shall be governed by the laws of the State of
Colorado. Any action or proceeding seeking to enforce any provision of this
Agreement shall be brought in the courts of the State of Colorado and Pledgor
consents to the jurisdiction of such courts and waives any objection to venue
laid therein. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
any 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 Agreement.
15. Notice. All notices, requests, consents and other communications
hereunder ("Notice") shall be in writing and shall be deemed to have been given
(a) if mailed, the date of receipt of such Notice when sent via first class
United States registered mail, return receipt requested, postage prepaid to the
address listed below for the party to whom the Notice is being sent ("Notice
Party"); (b) if hand delivered or delivered by courier, upon actual delivery of
such Notice to the Notice Party at the address listed below for such Notice
Party; or (c) if sent by facsimile, on the first business day after the date of
the sender's receipt of a confirmed transmission of such Notice to the Notice
Party at the facsimile number, if any, listed below for such Notice Party
provided the party giving such Notice mails a copy of such Notice within two
days after the transmission of such Notice by facsimile to the Notice Party. The
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addresses and facsimile numbers for each party to this Agreement, as of the date
hereof, are:
If to Pledgor: Xxxxx X. Xxxxxxx, Xx.
00000 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
With a copy to: Xxxxxx & Xxxxxxx, PC
Attn: Xxxxxx X. Xxxxx
4000 Bank One Tower
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile No.: 317/236-9802
If to Pledgee: Multi-Link Telecommunications, Inc.
Attn: Xxxxx Xxxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Facsimile No.: 303/313-2001
With a copy to: Xxxxx, Johnson, Robinson, Xxxx & Ragonetti, PC
Attn: Xxxxx X. Xxxxxxxx
000 Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Facsimile No.: 303/825-6525
Any party may change its address or facsimile number by providing written
notice, in accordance with the foregoing provisions of this Section 11, to each
other party of such change.
Executed and delivered as of this 17th day of November, 1999.
"PLEDGOR"
/s/ Xxxxx X. Xxxxxxx, Xx.
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Xxxxx X. Xxxxxxx, Xx.
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EXHIBIT A
IRREVOCABLE PROXY
Xxxxx X. Xxxxxxx, Xx., an Indiana resident ("Xxxxxxx"), the owner of record
of 150,000 shares of the outstanding common stock (the "Shares"), of Multi-Link
Telecommunications, Inc., a Colorado corporation ("Multi-Link"), hereby
constitutes and irrevocably appoints Xxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxxx,
and each of them, as his proxies to attend meetings of the shareholders of
Multi-Link that may be held between the date hereof and the date of payment in
full of all obligations of Xxxxxxx to Multi-Link, under the Stock Pledge
Agreement and the Note, as described below, or any continuation or adjournment
thereof, with full power to vote and act for Xxxxxxx (including consent to
action in lieu of a meeting) to the same extent that Xxxxx X. Xxxxxxx and Xxxxx
X. Xxxxxxxxx were present, giving to Xxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxxx,
and each of them, and any substitute, full power of substitution. Multi-Link and
its Secretary shall be entitled to consider this Proxy to be effective upon
receipt of (i) a written statement of any holder of this proxy regarding the
continued effectiveness of this Proxy, notwithstanding any notice from any
person to the contrary and (ii) a written notice that an Event of Default has
occurred and is continuing with respect to the Stock Pledge Agreement and
related Note referred to below.
This Proxy is given by Xxxxxxx in connection with that certain Stock Pledge
Agreement of even date herewith (as hereafter amended, modified or supplemented,
the "Stock Pledge Agreement") and related Note of even date herewith, by and
among Xxxxxxx and Multi- Link and shall be deemed a part of such Stock Pledge
Agreement, which is incorporated herein by this reference. This Proxy is coupled
with an interest, shall be irrevocable, and shall continue in effect so long as
the Stock Pledge Agreement (or any modification or substitution thereof) shall
be in effect. Capitalized terms used herein shall have the meanings ascribed to
them in the Stock Pledge Agreement.
Unless and until an Event of Default shall occur and be continuing, the
rights granted pursuant to this Proxy shall be inchoate and the undersigned
shall have full power to attend meeting and vote the Shares in his discretion.
Any and all proxies previously granted are hereby revoked.
Dated this _____ day of November, 1999.
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Xxxxx X. Xxxxxxx, Xx.
A-1
