Exhibit 10.3H
STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT dated as of May 24, 2001, made by and between
Dr. Xxxxxxx Xxxxxxxx ("Pledgor") and those certain investors set forth on
Schedule A hereto (each a "Secured Party" and collectively the "Secured
Parties") and Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Wolosky LLP (the "Agent"), as
agent for the Secured Parties.
PRELIMINARY STATEMENTS:
I. The Pledgor owns 750,000 shares of the common stock, par value
$0.001 (the "Pledged Securities"), of LCS Golf, Inc., a Delaware corporation
("LCS Golf").
II. It is a condition precedent to the Secured Parties' entering
into that certain Subscription Agreement dated May 24, 2001, to purchase
convertible debentures of LCS Golf (the "Subscription Agreement"), by and
between LCS Golf and the Secured Parties that the Pledgor shall have made the
pledge contemplated by this Agreement.
III. Contemporaneously with the execution of this Agreement, the
parties hereto shall also execute an Escrow Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Secured Party to enter into the Subscription Agreement, the Pledgor
hereby agrees as follows:
SECTION A. Pledge. The Pledgor hereby pledges to the Agent, and
grants to the Agent a security interest in, the following (the "Pledged
Collateral"):
1. the Pledged Securities and the certificates representing the
Pledged Securities, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Securities; and
2. all proceeds of any and all of the foregoing Pledged
Collateral (including, without limitation, proceeds that constitute property of
the types described above).
SECTION B. Security for Obligations. This Agreement secures the
payment of all obligations of LCS Golf now or hereafter existing under the
Subscription Agreement to secure its obligations to Secured Parties, whether for
interest, fees, expenses or otherwise, and all obligations of the Pledgor now or
hereafter existing under this Agreement.
SECTION C. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of the Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory
to the Agent. Upon the occurrence and during the continuation of an Event of
Default (as defined below), the Agent shall have the duty, at any time at the
direction of a majority in interest of the Secured Parties on five (5) business
days notice to the Pledgor, to transfer to or to register in the name of the
Agent or any of its nominees, or in the name of each of the Secured Parties on a
pro rata basis based on each Secured Party's amount subscribed for compared to
the total amount subscribed for, any or all of the Pledged Collateral as
provided herein, subject only to the revocable rights specified in Section F(a).
In addition, the Agent shall have the right at any such time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
SECTION D. Representations and Warranties. The Pledgor represents
and warrants as follows:
a. The Pledgor is the owner of the Pledged Collateral free and
clear of any lien, security interest, option or other charge or encumbrance
except for the security interest created by this Agreement.
b. The pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral, securing the payment of the Note.
SECTION E. Further Assurances. The Pledgor agrees that any time and
from time to time, at the expense of the Pledgor, the Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Agent may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Agent to exercise and enforce
its rights and remedies hereunder with respect to any Pledged Collateral.
SECTION F. Voting Rights; Dividends; Etc. a. So long as no Event of
Default or event which, with the giving of notice or the lapse of time, or both,
would become an Event of Default shall have occurred and be continuing;
(i) The Pledgor shall be entitled to exercise or refrain from
exercising any and all voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement.
(ii) The Pledgor shall be entitled to receive and retain any and
all dividends and distributions paid in respect of the Pledged
Collateral, provided, however, that any and all (A) dividends
paid or payable other than in cash in respect of, and instruments
and other property received, receivable or otherwise distributed
in respect of, or in exchange for, Pledged Collateral, and (B)
dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or
total liquidation or dissolution, shall be, and shall be
forthwith delivered to the Agent to hold as, Pledged Collateral
and shall, if received by the Pledgor, be received in trust for
the benefit of the Agent, be segregated from the other property
or funds of
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the Pledgor, and be forthwith delivered to the Agent as Pledged
Collateral in the same form as so received (with any necessary
indorsement or assignment).
(iii) The Agent shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose
of enabling the Pledgor to exercise the voting and other rights
which it is entitled to exercise pursuant to paragraph (i) above
and to receive the dividends which it is authorized to receive
and retain pursuant to paragraph (ii) above.
b. Upon the occurrence and during the continuance of an Event of
Default or an event which, with the giving of notice or the lapse of time, or
both, would become an Event of Default:
(i) All rights of the Pledgor to exercise or refrain from
exercising the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section F(a)(i) and
to receive the dividends payments which it would otherwise be
authorized to receive and retain pursuant to Section F(a)(ii)
shall cease, and all such rights shall thereupon become vested in
the Agent who shall thereupon have the sole right to exercise or
refrain from exercising such voting and other consensual rights
at the direction of the Noteholder and to receive and hold as
Pledged Collateral such dividends.
(ii) All dividends which are received by the Pledgor contrary to
the provisions of paragraph (i) of this Section F(b) shall be
received in trust for the benefit of the Agent, shall be
segregated from other funds of the Pledgor and shall be forthwith
paid over to the Agent as Pledged Collateral in the same form as
so received (with any necessary indorsement).
c. As used herein, "Event of Default" shall mean any failure on
the part of LCS Golf to honor the terms of the Subscription Agreement or any
debenture issued to a Secured Party issued on connection with the Subscription
Agreement.
d. In the event that the Secured Parties fail to invest at least
$25,000 by May 30, 2001 and an additional $50,000 by June 5, 2001, after the
Company shall provide notice to the Secured Parties and 10 days to invest such
funds, the Agent, pursuant to instructions from LCS Golf, shall be authorized to
return such pro rata percentage of Pledge Collateral as compared to the total
amount invested to Pledgor.
SECTION G. Transfers and Other Liens. The Pledgor agrees that it
will not (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Pledged Collateral,
or (ii) create or permit to exist any lien, security interest, option or other
charge or encumbrance upon or with respect to any of the Pledged Collateral,
except for the security interest under this Agreement.
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SECTION H. Agent Appointed Attorney-in-Fact. The Pledgor hereby
appoints the Agent the Pledgor's attorney-in-fact, with full authority in the
place and stead of the Pledgor and in the name of the Pledgor or otherwise, from
time to time in the Agent's discretion to take any action and to execute any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of the Pledgor under Section
F), including, without limitation, to receive, indorse and collect all
instruments made payable to the Pledgor representing any dividend or any part
thereof and to give full discharge for the same.
SECTION I. Agent May Perform. If the Pledgor fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Agent incurred in connection
therewith shall be payable by the Pledgor under Section L.
SECTION J. The Agent's Duties. a. The powers conferred on the Agent
hereunder are solely to protect each of the Secured Party's interest in the
Pledged Collateral and shall not impose any duty upon it to exercise any such
powers, except upon the direction of a majority in interest of the Secured
Parties. Except for the safe custody of any Pledged Collateral in its possession
and the accounting for moneys actually received by it hereunder, the Agent shall
have no duty as to any Pledged Collateral, as to ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Pledged Collateral, whether or not the Agent has or is
deemed to have knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against any parties or any other rights pertaining to
any Pledged Collateral. The Agent shall be deemed to have exercised reasonable
care in the custody and preservation of any Pledged Collateral in its possession
if such Pledged Collateral is accorded treatment substantially equal to that
which the Agent accords its own property.
b. Pledgor and each Secured Party hereby, jointly and severally,
agree to indemnify and defend the Agent and to hold the Agent harmless from any
loss, liability or expense incurred by the Agent without willful malfeasance or
nonfeasance or bad faith on its part arising out of or in connection with the
acceptance or administration by the Agent of its duties hereunder, including,
but not limited to, the reasonable fees, costs and expenses of defending itself
against claims of liability hereunder. Anything in the foregoing to the contrary
notwithstanding, at the sole discretion of the Agent, the Agent may at any time
deposit any or all of the Pledged Collateral with a federal or state court
located in New York County, New York selected by the Agent and in such event (x)
all liability and responsibility of the Agent shall terminate upon such deposit
having been made, and (y) after such deposit is made, and absent willful
malfeasance or nonfeasance or bad faith on the part of the Agent, the Agent may
represent Secured Parties in connection with any dispute or proceeding relating
to the disposition of the Pledged Collateral. Pledgor and each Secured Party
acknowledge that the Agent has represented and currently represents some of the
Secured Parties and the Pledgor individually and, absent willful malfeasance or
nonfeasance or bad faith on the part of the Agent, each of the Secured Parties
and the Pledgor hereby waives any actual or alleged conflict of interest by
reason of the Agent serving as Agent hereunder or in connection with any such
representation. Any breach or violation of the terms of this Agreement by any
party, including the provisions and restrictions of this Section J, in addition
to giving rise to monetary damages, may be enjoined. The Agent shall not be
bound in any way by any agreement or contract between any Secured Party and
Pledgor whether or not it has knowledge thereof, and the Agent's only duties and
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responsibilities hereunder shall be to hold the Pledged Collateral as Agent and
to dispose of the Pledged Collateral in accordance with the terms of this
Agreement. The Agent may act upon any instruments or other writings believed by
the Agent in good faith to be genuine and to be signed or presented by the
proper persons. The Agent shall not be liable for any error in judgment, law or
fact or for any act done or omitted to be done in connection with the
performance of its duties under this Agreement, except for its own willful
malfeasance or nonfeasance or bad faith. The Agent may consult with independent
counsel and a written opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or omitted by the
Agent hereunder in good faith and in reliance upon such opinion.
SECTION K. Remedies upon Default. Subject to the provisions of
Section F, if any Event of Default shall have occurred and be continuing:
a. The Agent may, as directed by a majority in interest of the
Secured Parties, (i) transfer the Pledged Collateral to each of the Secured
Parties in full satisfaction of the Pledgor's obligations under the Subscription
Agreement or (ii) exercise in respect of the Pledged Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a Secured Parties on default under the Uniform
Commercial Code in effect in the State of New York at the time (the "Code")
(whether or not the Code applies to the affect Collateral), and may also,
without notice except as specified below, sell the Pledged Collateral or any
part thereof in one or more parcels at public or private sale, at any exchange,
broker's board or at any office of the Agent or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as the Agent may deem
commercially reasonable, as directed by a majority in interest of the Secured
Parties. The Pledgor agrees that, to the extent notice of sale shall be required
by law, at least ten days' notice to the Pledgor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Agent shall not be obligated to make any
sale of Pledged Collateral regardless of notice of sale having been given. The
Agent 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.
b. Any cash held by the Agent as Pledged Collateral and all cash
proceeds received by the Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Pledged Collateral may, in the
discretion of the Agent, be held by the Agent as collateral for, and/or then or
at any time thereafter be applied (after payment of any amounts payable to the
Agent pursuant to Section L) in whole or in part by the Agent to satisfy the
obligations of LCS Golf under the Subscription Agreement and any debenture
issued pursuant thereto, as the Agent shall be directed by a majority in
interest of the Secured Parties. Any surplus of such cash or cash proceeds held
by the Agent and remaining after satisfaction in full of such obligations shall
be paid over to the Pledgor or to whomsoever may be lawfully entitled to receive
such surplus.
SECTION L. Expenses. The Pledgor will upon demand pay to the Agent
the amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Agent may incur
in connection with (i) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Pledged Collateral, (ii)
the
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exercise or enforcement of any of the rights of the Agent hereunder or (iii) the
failure by the Pledgor to perform or observe any of the provisions hereof.
SECTION M. Amendments, Etc. No amendment or waiver of any provision
of this Agreement, and no consent to any departure by the Pledgor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Agent, as directed by a majority in interest of the Secured Parties, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
SECTION N. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and mailed by U.S.
registered mail, or delivered, to the parties at their respective addresses as
specified on the signature page hereto or, as to any party, at such other
address as shall be designated by such party in a written notice to the other
party. All such notices and other communications shall, when mailed, be
effective when deposited in the mails.
SECTION O. Continuing Security Interest.
a. This Agreement shall create a continuing security interest in
the Pledged Collateral and shall (i) remain in full force and effect until the
payment in full of the Note and all other amounts payable under this Agreement,
(ii) be binding upon the Pledgor, its successors and assigns, and (iii) inure to
the benefit of, and be enforceable by, the Agent and its successors, transferees
and assigns.
b. Upon the payment in full of the obligations and all other
amounts payable under this Agreement, the security interest granted hereby shall
terminate and all rights to the Pledged Collateral shall revert to the Pledgor.
Upon any such termination, the Agent will, at the Pledgor's expense, return to
the Pledgor such of the Pledged Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof and execute and deliver to the
Pledgor such documents as the Pledgor shall reasonably request to evidence such
termination.
SECTION P. Governing Law; Terms.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. UNLESS OTHERWISE DEFINED HEREIN OR IN THE NOTE,
TERMS DEFINED IN ARTICLE 9 OF THE CODE ARE USED HEREIN AS THEREIN DEFINED. ANY
ACTION, SUIT OR PROCEEDING INITIATED BY ANY PARTY HERETO AGAINST ANY OTHER PARTY
HERETO UNDER OR IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN THE STATE OF NEW YORK. EACH PARTY HERETO SUBMITS ITSELF TO
THE EXCLUSIVE JURISDICTION OF ANY SUCH COURT, WAIVES ANY CLAIMS OF FORUM NON
CONVENIENS AND AGREES THAT
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SERVICE OF PROCESS MAY BE EFFECTED ON IT BY THE MEANS BY WHICH NOTICES ARE TO BE
GIVEN PURSUANT TO THIS AGREEMENT.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered as of the date first above written.
PLEDGOR:
____________________________________________
DR. XXXXXXX XXXXXXXX
Address for Notices: 000 X. Xxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
SECURED PARTIES:
By: __________________________________________
Name:
Title:
Address for Notices:
AGENT:
XXXXXX XXXXXXXX FROME XXXXXXXXXX
& WOLOSKY LLP
By: _________________________________________
Address for Notices: 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
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